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Strategies to Increase Dealership Profitability Most Dealerships Overlook

Understanding the auto industry and trends in 2022-23 to increase dealership profitability Tracking the automotive market and key trends in 2022-23 could help you gain an edge over other players in the auto retail industry and influence your dealership profitability in a positive way. Before we dive deeper into the three key strategies to improve your dealership profitability, let us look at the consumer and automotive industry trends that may impact your dealership’s bottom line. To emphasize, it is critical to watch your consumers’ behavior and the auto industry’s inclination before planning a strategic move in anticipation of growing profits. Three critical consumer behavior metrics to watch as your plan for growth in 2022 1. Future Vehicle Intentions The pandemic has a low impact on consumers’ intentions to buy a new vehicle. 69% of consumers in the U.S, 3% more than the previous year, have not altered their timeline for purchasing a new vehicle, and 14% intend to acquire a vehicle to avoid public transportation. Source: Deloitte Automotive Consumer Report 2. Preferred way of buying a vehicle The COVID accelerated the digital buying options as more and more dealers offered virtual purchasing alternatives. Despite that option, the most preferred way of buying a vehicle remains in-person in the U.S. 75% of consumers would prefer an in-person experience to buy their next car. Source: Deloitte Automotive Consumer Report The main reason for purchasing a vehicle through a virtual process is the ease of use and convenience. 25% of consumers consider buying their next car online because of ease of use and 39% because of convenience in virtual buying. Source: Deloitte Automotive Consumer Report   3. Inclination towards the personal vehicle Personal vehicles are a high preference for consumers in the U.S. market. To point out, 76% of respondents said they are inclined to use private vehicles as a mode of mobility, the highest among all the other surveyed regions. Source: Deloitte Automotive Consumer Report Translate the consumer insights into strategies to improve dealership profitability 1. Adopt creative ways to optimize your inventory Supply chain irregularities and the pandemic did not impact the consumers’ intention to buy a vehicle. As a matter of fact, growth in new car sales is driven by pent-up demand in 2022 as consumers appetite for vehicles continues to grow. Therefore, the dealership needs creative strategies to acquire used cars to meet the demands. Opportunity in service drive: Fewer vehicles are going through auction; those that do are selling at record-breaking prices. Where is good used inventory? Not to mention, checking your service drive might help. Here is why: – The average dealer sees 300-400 used vehicles in their service drive each month. – You know your customers and the service history of their vehicle. – Your service customers may be considering and not realize the premium value of their vehicle Are you offering your customers buy-bids and appraisals? Your guaranteed price may be just the nudge they need to cash in or pre-order something new from you. Make an offer your customers cannot refuse: Do we need to say consumers love instant cash offers and appraisals? Offering an appraisal and a buy bid on cars that come to your service drive will accelerate your buying opportunities. It creates a win-win for you and your customers. 2. Get in front of your shoppers first with advanced AI tools Personal vehicles are of high preference to consumers in the U.S. Furthermore, approximately 86% of car shoppers conduct online research before visiting a local dealership, as per research from Adtaxi. These statistics show that consumers are more curious than ever, and they are fulfilling their curiosity by conducting online research before they ever set their foot in a dealership. Hence, it presents an excellent opportunity for dealers to influence potential buyers before they go to competitors. Advanced marketing tools are your best friend: Technology and advanced marketing tools could provide deeper insights into your potential customers. For instance, A.I. powered tools can help you see: The active shoppers in your market right now Details of buyers- name, contact, motivation to buy Make and models they are shopping for The number of days in they have been in the market, shopping behavior, and intensity Get a free demo to up your marketing game: We can help you get a demo of the new A.I.-powered tool to excel in the crucial areas of marketing. Get access to: – Rich data from about 90% of connected US devices – Information coming from appx 250 million protentional shoppers – Omni channel marketing – Audience identification and reach within 24 hour of their entering the market

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What’s Ahead for the Dealerships: Top 5 Trends to Watch in 2022

