Car Ads May Be in Shorter Supply This Holiday Season, Thanks to the Supply Chain Mess

·3 min read
Photo credit: Vitali Laurentsik - Getty Images
Photo credit: Vitali Laurentsik - Getty Images
  • Fewer cars to sell mean less reason to drive shoppers into showrooms, and that means holiday advertising is expected to be down this year, too.

  • Of course, automakers have already decreased their ad spending compared to pre-pandemic days. Reuters said digital car ads were down around 10 percent this summer and fall, while TV ads were down around 5 percent.

  • Blame the supply chain, but if you're determined to put that bow on top of that gift car, you can still do that—some holiday traditions are too special to be forgotten about entirely.

As we enter the second holiday season of the COVID-19 pandemic, automakers and their dealers are faced with a new dilemma: how best to advertise their vehicles when the supply of those vehicles is limited. Given the challenges of the global supply chain—and the well-documented auto manufacturing plant shutdowns that have taken place this year—there just aren't as many vehicles for sale as there usually are. And that leads to questions about how much to encourage demand.

The answer, it seems, is to dial things back. A recent report by Reuters found that both car companies and local dealerships have decided to reduce the amount of advertising spending they plan on doing this year.

Ad dollars have already been in decline during the pandemic. Analytics firm Pathmatics found that automakers reduced their digital advertising spending by around $24 million, around 10 percent, between late July and the end of October, compared to the same time frame in pre-pandemic 2019. Another analytics firm, EDO, found that spending on broadcast television commercials during those same months was down $57 million, or five percent again compared to 2019.

"Winter sales events are such an institutionalized event that it's hard not to do them," EDO CEO Kevin Krim told Reuters. "But if they do their jobs really well, they could make people unhappy if the cars aren't there."

Simply cutting back on advertising because the showrooms are a bit barren is not the straightforward solution it might seem to be. Data from PureCars shows that dealers that cut back on advertising spending between March and August of this year had more of an overall sales dropoff than dealers that changed their advertising messages alongside spending more. PureCars found dealers who decreased the amount spent on advertising between 50 and 89 percent had an average sales volume drop of 28 percent. But dealers who increased their ad spending by 9 percent had a sales drop of just 9 percent.

General Motors told Reuters it will not spend the same amounts on advertising as it has during past holiday seasons, while Ford said it will advertise its F-series trucks and some SUVs in a "Get Holiday Ready" campaign. Retailer AutoNation is also going to spend less this year. Lexus will one again take over screens with "December to Remember" messages, but they might look different than they have in the past.

Photo credit: Lexus
Photo credit: Lexus

Lexus has been running its campaign for more than 20 years. "For us to change it dramatically, it's too important to the brand. It's part of our DNA," Lexus U.S. vice president for marketing Vinay Shahani told Reuters. Shahani said Lexus will spend around the same amount as it has in the past, but "certainly you could expect the offers may not be as compelling" as they were before.

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