Get the resources you need to drive your dealership growth and professional development from our team of automotive experts. Partner with your trusted dealership consultants and take your dealership to the next level.

A person ensuring profitability in inventory shortage

Get Your Profits Back on Track: Strategies to Raise Dealership Profitability in Inventory Shortage

Market, car sales trend, and dealership profitability influenced by inventory shortage and high prices  New vehicle sales for September 2021 are expected to decline 25%, hurt by a shortage in inventory even as consumer spending remains strong, reported JD Power and LMC Automotive in a joint forecast. Thus, the dealership’s profitability in inventory shortage could be impacted. “September results show that there are simply not enough vehicles available to meet consumer demand,” JD Power said in a statement. The gap between supply and demand is rising and is causing a record high price of new vehicles. According to a new report from Kelly Blue Book (KBB), the average transaction price (ATP) for a new car in September was up nearly 10% from a year ago, reaching $43,355. Additionally, the sales of new vehicles decreased compared to the pre-pandemic era, squeezed by chip shortages and high prices. Therefore, it is critical to be creative to ensure dealership profitability in inventory shortage. Chart source: CBS News Average used car price sets another record Offering used cars seems to be an obvious choice for dealers. However, procuring quality used cars have been a challenge in itself. Furthermore, the prices for used cars are heating up, and affordability is decreasing. According to KBB, the average listing price for a used car rose to $25,829. Furthermore, the older, high mileage cars are in the shortest supply. This shows, affordability is a significant factor for many consumers, and they are looking to buy a car that fits their budget even if a car is high on mileage. Mitigate the loss of retail units and revenue The chip shortage has hit the car manufacturers and dealerships. However, if the last year has taught the industry anything, it is that the auto industry can move quickly to adapt to the changing scenario. The dealerships are doing everything in their scope to meet the needs of the consumers. From going fully digital to delivering vehicles at home, dealerships have transformed to serve their customers and maintain profitability. The shortage of inventory has undoubtedly impacted the sales and profits of the dealers. But there are ways you can mitigate the loss of retail units and revenue. The inventory shortage is out of control, but how you respond to maintain profit is not. Here are some of the useful strategies for you: 1. Service Drive Sales: Collaboration is multiplication. —John C. Maxwell. Service drive and F&I departments have different environments and business objectives. But it is essential to remember that everyone is still part of the same dealership team. Hence, working together with other departments will help everyone grow profit and serve customers better. Educate service personnel on what to sell, when, and how. Notably, discussing additional benefits of doing so may be a good idea, especially in commission-based service departments. With a strong collaboration among service and F&I departments, you could help the customers see the value in finance and insurance products. For instance, when a customer drives in for their vehicle’s service, it would be beneficial to offer them valuable products such as high mileage coverage, tire and wheel coverage, and paint protection based on their vehicle condition, mileage, and driving habits. This would be an effective way to raise dealership profitability in inventory shortage. 2. Create value for your customers: The more you focus on the value of your product or service, the less important the price becomes. – Brian Tracy With a change in consumers’ vehicle retention and driving habits, it is critical to understand what creates value for your customers. The dealership should use reasonable effort when assessing client needs. This will allow you better match the products to consumer needs. For instance, know what vehicle service contract (VSC) your customers currently have and what they might need next. In addition, customized programs serve a client’s individual needs, including market-driven options that complement manufacturers’ programs, such as Diesel Wraps, Extended Power Train Wraps, Certified, and Lifetime Wraps. 3. Add non-cancelable products to your portfolio: F&I is a significant stream of revenue, especially in this market condition. The best way to make up for the loss of profit from inventory shortage is to increase sales of non-cancelable products and warranties. We see that some pre-loaded and non-cancelable products, such as BrakePlus and EverDrive, have high penetration rates, as high as 90%. Moreover, in the long run, these sales add up to more guaranteed revenue. More information on BrakePlus follows: Your Value: Increase your front-end profit by $250 per vehicle 70%-80% penetration Noncancelable, re-insurable*, pre-loadable* *Contact PRO for details on how BrakePlus can work for your service, sales, parts, and finance department. Your Customer’s Value: Improves safety from other drivers while on the road Decreases chance of rear damage to the vehicle Product Warranty may be purchased with the system for added coverage PRO Consulting can help you mitigate the loss of retail units and drive your profitability. We have been in the auto industry for over three decades. We leverage our expertise in supporting the dealers to find unique solutions to raise their revenue significantly. Get in touch with us to find out how we can help you grow your dealership.

