Ukraine has a robust presence in the automotive supply industry. Recent projections from Bloomberg show that the crisis in Ukraine could decrease European auto output up to 15%, contributing to already soaring vehicle prices.
The crisis in Ukraine has garnered global attention as Russia has taken steps to launch a full-scale invasion. The current Ukraine conflict has stemmed from Russian ambitions to re-establish their country as a formidable force and “restore the Russian Empire.” However, many countries are not supporting Russia’s decision to invade their neighbor and this has had a significant impact on automotive production and sales.
Following an already strained situation of a global chip shortage and pandemic, the current Ukraine conflict is only adding to the challenges facing dealerships.. What exactly does the Ukraine crisis mean for the auto industry and how can dealers weather the storm?
The Automotive Overview
From a high level, consumers are feeling the pinch in their wallets as gas prices continue to rise in response to the Russia and Ukraine conflict. Auto manufacturers are also seeing some strain as many are experiencing shortages in the automotive supply chain, resulting in halted or reduced production. Moreover, many companies have simply ceased operations in plants located within Ukraine or Russia and are banning exports to Russia while the conflict continues.
Ukraine’s Halted Production
Ukraine has a robust presence in the automotive supply industry. Recent projections from Bloomberg show that the crisis in Ukraine could decrease European auto output up to 15%, contributing to already soaring vehicle prices. Because Ukraine is responsible for manufacturing many of the parts that are needed to assemble vehicles, many dealers may see escalated shortages while the conflict continues.
Most notably, The Volkswagen Group has been hit hard by the conflict. Volkswagen has stopped production due to the unavailability of wiring harnesses that were supplied by Ukraine which reportedly will affect all models manufactured by the parent company. Add these shortages to an already strained supply chain and a shortage of chips and many auto manufacturers and dealers are feeling the strain.
Russia’s Stalled Exports of Raw Materials
Russia has also put bans on certain raw materials that are used in the production of vehicles, such as nickel, palladium, copper, and other metals. Some of these metals are needed for chip production, while others are crucial for the manufacturing of parts, such as catalytic converters. In retaliation to import bans, production stops, and global backlash, Russia has decided to keep these materials close to home, exacerbating the current chip shortage and new vehicle woes.
Check out this article from Automotive News to learn more about the challenges and obstacles facing specific manufacturers.
What the Ukraine and Russia Conflict Means for Your Phone Staff
Your dealership can find creative ways to navigate these obstacles. Your ability to help consumers make choices based on their options and market shifts is going to start with your phone staff. When customers are looking to evaluate their options, they call and ask questions. Here are some ways you can prepare your phone staff to manage questions based on the Ukraine crisis.
- Keep your reps updated on inventory at all times. Customers who are looking to purchase will want to know what is immediately available and they may make several inquiries into dealerships to find their best option.
- Keep all call info in your CRM. Putting the details into your CRM is absolutely essential for navigating these shortages. Identifying your customer’s needs will help you to keep them apprised of all changes and make all conversations efficient.
- Educate your phone reps to leverage used-car sales. New vehicles aren’t the only source for a vehicle purchase. Give your staff full access to used car inventory and offer those options as an alternative.
- Pivot the conversation to include FixedOps. When new vehicle sales aren’t fitting your customer’s needs, you can always provide ongoing maintenance for their current vehicle to hold them off until inventory becomes available.
- Focus on a great customer service experience. The shortages aren’t just hitting one dealership, it’s hitting them all. Gently and appropriately remind customers that shortages are widespread, but that you remain committed to serving them as best as possible.
- Train staff to manage tough calls. Customers may not be happy with your response, but training staff to remain calm and giving them strategies for shifting the call can make the difference between a conversion and a loss.