The Bottom Line: Automotive dealerships are facing severe margin compression and can no longer rely solely on new vehicle sales to survive. Dealer principals are actively ignoring massive, untapped revenue streams like tire sales, in-house detailing, vehicle customization, fleet servicing, and dealer-owned insurance agencies.
The Bottom Line: Car dealerships are actively setting their advertising budgets on fire by severely underpaying their Business Development Center managers and relying on lazy, automated templates to handle internet leads.
The Bottom Line: Car dealerships are actively hemorrhaging revenue because dealer principals and general managers refuse to mystery shop their own operations out of a misguided fear of uncovering the truth.
The Bottom Line: Dealerships are actively bleeding revenue by losing a staggering 70 percent of their customers to independent mechanics the moment the factory warranty expires. The root cause is a complete lack of a compelling reason for consumers to return to the higher-priced franchised service drive.
The Bottom Line: Car dealerships are actively losing massive amounts of gross profit because their sales and finance professionals lack fundamental product knowledge. Relying on boring manufacturer modules and allowing staff to cheat on certification tests completely destroys customer trust and kills sales opportunities.
The Bottom Line: Car dealerships are actively destroying their long-term viability by chasing short-term OEM stair-step programs and wasting massive budgets on obsolete print advertising. This desperation leads directly to deceptive marketing tactics that poison the consumer buying process and ruin the dealership's credibility.
Let’s be completely honest about the current state of automotive retail: it is almost impossible to make a substantial profit relying solely on the margin of a new car sale. New vehicle margins have essentially evaporated, yet the vast majority of Dealer Principals and General Managers continue to obsess exclusively over front-end showroom volume.
The automotive retail landscape has been irreversibly altered. For decades, traditional brick-and-mortar car dealerships operated under a standard set of rules: drive traffic to the showroom, engage in lengthy negotiations, and push for maximum gross profit on the floor.
When you sell F&I products like Vehicle Service Contracts (VSCs) or ancillary protections, what happens to the premium dollars? If you are like many local dealerships across the country, you might be actively giving away millions of dollars in underwriting and investment profits to third-party administrators.
In today's automotive retail environment, the Finance and Insurance (F&I) department generates the most profit per square foot, making finance managers the true financial backbone of a successful car dealership. However, unlike other financial sectors, F&I is not a regulated profession, meaning there is no state license required to practice.
In the modern automotive retail environment, margins on new car sales are continually shrinking to the point of evaporation. It is incredibly hard to make money relying solely on the front end of a new car deal. Yet, the vast majority of Dealer Principals and General Managers—many of whom came up exclusively through the sales department—
The automotive retail industry is currently standing at a historic crossroads—either we get better, or we will be extinct. For decades, traditional brick-and-mortar car dealerships have operated on a specific set of rules. However, the modern consumer has fundamentally changed, and the business models that generated massive profits for the last forty years are rapidly becoming obsolete.
Let’s be completely honest about the current state of the automotive retail industry: it is almost impossible to make money selling new cars. New car margins have been compressed to the point of being virtually nonexistent, yet the majority of general managers and dealer principals continue to obsess over front-end sales volume.
For decades, the automotive retail industry has operated under a massive misconception: the belief that the primary way to generate wealth is by simply selling more cars. In today's hyper-competitive market, characterized by compressing front-end margins, digital retail disruptors, and the looming transition to electric vehicles, the old playbook no longer works.
For decades, the automotive retail industry operated on a simple, unspoken rule: a great month on the sales floor could hide the sins of the rest of the dealership. If variable operations were pumping out high volumes, Owners and General Managers could afford to overlook inefficiencies in the service drive, bloated inventory in the parts department, or sloppy cash flow management in the accounting office.
The automotive retail industry is standing at a historic crossroads. The business models that generated massive profits for the last forty years are rapidly becoming obsolete. Between the aggressive rise of Electric Vehicles (EVs), the integration of Artificial Intelligence (AI) into daily operations, the constant threat of digital retail disruptors, and the ongoing wave of dealership consolidation, the future belongs to those who adapt.
Auto Dealer Reinsurance can offer several benefits for car dealers, including: 1. Additional revenue streams: By becoming a reinsurer, car dealers can generate additional revenue streams by earning premiums on the policies they underwrite.
Training your team is one of the most important factors for success in any business. Employees need to know their product, know the industry, and stay up to date with changes to the market. This is as true for car dealerships as it is true for any business.
With just two months left in 2018, dealership owners and managers should already be thinking carefully about 2019 strategy. The auto retail business is changing fast and in order to remain competitive dealerships must always be planning for the future and adopting new trends.
With the economy continuing to thrive and car sales doing well, many dealerships are riding high and focusing on moving cars. Unfortunately, many dealership managers have an overfocus on simply selling cars, and are missing important opportunities to maximize revenue per vehicle and generate real competitive advantage with advanced selling, bundling, and positioning.
As the American economy continues to perform well, dealerships see growth as more consumers walk through their doors looking to buy a new car. Good economic times of course are great for the car business, but there is one downside to growth that dealerships can face: attracting and retaining talented employees.
More and more dealerships now provide loaner vehicles to service customers. This is a major factor in improving customer service and satisfaction - the customer can easily bring their car in to be serviced, but still have a car to get around during the service process.
By now, everyone in the auto retail business has heard of the car subscription concepts offered by brands like Porsche and others. Visit porschepassport.com and you’ll see this concept in action. Something like “Netflix for cars”, the new car subscription model allows customers to pay a monthly fee to access the entire Porsche lineup, change cars as.
Car dealerships today cannot rely solely on selling cars to be profitable and competitive in the increasingly pressured auto retail industry. Effective dealership owners and managers know that pursuing other paths to profit is key to overall success. One of the most important additional business units that needs to be optimized aggressively is your service.
Recruiting and retaining a talented team is one of the biggest challenges in automotive retail today. Today’s younger employees often show little employer loyalty, and with margins shrinking dealerships often struggle to offer competitive compensation. To manage your team effectively you must have strong and structured on boarding process.
The automotive retail industry is getting more competitive every year. There’s no doubt that as we move deeper into 2018, dealerships will continue to face pressure from all sides. However, 2018 has also seen strong overall economic growth and the industry is filled with opportunity for dealerships that embrace change and keep working aggressively to improve.
Today’s car shoppers want an automotive retail experience that mirrors the convenience and transparency of shopping on Amazon. That’s the message author and automotive management expert Max Zanan explained in his latest article featured on Ward’s Auto, a message that the auto industry has been slow to adopt.
The internet has changed the way consumers shop across all industries. In the past, businesses could rely on being better informed than their customers, and could assume that shoppers often didn’t have much choice in where to buy.
Max Zanan is an automotive management professional with more than 20 years of experience working in the auto retail industry. Max is the author of a new book Perfect Dealership, a guide for dealership managers and owners to running a more profitable auto business. Today, Max sat down with marketing consultant Alex Swerdlow to talk more about the book and his vision for the automotive industry.
