Three Odd Reasons for Car Dealers to Increase Market Share

Three Odd Reasons for Car Dealers to Increase Market Share

“Why step on a garden rake and get smacked in the face when you can just pick it up?”

Here are three seemingly odd reasons why increasing your dealership market share matters more in 2016.

  1. Sales volume is high. But it’s also high for like-brand dealer competitors. Plus the factory stair-step programs are in full gear and dealers are doing whatever it takes to make those monthly sales goals. It’s even getting harder to get some popular models as we hit year end.
  2. The car-buying information websites are full speed ahead including the addition of a few more recently. That means dealer-pricing information is falling from the trees. Consumers have so much pricing info that a 1-dealer stop often is all it takes to buy.
  3. Used-vehicle inventory is hitting the marketplace in high numbers, as 2- and 3-year-old off-lease units come back to the lot after strong sales years of 2014 and 2015.

A reason I would build market share urgently in 2016 is that sales volume will inevitably slow, resulting in a mad scramble for profits. As car sales have been climbing, dealer per-unit profits have been fading. They averaged 6.2% in 2008, but are at 3.5% today, according to Manheim Consulting.

High sales volume masks the profit problem. What will happen when there aren’t enough buyers for overstocked dealers? Remember 2009?

Assume 20% of your market’s car buyers would disappear overnight. Do you have a dealer exclusive? Why should the remaining buyers shop you?

Are you well-positioned to sell certified pre-owned vehicle comparisons and used inventory payments to build margin if new sales slow?

Does your sales team and business development center know how to properly position a CPO price compared with that of a new unit?

What about advertising? Are you using the same media your consumer uses most when in the “red zone” of top car-buying days and places?

If not, it’s time for a market-share growth session. Create a plan to win.

As a mentor once told me: “Why step on a garden rake and get smacked in the face when you can just pick it up?”

Adam Armbruster is a senior partner in the business growth firm Eckstein, Summers, Armbruster & Company located in Red Bank, NJ. He can be reached at 941-928-7192.

TAGS: IdeaXChange
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