Read More
An old car portraying the average age of cars in the US

The Good, Bad, and Ugly Truth About the Average Age of Cars in the US

The average age of cars and light trucks in the US rises to 12.1 years. What does it mean for your dealership? Americans are keeping their vehicles longer The average age of cars in the US hit a little over 12 years. While the average age of the vehicles has risen steadily over the last 15 years, the trend has accelerated due to a steep decline in new vehicle availability and sales, according to IHS Markit, a leading data and information provider. Improved vehicles quality is another contributing factor. As a result, the consumers are comfortable keeping their cars and trucks longer. Does the rise in average age of cars in the US present a threat or an opportunity for dealerships? The answer depends on how you capitalize on it. Two decades ago, a car might have changed hands once or twice in 100,000 miles. Nowadays, it is not uncommon for a vehicle to have multiple owners and last for over 200,000 miles. By the time the vehicle reaches its third or fourth owner, there is still meat on the bone. Furthermore, according to IHS Markit, a decade ago, the average age of vehicles in the US was 10.6 years. In 2002, the average age was 9.6 years. With the economy struggling due to the pandemic and limited and pricey options for new vehicles, the trend is expected to continue. Additionally, the average age will likely be significantly higher than what it was a few years ago. The big question is, how does this impact dealerships? Is this bad news, good news, or a mixed one? The answer lies in how you look at it. From a customer-centric lens, there is a lot you can do in this situation to keep your customers satisfied as they hold on to their vehicles longer. In addition, it would also present you with opportunities to increase your profitability. Here are some of the strategies you can adopt to help your customers while keeping your profits higher: 1. Ask the right questions In an inventory situation where customers do not have the options they did, it is critical to ask the right questions to help them find a vehicle that would ease their decision-making. Asking closed-ended questions would help shorten the buying process and assist customers in choosing a vehicle that best matches their desired one. For example, asking, “are you looking to buy a car in a light or dark color?” In addition, implementing a choice-close strategy, i.e., asking questions with two options, would keep the interaction positive and the customer happy with control over choice. 2. Create needs awareness Customers are perceptive, and they can quickly tell if the dealership personnel are helping them or selling them. Significantly, the moment a customer feels heard and understood; buying comes organically. This creates a more fulfilling experience for customers and increases the likelihood that they would recommend your dealership to their friends and family. Therefore, when creating needs awareness, tailor the messaging and product packages to be meaningful to your customer. For example, if a customer is buying a high mileage used car and low monthly payments are essential to them, creating awareness of products such as appearance protection and high mileage vehicle service contract (VSC) would directly meet their needs. Asking questions in the following manner could help in making customers aware of the need for the product. If this vehicle needs to be taken into the shop, do you want to pay for it, or do you want us to pay for it? Do you want to pay for all of it or some of it? Products that add value to your customers and grow your PVR In the current scenario where the vehicle is held longer, a product that keeps the car looking good longer, like Cilajet/Express Appearance Protection would benefit your customer. Your customer’s value: Long-lasting appearance protection, making it easy to keep clean and shiny Provides an additional $500 trade-in value guaranteed at selling dealership Performance guaranteed for five years for new cars and three years for used cars How you sell it: Walk your customer through a scenario where Cilajet’s protection would benefit them. Educate your customer on the factors that determine the trade-in value Your value: Brings the customer back to the dealership for repairs Available for all vehicle makes Protects trade-in value High CSI Product promotes repeat and referral business Non-Cancelable (no chargebacks) Another valuable product for a customer purchasing a high mileage vehicles is Essential Enhanced High Mileage Vehicle Service Contract (VSC). It protects the customer from expensive repair costs resulting from the most common malfunctions of high mileage vehicles. Powertrain to exclusionary coverage is available with terms limited by time and miles. Your customers’ value: Coverage for likely repairs Roadside assistance up to $100 per occurrence Discounted deductibles to return to the selling dealership Your value: Vehicles that come with guarantees sell at higher prices Buyers become repeat customers by returning for service Your customers’ high-price repairs are taken care of 3. Present F&I products optimistically: Joe St. John, Business Development VP, StoneEagle, stated that data through May shows soaring F&I profits. The average F&I profit per vehicle sold in May 2021 was $400 higher per unit than in May 2019. Moreover, the sales of F&I products per purchase have also increased. StoneEagle data also shows that consumers now buy 1.49 products per vehicle, up from 1.23 in 2019. This shows that consumers have a lower risk tolerance than in the pre-pandemic era and they want to be in a favorable position when the unexpected happens. Therefore, offer F&I options with conviction to help consumers offset the risks. Overall, the way consumers buy has drastically shifted in addition to the average age of cars in the US. Adapting your dealership to accommodate these changes will keep you fluid and robust. We have been providing profit-enhancing strategies for over three decades. Reach out to us today to learn how we can provide you with

