Just when we thought lower interest rates and improved vehicle affordability were within reach following the Federal Reserve's announcement on September 18th, the economy threw us a curveball.  We're now grappling with one of the most destructive and costly disasters in recent history, with damage estimates soaring up to $110 billion with another about to hit imminently. The anticipated economic relief has swiftly morphed into a new wave of challenges that could have far-reaching impacts on the automotive industry.

One of the most pressing challenges we face is the uncertainty surrounding vehicle affordability. Dealerships and the vendors that support them are navigating these turbulent times without a compass. The lack of real-time monthly payment intelligence leaves software providers—and by extension, the entire industry—flying blind. Without visibility into Market Based Affordability, it's nearly impossible to gauge whether current strategies are effective or need adjustment.

Understanding the customer's perspective is more crucial than ever. Every vehicle purchase boils down to three core considerations:

1. Does it meet my essential needs?

   • Does the vehicle have the features, seating capacity, drivetrain, and options that fulfill my requirements?

2. Is it better than what I'm comparing it to?

   • Among similar options that meet my essential needs, does this vehicle offer attributes that make it stand out?

3. Can I afford it?

   • Do I have the financial means to purchase this vehicle at the point of sale? Better asked, what is the monthly payment and can I afford it?

While we, as software providers, have made significant progress in assisting customers and dealers with the first two questions, the issue of affordability remains a surprising and unmet gap. Before consumers even enter a dealership, they want to understand their options in terms of monthly budgets and affordability. Interestingly, most dealers are eager to provide this information. However, fully automated, transaction-grade monthly vehicle payment data—rather than rough estimates—remains extremely limited.

Despite heavy investments in digital marketing, customer data, merchandising, and messaging technologies, we have yet to address that crucial “last mile” of monthly affordability. This piece is essential in driving engagement and ultimately converting visits into closed sales.

Affordability is a top concern, especially during the initial stages of the shopping process. By withholding this critical information until customers arrive at the showroom, we risk losing a significant portion of active shoppers who disengage because their affordability questions go unanswered. This is a significant missed opportunity.

This situation is reminiscent of the automotive industry in the mid-2000s before the advent of inventory data feeds. Back then, everything operated at the model level, and advertisements often featured cars that weren't even available at the dealership. Individual vehicle advertising was limited to print classifieds, showcasing only a fraction of a dealership's offerings. The lack of automated inventory distribution meant that dealerships couldn't effectively communicate their available stock to potential buyers.

The rise of digital advertising revolutionized this landscape by enabling automatic inventory distribution. No longer did dealerships have to manually add or remove each vehicle from their listings. These automated feeds became the backbone of the analytics that nearly every facet of the automotive industry relies on today. Currently the average dealer spends around $703 per new vehicle sold. It’s impossible to consider spending this kind of money without the analytics to measure its effectiveness.

As we navigate the current challenges, one truth remains: the only constant is change. The fundamental lack of visibility into vehicle affordability is a critical issue we must address. Real-time monthly payment intelligence is not just a tool but a necessity for dealerships and the software providers who support them. By integrating accurate, up-to-date payment information into your systems, you can gain the insights needed to adapt your strategies effectively and meet your customers' needs.  

In these unpredictable times, having access to real-time data isn't just advantageous—it's essential. Let's work together to bring clarity to vehicle affordability and steer the automotive industry toward a more informed and resilient future. The era of Market Based Affordability is here to stay…especially now. We all need to embrace this or risk getting left behind.