Dealers Talked – Alex Listened
- Takeaways from DrivingSales for Reynolds Consultant, Alex Abramovich.
- Stay updated on major issues and adapt your business accordingly.
I had the pleasure of moderating a discussion at DrivingSales’ President’s Club, held in New York City. I always enjoy participating in industry conferences and trade shows. It amazes me how much conversation can flow from complete strangers propelled by a common interest.
At this conference, I found myself taking note of the more complex conversations. The conversations with faces twisted in frustration or confusion, and a glint of fear in the speaker’s eyes. The topics that had many people offering solutions, but no real promise of success. These are the topics I want to share to both make you aware of them, and to offer a sliver of advice.
- There is a shift from new to used vehicles due to rising new vehicles prices.
Less consumers are able to rationalize purchasing a new vehicle. This is a problem many of us are aware of with many possible solutions. With increased interest in more affordable vehicles, lease deals are an attractive option. With a lease, you’re satisfying floorplan requirements by moving higher-priced vehicles, and you’re creating a possible used vehicle in the future. You can also increase your stock of popular used vehicles by targeting the customers who own them while they are in for service or routine maintenance. Getting them into a new vehicle can prove mutually beneficial if you leverage the right information at the right time in the customer’s lifecycle.
- Dealership marketing is getting more and more focused on consumer behavior online, before customers ever walk into your store.
There has been a noticeable increase in software and algorithms for collecting information on consumers. Knowing more about your potential customers, and even your current customers, can help shape your ideal target market. Think of the potential impact on customer experience if you knew simple customer information when they walked on your lot – like the size of their family, the amount of travel they do, or if they’ve made any big life changes recently. At the very least, you’d be able to find the vehicle of their dreams much faster.
- Industry leaders agree online car buying is coming, but they do not agree on when or how much of the market it will affect.
All agree at least some consumers will execute the entire purchase online and never walk into a physical dealership. They also agree there will be a shift towards completing more parts of the vehicle purchase online; that new cars will see more complete online purchasing than used cars. They disagree on what percentage of the business will be done totally online though. Some believe it will be a large portion (like current online shopping for just about anything on Amazon), but others say it will be marginal. Dealerships have already taken steps to prepare for this new segment of automotive consumers. Regardless of how or when online car buying will occur, you need to be ready to accommodate these customers.
- The US economy is showing signs of slowing.
In July 2019, the Federal Reserve announced a cut in interest rates to help stifle any downslide in the economy. This will likely keep new car sales flat from last year. If dealers haven’t been preparing for an economic slowdown, they need to start. The best way to prepare is not to lock money away, making your employees and your customers settle with cheaper accommodations. Rather, you should invest wisely to make your business attractive to consumers. People will still need to buy cars, so make sure you’ve adapted to satisfy their needs and keep them engaged. If vehicle sales slow, your service department will be the most important source of revenue. You need to make sure you’re capturing every service opportunity.
There are a lot of pressures on the dealership today, and likely even more in the future. You’ve made the first step to properly prepare by staying informed about the industry. Once you’re ready to evaluate your position in the market and strategize a plan for long-term success, I recommend leveraging the perspective of an industry consultant who has dealership experience. This is the fastest way to get your business on track and working toward the future.
Automotive News recently published an article discussing why dealerships are sourcing lower-grade used vehicles to fill their lots.