Read More

Why Taking These 4 simple Steps Could Boost Your Dealership Sales 

Implement these strategies now to boost dealership sales and thank us later. Every business wants to grow more, succeed, and increase profit. Dealerships are no different when it comes to profitability. Yet, there is no simple formula to boost dealership sales. Your profitability depends on multiple factors, and identifying such factors is not as simple as it may sound. As they say, the road to success and the road to failure are almost exactly the same. The only difference is the road to success is much longer. Boost dealership retail and f&I sales by following these 4 steps: 1. Level up your employees’ skills The process of improving a dealership’s profitability starts with the right person in the right role. To emphasize, hiring demotivated sales and service personnel can diminish customer relations and trust and influence your profits negatively. On the other hand, if you have the right people on your team, you could close the deals faster and build a strong relationship with the customer. Additionally, having skilled and adequately trained personnel would significantly grow the prospects of making a second sale. Significantly, a dealership with well-trained employees is like an equipped handyman who has all the necessary tools and techniques to get their job done. To emphasize, employees do not come to work to fail. They either possess insufficient training, or they might be in the wrong role if they have been trained and are still underperforming. It requires a management decision. Therefore, personality and cognitive analyses to place the right person in the right role are critical for recruiting and retaining a strong workforce. As the automotive industry insider for over three decades, we cannot point out the benefits of employee training enough. For example, well-trained personnel efficiently grow customer satisfaction. Consequently, a satisfied customer can become a brand advocate for your business. They cost less to serve and are typically willing to pay more than other customers. They often act as word-of-mouth marketers for your company and are highly likely to refer their friends, family, and acquaintances to your dealership. 2. Leverage technology and expand your market with AI-powered tool  What if we told you that you can get more than your fair share? What if we told you that you could have a bigger piece of the pie? You will never be asked to trade off your ethics or your moral standards. Instead, leveraging AI-based technology can provide you with data to get in front of your shoppers first and reach out with relevant offers and messaging. Additionally, putting your highly trained people in front of highly qualified prospects—based on the data insights would create the perfect opportunity to get “more than your fair share.” In other words, instead of closing 2 out of 10, they can close 3 or 4 out of 10. Furthermore, advanced tools can equip you with data to win more business and insights into what channels your shoppers are using, what are their motivation to buy, and ways to connect with your potential buyers before your competitors. An AI-powered marketing tool can help skyrocket your sales and help you pave your way towards success. Reach out to us using this form  to learn more or schedule a demo of this marketing tool. See for yourself how your dealerships could significantly benefit from advanced AI technology. 3. Introduce F&I with conviction to boost dealership sales To grow your dealership profit, you need a strategy for your finance and insurance products and departments. Evidently, change in the customers’ driving habits, and behavior is influencing the purchasing decision now more than ever. As a result of the pandemic, people’s risk tolerance has shifted towards the conservative direction. In other words, people are less willing to take risks. Therefore, it is an opportunity for the F&I staff to present useful products, help them understand the benefits, and reduce your customers’ distress. GAP coverage, vehicle service contract (VSC), and ancillary products such as Brake Plus and Forever Start could serve the unique needs of your customers and enhance their overall ownership experience. For example, selling about three products per vehicle retailed equates to earning an average of $200 to $300 more PVR. Offering products that speak to what the manufacturer does not cover can close the deal faster and grow your profits. 4. Stay aware to stay ahead Yes, you have been in the auto industry for a long time. Yes, you have gained good experience. Yet, there is always going to be more you can be aware of to beat your competition. Staying ahead of the industry trends, cutting-edge products, and beneficial services could make a huge difference. Knowledge of little details such as product features, benefits, and coverages could do the trick. For example, do you know that you could offer GAP coverage of higher value—150% LTV, which has better coverage, and less risk at almost the same price as GAP 120% LTV? You can access the GAP 120% LTV vs. 150% LTV comparison here. We can help you boost your dealership sales You must have heard information is power? Staying in the know will not only increase your profit but also increase the trust of your customers. The PRO team specializes in identifying opportunities to make sure you stay ahead in the game. Contact us for the inside story on what makes a dealer more successful than the other and how you can claim your seat among the top dealerships.