The inventory shortage took center stage in the automotive industry in 2021. As the chip supplies are loosening up, the worst of empty-lot situation is likely behind us. However, the vehicle supply might not improve before the year’s second half. The question is, how will the new year fare for the dealerships? Will there be a recovery in production and growth in new car sales? Let’s look at what might lie ahead of the automotive retail industry in 2022. 1. Growth in new car sales driven by pent up demand Consumer appetite for vehicles continues to grow, and the tremendous desire for personal cars doesn’t seem to be changing. So, there is a high pent-up demand rolling into the new year. Thus, the vehicle demand will remain high to support new and used vehicle sales this year, and the dealers should be able to sell their inventory faster. The new car sales are expected to climb by over 15 million units. According to IHS Markit forecasts, this reflects the growth of over 2.2 million units year over year. Additionally, used vehicle sales are also predicted to remain strong amidst the supply crisis. 2. The consumers will face limited choices and higher prices as the demand-supply remains an issue So, the question is, how can dealers meet the expectations of their consumers with limited inventory? How does this impact customer experience? From a customer’s standpoint: A consultative and customer-centric approach that focuses on benefitting the customers throughout the sales process is the key to reducing friction and improving customer experience. In short, a value-based tactic involves guiding the prospective customer to reinforce reasons why your offering is valuable to your purchaser- be it in the car sales of the F&I department. From the dealership’s staff perspective: Empowering your teams with the necessary tools and data is critical. For example, updated inventory data and CRM insights provide information quickly, evolve their rhetoric and messaging, and serve the customers better in matching vehicles to their expectations. This would help reduce the friction for buyers and sellers and make it easier for both parties to complete the transaction. In addition, be mindful of promotions and advertising on the inventory-based solution. Promoting inventory that you own instead of marketing core models and only certified pre-owned models. It wastes dealership resources and draws customers for vehicles you might have. It leads to higher dissatisfaction among shoppers and impacts your dealership’s image—which matters more than one might think. 3. The F&I revenue opportunity will remain a profit center for dealerships as they see a growth in new car sales The new and used car prices are higher than ever. As the consumers pump in big bucks to buy a vehicle, they are highly likely to protect it from unforeseen problems. Furthermore, consumers’ risk tolerance capacity plays a significant role in the F&I department. Studies show risk tolerance, especially towards financial emergencies, has shifted to a conservative direction amidst uncertain business, social, and political scenarios. Therefore, F&I managers can help customers put aside their anxieties and protect their vehicles with appropriate coverages and products. 4. The prices for used cars would not decrease as rapidly Towards the end of 2021, as the empty-lot syndrome was at its peak, the used car prices skyrocketed, and affordability highly influenced the buying decision. The average used-vehicle price set new records and rose above $28,000 in December 2021. Without new vehicle production and supply getting back to their full potential, the used cars are not as quick to depreciate as they have been in the past and cost close to what a new model runs. Then again, what does this mean for you, your dealership, and your customers? It depends on what you make of it. Pricing the vehicles strategically to compete with other dealerships and offering valuable F&I products increases the vehicle’s value to customers while surging your profitability. Procuring used cars is not easy for every dealer, but your service drive could be an excellent resource for buying used vehicles from your existing customers and filling empty lots. 5. The Service drives will be a revenue center this year The average age of cars in the US is over 12 years old, as per research by IHS Markit. In addition, Cox Automotive reveals more car owners will be focused on fixing up than breaking up. Furthermore, Americans expect to drive more in 2022 than last year. Therefore, the more visits to service drives, the more opportunities for service drive to become a critical component of the dealership’s success. All in all, the year ahead would show signs of relief for the auto retail sector. As a result, the dealerships and their staff—sales, F&I, service would sell their inventory faster and secure more opportunities to help shoppers safeguard their purchase with valuable F&I products. PRO Consulting can support your dealership profitability with strategic growth planning to help you stay relevant in the challenging market conditions. Book your free 15 minutes consultation to discuss how your business can drive growth in new car sales and reach higher profits.  

