If you're like most of the dealers I talk to, chances are you're closer to experiencing one of the scariest years in recent history than shopping for an extended vacation home.
So, if things are so “off,” why didn't I see you at NAF's Non-Prime Lending Conference in Chicago, or at one of Chris Leedom's special finance seminars, or at the JM&A gathering in Colorado Springs, or at any of the dozens of other profit-opportunity sessions I've poked around lately?
Most dealers say this market is just too demanding to spend time away from the store. Many say: “I have to be in the store more than ever because of the less than ever traffic that's showing up.”
Sounds kinda silly when you say it out loud, doesn't it?
Most dealers (and general managers) wake up and put one foot in front of the other until they've repeated every step they walked yesterday and the day before, and they continue to do so until the day is done.
As scary as it might be out there, pulling out of a comfortable rut to hunt for alternatives seems just too frivolous, too precarious or too unlikely. Unless things get so bad that we panic, it's easier to rationalize that we'll just cut some expenses, lay off a little staff or liquidate some stale inventory when need be, rather than leave the store and search for new opportunity.
Most dealers prefer to wait and see. Yet there's always a dealer up the street for whom the current market is not so tough. While most of us watch our lines and check our bait, there's always that fisherman pulling fish out upstream, upsetting our effort.
That “better fisherman” should provoke the rest of us to ask questions and explore new possibilities.
The search usually starts with a question to the sales manager as to what's going on up the street. First responses are generally defensive and more along the line of excuses than answers:
“Those guys are crooked. They make claims and offers that they have no intention of backing up. Their ads are illegal!”
A second level of inquiry takes aim at the human equation. “Do we know anyone who works there? What kind of people do they have? Where did they come from?”
Once all the excuses are dismissed, we probe the process. “What are they selling and to whom and for how much? Where are they getting their product?”
Finally the questions turn to the marketing. “How are they generating so many leads? What's their offer? Where are they placing their ads?”
These inquiries never reveal magic, just that, when the market turns, some dealers are quicker to turn with it. Some dealers are more agile, more adventurous and more willing to take risk.
In the world of stocks and bonds these folks are called contrarians. They buy when the herd sells, and sell when the herd is buys. They spot opportunity that's almost out of sight and run with it until the rest spot it. Then, as the herd depletes the margin through crowed and sloppy competition, the contrarian moves on to greener pastures.
I've always made the most money in the oddest markets, markets like today. My favorites are the markets that are too complex to attack with flashier ads, bigger inventories or deeper discounts.
When dealers were filling Sunday newspapers with high priced ads touting deep discount car deals with tiny print disclaimers, I was buying leads from Autobytel and delivering cars to homes and offices at profit margins that were the envy of my market.
Once the OEM's and consolidated dealer groups turned their attention to the World Wide Web and lead aggregation, I studied telemarketing and business development to generate direct leads into my store. In short, I look where the others aren't.
By the turn of the millennium my head had already moved away from the then dwindling volumes of vehicles sold through the Net, to the opportunities created by the unprecedented margins between what finance companies could raise money for and the rates that could be sold to credit-challenged car buyers (special finance arbitrage).
In coming months I'll tell you what I see next over the next horizon, but in the meantime, I would encourage readers to target their advertising to the appetites and lifestyles of an educated, aging and active Boomer generation.
I predict that the ownership experience will be far more compelling than the product itself, that low interest and nothing down will be the starting point not the closer, and that managing residuals will be more important than developing new product.
As for the remainder of 2003, dealers choices will be three; accept shrinking profits, trim operations to fit within a declining market, or exploit new opportunity — watch and wait, cut and fire, or hunt.
I'll hunt. For those of like minds, this “scariest” of recent years may prove to be one of the most profitable.
Peter Brandow is a veteran dealer in Pennsylvania and New Jersey.