Read More
A balance to measure weight

GAP Claims are Rising: How to Stay Ahead of the Market Tides

GAP claims are rising. What products are you offering? How are they going to impact you and your customers?. GAP claim are rising: The influencing factors GAP claims are designed to protect consumers by paying the difference or the gap between the value of a vehicle at the time it is totaled. That is, stolen or not recovered vehicle value and the balance owed to the loan. For dealers, the product helps customers who suffered from the total loss back to the market for a new car. To emphasize, the frequency of GAP claims is rising to new levels. This could mean both your dealership and your customers could be at risk of significant and unnecessary hits. FI magazine reported: Between 2014 and 2018, the average new-vehicle GAP claim payout grew 19.5% or 4.7% per year. For used vehicles, in the same timeframe, the GAP payouts increased too. It rose by 18.5% per year, and producing a four-year total increase of 95%. Experts blame factors such as insurance companies becoming more likely to total vehicles due to rising replacement parts complexity and related costs. In addition, a greater number of complex vehicles on the road, higher collision rates, and a rash of severe weather events add to the claims surge. A high growth in GAP claims could also be a result of high car prices. This means, customers are paying too much for cars due to the rising costs because of inventory shortage. Therefore, it is critical to ensure that the products you are offering will provide higher coverage to your customers in a situation like this. It is essential to consider why better GAP coverage is critical for your customers and you as dealership personnel.  • GAP coverage protects your customers if they owe more on their loan or lease than the value of their auto at the time of loss. • The need for the coverage is increasing. Consumers are willing to pay more for vehicles they desire and are ready to accept longer terms and higher interest rates to obtain those vehicles. • Discussing this difference in GAP coverage with your customers upfront prevents difficult conversations in the event of a claim. What should you offer: Could you be offering something with higher value, better coverage, and less risk to you at the same price? GAP with a 120% LTV vs. GAP offering 150% LTV makes a considerable difference may be nearly the same in cost. The right GAP product will improve coverage for your customer, your relationship with them and better protect your profits. Consider the following comparison between the two typical GAP offerings, namely GAP 120% LTV and GAP 150% LTV, and which coverage would benefit you and your customers more. GAP analysis chart for your and your customer’s benefit Year one GAP risk evaluation: The comparison between the 120% LTV and 150% LTV clearly shows that 150% LTV GAP coverage would benefit your customers significantly. Not every customer might fully understand the difference or the benefit of choosing one coverage over the other. Hence, demonstrating the math would give much-needed clarity. Significantly, showing genuine interest to your customers in helping them choose the better plan. It would build trust and foster loyalty in them towards you and your dealership. On the other hand, as dealership personnel, it would save you valuable time. Moreover, it will help you avoid uncomfortable dialogue with your customers when they file for a GAP claim. Stay Ahead of Marketing Tides The PRO team specializes in identifying opportunities like this to make sure you stay ahead of market tides that could affect your profit. Contact us for the inside scoop on what makes a GAP product work for everyone.