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10 Things Dealers Need to Run a Successful Reinsurance Program

How to find the right dealer reinsurance provider and profit-sharing program that works for the Dealer’s best interest to generate wealth and financial security. One of the most valuable assets a Dealer has is often neglected and misunderstood. Running an effectively managed reinsurance program with the right provider generates security and wealth, while allowing the Dealer to stay in control. Analyzing your current reinsurance program or shopping for a new one is no easy task. However, carrying on with no dealer reinsurance program or a poor reinsurance program can be costly to a Dealer’s long-term wealth. Many Dealers assume all reinsurance is the same and therefore look for low administrative costs alone. After decades of experience in the dealership and on the administrative side, we can tell you – all reinsurance is not created equal. Here are the key components Dealers should look for when assessing a dealer reinsurance program or looking for a new reinsurance provider to build long-term wealth. 1. Dealer reinsurance with control and flexibility Have you been offered the option to own your own reinsurance company? Dealer owned profit sharing programs allow you to build substantial wealth and security with access to legal tax advantages. With the right program, this means you would get: 100% of underwriting profits Keep 100% of underwriting investment profits Fully disclosed provider fee There is a substantial amount of money you could be leaving on the table if you do not own your own reinsurance company. Furthermore, if you receive 100% of underwriting and investment profits the money works for your wealth development rather than someone else’s. 2. Investment income opportunities with dealer reinsurance program Does your current provider give you the possibility to create your own investment strategy without difficult restrictions? Guidelines are expected, but your provider should be generous with these guidelines and work to help you build your wealth. Additionally, this should include collaborating with your dealership counsel, accountants, and investment advisors to ensure transparency and compliance. 3. Ability to lend to yourself with interest Where do you get funds when unexpected expenses occur? The right Dealer owned reinsurance program allows the Dealer to be their own lender. If your reinsurance program offers this already, what percentage of unearned premiums does your current provider allow you to borrow? And your earned premiums? And how much interest do you pay on that loan? Where does the interest go? The right provider would allow you to borrow up to: 75% of your unearned premiums (up to 100% in certain States) 100% of your earned premiums Interest accrued from the loan would return to your reinsurance reserve. To enumerate, the money returned in the form of interest then goes back to work for the Dealer’s wealth development. 4. Choice to reinsure more products Are you reinsuring as many products as you could? Underwriting profits exist whether a product is reinsured or not. If you are not reinsuring as many F&I products as possible, there are underwriting profits still being collected – just not by you. In addition, the right reinsurance provider will have a team in place that assures your profits are going into your pocket. Not to mention, the option to increase the number of F&I products you are reinsuring is a powerful tool to catalyze the growth of your long-term wealth. 5. A diverse team working for your best interest Who is on your reinsurance provider’s team? Your wealth should not be controlled by a single entity. The reinsurance program should be managed by a diverse team of specialists from separate entities controlling single aspects. Many providers will offer an in-house team as a complete solution. This can be problematic for 3 three reasons: 1. Conflict of interest between you and the administrator and or underwriter 2. Lack of transparency related to ceding and other fees 3. Difficult to see who holds the money and for how long In short, a reinsurance program that works in the best interest of the Dealer will keep arm’s length separation between each aspect of every transaction. For example: The administrator manages the claims. The F&I agent of your choice drives in-store production. Reinsurance specialist hawks loss ratios and ARC profitability. Your investment specialist drives return on invested premiums. Independent reinsurance expert attorneys & CPAs assure your ARC is IRS compliant and tax returns are done properly. Notably, all of these components working separately yet collectively on your behalf ensures the best environment for your reinsurance success that produces long-term wealth. 6. Flexible and customizable F&I product offerings Is your current provider allowing you the needed flexibility and customization to best meet your market’s needs? Your F&I and reinsurance profitability depends on selling the right products for your market. Therefore, to best meet your dealership’s goals and your customers’ needs, you must have an expansive suite of products to choose from. Likewise, you should have the choice to bundle menu items and explore strategies to create added value. This is key to building and developing wealth. After all, it is your business. 7. Transparency with detailed reporting How often do you receive reports detailing your team’s sales results, your costs, and your progress towards your F&I and revenue goals? How comprehensive are these reports? A trusted reinsurance provider should produce quarterly reports at a minimum showing: Complete financial statement for your reinsurance company Record of loan status and dividends Detailed report of product performance including individual claims These reports should be provided voluntarily and reviewed methodically with your agent at least quarterly to properly track the growth of your wealth. Single page reports available upon request or infrequently are insufficient and could be a sign of a larger issue. Significantly, detailed reporting is necessary to track your reinsurance performance and build long-term wealth. 8. Claims processes that support overall success How do claims affect your cashflow? You and your team should be provided with proper training and support to confidently sell F&I products and manage claims, with supportive processes available. This could

