Car Dealers Could Ditch Spot TV

As car dealers increasingly target small groups of consumers, broadcasters risk losing advertisers to digital platforms, an industry expert said Thursday.

“Dealerships have come to realize that a large, scattershot approach is good for (manufacturers) but may not work for a specific dealership,” Steven Szakaly, the National Automobile Dealers Association’s chief economist. “It may be better to target this demo online instead of TV is a concern.”

Speaking at the TVB Forward Conference in New York, Szakaly said dealers are changing their approaches to advertising as the automobile industry – local TV’s largest advertising sector – starts to plateau after a historic seven years of growth.

Targeting potential buyers, who are older, richer and more educated than the average consumer, becomes increasingly important, he said. The car industry sells vehicles to about 5% of the U.S. population each year.

“You are aiming at a very, very specific group,” Szakaly said.

At the same time, however, Szakaly said he expects car dealers to advertise more and offer more incentives as the industry’s seven straight years of growth (which hadn’t occurred since the 1920s) comes to an end.

Forecasts call for industry growth to cap at 1% a year for the foreseeable future, he said.

Although such slowdowns are usually associated with larger economic woes, that is not the case this time around, Szakaly said.

Instead, a return to pre-recession ownership rates, as well as car prices rising faster than incomes, are impacting the business. So are millennials, who, thanks to school loans, are in debt earlier and having children – a key driver of car sales – later, he said.