Profit protection soon will become a hot topic across the auto-retailing industry.
Today’s customers shop for a vehicle for an average of 90 days. But they drive in and buy in about 90 hours. Dealers’ advertising plans need to take into account this 90-day/90-hour rule.
Does yours? Or are you still using an ad plan from the 1990s and simply spending more every year. Hint: You’ll know you’ve outgrown your old ad plan when your per-vehicle-retailed rate is climbing but your net profit is flat or down.
U.S. vehicle sales this year are expected to reach nearly 18 million units. But margins are in decline. I’ve met many dealers who simply have given up trying to make a decent profit on any new vehicle. They aim only to hit OEM new-car sales minimums. Used cars have become their expertise.
It doesn't have to be that way.
Can’t we innovate a better profit just like other retailers? When Coca-Cola found people were drinking less soda, the beverage maker rolled out Coke Natural in a green bottle. The company also allowed consumers to place special personalized orders of bottles and cans with their names on the labels. The result was a 4% increase in sales.
I recently participated in a National Automobile Dealers Assn. national profit webinar. I shared three things to do right now to drive net profit. None of them cost extra money.
First, get out of low-scale niche media. It’s slowing you down. Talk to the masses and you’ll get mass response.
Second, focus on lot management and display. When car buyers only visit one dealer let’s not bore them to death with the same old look of every other same-brand store in the market. Lining up promo units in bright colors with affordable lease payments is a start. Why hide these values if you want to sell them?
Third, merchandise accessories. Industry pros tell me 50% of auto buyers will purchase accessories when shown them. These accessories carry up to a 50% profit margin.
Not presenting upgraded wheels, tinting, wraps and warranties is just plain silly when consumers value them.
Don’t let your profits be limited when you have many steps you can take right now to expand them.
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.