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Close the Most Car Deals During the End of Year Rush

You have worked hard all year to navigate inventory limitations and manage consumer demand. With Christmas around the corner, most of us are preparing for the final days of December in the dealership. In a year different from any other, what should you expect from customers this year? How can Salespeople and Finance Managers close more car deals during the end of year rush? Historically, the highest volume of sales at the dealership, occur in the final week of the year. Although we are seeing a decrease in manufacturer incentives this year, consumers are still very likely to car shop between Christmas and New Year’s. As always, most buyers will have done a considerable amount of research before arriving to the dealership to buy, this holiday season. Likewise, many will also be ready to ask questions, negotiate, and get the best deal possible. Salespeople and Finance Managers will need to be strategic to close more car deals. Considering incentives are down and prices high, Salespeople and Finance Managers may be looking for ways to maintain focus and sales momentum to maximize dealership traffic and close more car deals. Even though this year has been profitable for many dealerships, the final weeks of December are no time to slow down. As the year comes to end, here are some things to remember as a Finance Manager or Salesperson, that will help you close more deals during busy days at the dealership. Pay attention to your health Food, shelter, and water are the building blocks of wellbeing and performance. When you are busy, it can be easy to neglect yourself. However, you will be able to maximize busy times and perform at your peak if you are in the habit of taking care of your personal health. Here are some smalls things you can do to help you keep your sales momentum and close more deals: 1. Eat. Try to eat a healthy breakfast, keep snacks nearby, and have a plan for lunch. When you are hungry, your blood sugar drops. This can create confusion, fatigue, and sometimes irritability. 2. Stay hydrated. Life would not exist without water. You are not an exception. Staying hydrated during the day will help you stay focused, calm, and awake. Keep a water bottle at your desk so you always have water to drink nearby. 3. Stretch. Periodically stretch your hands above your head, do a neck roll, and check on your posture. This will help you stay energized, relieve tension, and maintain good posture. Good posture and relaxed demeaner during chaotic days will help you show your customers that you are professional and trustworthy. 4. Take meaningful breaks. When you are able to take a break, are you doing something that is recharging you? See if you can clear you mind completely for 10-15 minutes while you are on your break. You could listen to music, go on a walk, close your eyes and breath, or maybe listen to something funny. Find out what works best for you and do it. You will see an immediate difference. 5. Protect your voice. Working in sales requires using your voice. If you are seeing people all day, that adds up to a lot of talking. Staying hydrated, keeping answers concise, and asking more questions will help protect your vocal cords. If your voice is fading, a spoonful of honey straight up or in a cup of tea, will save you. Stay composed in any situation to close more car deals We are instinctively judging creatures. If you sense a customer is skeptical or unfriendly at first, remember – this can change. You are in control of your behavior and how you interact with each customer, no matter what ideas they have about dealerships, car sales or you. Some reminders on how to keep your cool, make a great first impression, and stay focused to make the sale: 1. Smile and laugh. Even if you are feeling low or bothered by an interaction, visualizing something that makes you happy will help elevate your mood. Seek humor in situations and keep the conversation light. Happiness and levity is contagious. 2. Give compliments. Take the higher road and find something you like about your customer. Sometimes the meanest people are even meaner to themselves and could use a little boost. 3. Take nothing personally. Remember, someone’s assumptions are their own problem. Some also suffer from a lack of awareness. This is also their problem. 4. Lead with empathy. It is important to remember that everyone has a story that impacts how they behave. Remaining empathetic during every interaction will help you create positive experiences for yourself and your customer. 5. Be honest and genuine. Show you care by asking questions and giving honest answers. Kindness and honesty is the best defense against anything that may come your way. Remembering your customer’s names is a simple yet effective way to close more car deals “I’m horrible with names,” said no successful person ever. The simplest way to make someone feel special and seen is by asking for their name, making sure you can say it correctly, and then remembering it. When customers feel taken care of, seen, and heard, they are more likely to trust you with their business. During the holiday season, this is especially important. Here are some tips to help you remember names of your customers: 1. Say it back to the person after they say it to you. “Nice to meet you, Penny” 2. Repeat the name in your head and tie it to something that stands out to you. For example, Penny with the pink shirt. 3. Keep a pocket notepad with you and jot it down 4. Imagine a powerful visual to associate with the name. Know the difference between a question and an objection Toward the end of a long day or week, customers with a lot of questions can be challenging. Many salespeople may get defensive when asked too many questions. Don’t let

