Spring is a great time for a car dealership to hold a customer service clinic.
I’ve always liked these special events that provide helpful maintenance tips to car owners while allowing stores to stay engaged with customers. I’d plan one for the near future.
Many customers during the winter season have had only the required maintenance done on their cars, if any. Clinics help them become familiar with proper car care.
It is important they now check their vehicles for any safety and mechanical concerns. I can attest from personal experience the impact of potholes on suspension and steering systems.
I also would wager most vehicles that have endured pothole encounters are in need of an alignment. That’s high-margin work for a dealership.
An added benefit of service clinics: I don’t remember ever holding one that didn’t result in at least one vehicle sale.
Meanwhile, dealers attacking the market should also keep an eye on expenses. I know by working with clients in New England and the upper Midwest that certain expenses are tremendously over budget year to date.
Harsh winters caused vehicle damage. Snow removal and lot maintenance after storms have in many cases bit into budgets. Fortunately, these expenses, as a percentage of gross fall back in line now.
Recent articles remind us that a sales downturn is inevitable. That’s just the cyclical nature of the business. Despite lessons learned during the recession, dealers know complacency can set in easily during boon times.
It’s only natural to want to make hay while the sun shines, and we certainly have the opportunity to accomplish that.
At the same time, we must temper our enthusiasm with a dose of common sense. The Federal Reserve seems poised to increase interest rates. Calculate the net effect a 25 basis point increase in rates will have on your total expense. Be mindful of that when placing new-vehicle inventory orders.
Another critical area each dealership needs to monitor is personnel count and expenses. In tough times, staff reduction is one of the toughest challenges. Now, when making the decision to add new staff, think long and hard before hiring anyone who will not fill a productive role.
I am fortunate to work on projects with the Brazilian auto industry. During the past two years, I have helped its leaders conduct business studies of the U.S. and identify steps American dealers took during the recession to lessen the financial impact. This study took place while auto retailing was robust.
Auto sales in Brazil this year have dropped to a level not seen since 2008. While this is bad news, I take some degree of comfort knowing dealers were not caught unaware of this possibility and during the good times had the foresight to prepare for a downturn that indeed materialized.
I’m certainly not predicting anything of the same magnitude will happen in the U.S. market. But the lesson is this: Even though business is thriving, be prepared to adjust quickly and less disruptively to a downturn.
Tony Noland of Tony Noland & Associates is a veteran dealership consultant and former dealership manager. He can be reached at tonynolandandassociates.com.