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Labor Shortage Bigger Than Pandemic: Workers Are Missing Everywhere

Tips for recruiting and retaining the right talent in your dealership, and manage labor shortage Hiring and retention in auto industry Economic data indicates that over the past month, job openings have been rising considerably. Hirings are also up, but the companies are not coming close to filling the number of vacant positions or dealing with labor shortage in the auto industry. The need for the workforce has been high, especially when the demand for cars and trucks is rising. The auto industry has been facing hiring challenges before the pandemic, and dealerships will continue to have one after the pandemic is over. As per automotive news, the number of applicants rose only 2%. People have been blaming unemployment benefits as a significant factor to keep the workforce from joining back. However, several states have ended that program a while ago, and nothing changed. The labor shortage is bigger than the pandemic. What are the contributing factors of labor shortage and workforce challenges in auto industry? In a pandemic, many people found time to contemplate what work means to them, how they are valued in their job, and where they fit in company culture. In the majority of cases, this initiated the decision to say, yep, I’m out. Some called it soul searching, and others called it retirement or a fresh start. No matter what reasons people had, it all added up to make hiring and retention complex. Common reasons were: Some employees remain hesitant of plant or on-site environment Federal unemployment benefits until recently resulted in employees choosing to stay home Senior workers decided it was time to announce retirement The multi-month break from routine work allowed some employees to rethink their career and current industry How to fix it? The big question is how to attract the right talent to ensure that your dealerships stay profitable? The automotive industry will have to come up with still better and creative solutions to recruit workers. Hiring bonuses, common in tech firms, were a step towards attracting the right talents. Cash bonuses to employees who help employ a friend or family member also are taking hold. The auto industry is known for opportunities to make more. If the individual possesses skills to close more deals faster, knowledge to satisfy customers’ concerns, grit to manage sales objections, then the sky is the limit for this employee. Hence, a motivating pay plan is a robust strategy to hire and retain the best employees who will strive to reach higher goals. One of the pillars of dealership profitability highlights the importance of a motivating pay plan to ensure that you get and keep the right talent in your dealership. Hiring the right talent in dealerships To emphasize, the right talent will enable you to make more profits and create value for your dealership to help you stand out from the crowd. Such as providing an exceptional experience to customers on the sales floor or ensuring customers’ needs are met and matched with the right products. Additionally, data-based hiring will provide you with relevant information to understand the candidate beyond their resume. The assessments offer rich data on candidates’ strengths, limitations, and personality traits. Evaluating how well the individual would fit with your department, team, and work culture before hiring is critical. More importantly, a professional interpretation of the assessment data is the key to identifying and placing the right talent in the right role. A proper reading of the data would yield the best hiring, retaining, and promoting decisions. PRO Consulting has been supporting the hiring and retention of the dealerships’ staff. With data-based hiring, the dealers have experienced raised productivity and profitability. Contact us to find out how we can help you identify and place the best candidates aligning with your dealership culture and business.

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Hands portraying dealership employee hiring and development

Your Workforce: It Just Might be the Best Investment You Will Ever Make.

The road to dealership success is constructed with proper hiring practices, employee development, and retention. Dealership employee development and proper hiring is an investment that will deliver tremendous benefits. Without a doubt, you have given it a thought and strived to raise employee efficiency and retain them for longer. However, what if you had a proven method to identify the right talent?  If you had an unswerving strategy to place your hire in the role where they would perform their best and positively impact your profitability? If we tell you there is a way to eliminate all the guessing work and annoying and time-consuming processes of hiring and placement. Would you still opt for the traditional, tedious methods? Nobody like to see their employees underperform or leave for a more satisfying role. Put an end to your tiresome and ambiguous hiring and placement process. There is a reliable and no-nonsense way to recognize how the candidate fits your team, culture, and work pace. Will the candidate contribute how you expect, or will they go above and beyond? How to ensure you have employees to maximize your profitability and provide exceptional service to your customers? You can obtain those answers through a proven assessment. A cognitive and personality assessment can give you more insights than you would think into a candidate’s potential and traits. Attributes such as collaboration, motivations, persistency, and more can be easily evaluated with such assessments . It will help you discover a candidate’s strengths and limitations. Evidently, recruiting employees who are driven and genuinely excited about their work produce better results. Motivated employees can lead to increased productivity and allow a dealership to achieve higher levels of output. Dealership employee development and right hiring could make a huge difference. Traditional hiring vs. data based hiring To give you a scenario, you hire an experienced sales manager. This manager has worked through several stores in the town and highlights their migration from store to store as an achievement. However, he comes with his own bag of habits or negative traits that he has absorbed over time from his peers and bosses. Furthermore, the candidate is good at hiding it at the interviews. Once you hire them, you realize that the new hire is good at disappearing from the sales floor from time to time, avoids training, and neglects the dealership’s goals. Consequently, you realize that all your time and resources in hiring this candidate went down the drain. The good news: you can take control of your hiring practices so that you can get an accurate understanding of the person before you hire them. To emphasize, taking advantage of a recognized assessment will allow you to place the people in the right role based on their qualities and capabilities. Let’s take a closer look at how hiring can be improved with the help of cognitive and personality assessments. Quality practices to hire quality candidates Employee turnover is a huge problem in the automotive industry. Therefore, to attract quality candidates, you need to change your hiring practices. Look over your current employees and assess if you knew their strengths and limitations better. Would you not place them in a role better suited to produce higher results? Personality and cognitive assessment are great tools to improve your hiring practices significantly. This tool will provide valuable data to make informed decisions and keep the guesswork out. Interpretation of results for efficient dealership employee development and hiring Assessment is only half of it. Correctly interpreting the results is a significant part. The assessment measures the candidate’s personality traits and maybe even gives you a brief remark on their personality type. How would you successfully use this information in your department? This is where professional consulting comes in handy. A professional interpreter can tell you how a specific personality type, say, ‘Analyzer,’ will fit in the sales or F&I department? Wouldn’t it be better to get an in-depth view of what this person could do to close deals or present F&I ancillary products by quickly evaluating the client’s needs? Consultants can draw a clear sketch of where this candidate would perform best based on their traits. Data based training and development Whether product sales or F&I, one of the core functions of your staff is to understand customers’ needs to serve them better. Similarly, the development of your employees should also be done based on their individual needs and traits. Taking a data-based approach to learning your employee’s potential and characteristics would help provide customized training. PRO Consulting specializes in training dealership staff based on data insights. In terms of employee performance, the results of tailored training have been significantly higher than traditional training. On the other hand, retaining efficient employees is another major challenge that dealerships face. The turnover rate costs dealers millions of dollars, and the current atmosphere is creating a revolving door of retail automotive talent. A COX Automotive staffing study shows, the sales consultants’ turnover rate is 67%, and F&I and other dealership roles are between 38% and 40%. It demonstrates that dealers need to take an unbiased look at their hiring practices, compensation plan, and overall culture or risk of losing talent to other dealerships or industries. Some of the strategies to decrease turnover are: Set realistic expectations in the job description Utilize cognitive and personality assessment to vet candidates before you invest your time and efforts Assess employee’s potential and traits to provide customized training Conduct regular check-ins to track progress and provide feedback Positive impact of dealership employee development and right hiring practices: Setting clear expectations and providing resources and training would allow employees to enhance their sales process, handle objections and close more deals faster. In addition, regular training and engagement with managers will make them feel valued. As a result, they will be more likely to succeed in their job, stay longer, and contribute fully to the dealership’s profitability.

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