Read More

Transition and Improve Your Dealership From Being Good to Great

5 strategies to improve your dealership from being good to great Greatness is not a function of circumstance. Greatness, it turns out, is largely a matter of conscious choice and discipline— James C. Collins. Transform and improve your dealership from being good to great: Every dealership strives to grow profits, and they have their own set of approaches to attain growth. The definition of success and methods to obtain the perceived success varies from dealer to dealer. However, it is always a top challenge to find the key to being better than the rest and transitioning from being merely good to being a great dealership. In other words, it takes efforts and effective strategies to improve the dealership from being good to great. It is an easy guess that there is no single proven formula to be a great dealership. The transition from good to great require making conscious choices, consistency of actions, and discipline. In addition, the combination of the right people and generosity are other contributors to transform your dealership from good to great. Let us take an in-depth look at what characteristics and strategies support a dealership’s transformation for the better. 1. Being proactive and building opportunities: Customers lie at the heart of the automotive business. Therefore, providing a meaningful experience to the customer forms the basis of high profits. Car buyers seek convenience and simplicity in buying online and in-stores. As per a Cox Automotive report, 54% of car buyers would buy from a dealer that offered their preferred experience over the lowest price. Furthermore, buyers spent a considerable amount of time on the internet, and more than one-third of car buyers visit just one dealership before purchase, reported PRNewswire. So, the question is, how do you ensure your dealership is the one they visit? The answer rests in delivering convenience and being more accessible to your potential buyers. Utilize digital mediums to offer meaningful and transparent information via your web channels and robust research tools they want. Hence, proactively investing in technology and tools to help ease your customers’ research process is a way to building opportunities. Additionally, installing help desk services such as web bots to quickly answer or address customers’ queries could be an effective strategy to enhance potential customers’ experience to win their business. Remember: Managing your problems can only make you good, whereas building your opportunities is the only way to become great— James C. Collins. 2. Identify your most important assets: The right people to improve dealership from good to great Getting the right people on the bus, the wrong people off the bus, and the right people in the right seat is one of the most critical factors to transform your dealership drastically. Firstly, implementing a data-driven approach while hiring would add to creating a productive team of employees. Utilizing personality and cognitive assessments would lead to not only identifying the right people but also placing them in the right role. Consequently, it would enable you to help your employee perform their best in the position that aligns with their personality and cognitive capacity. However, taking the help of those assessments is just the first step. Interpreting results and translating them into a meaningful plan is very important. Understanding how to better utilize the person’s strengths and safeguard against the weakness requires experienced eyes. Reading the results to place the person in a suitable role, for example, personality types– analyzer, maverick, craftsman, and controller does not suffice. Efficiently comprehending the traits against the role’s requirements takes effort. A professional consultation would make a massive difference in that scenario. Significantly, even small changes could improve dealership from good to great. Remember: People are not your most important asset…. the right people are— James C. Collins. 3. Solid assessment and decision-making ability Continually assessing your processes to shape your decision is crucial to taking your dealership from good to great—weighing opportunities and threats, assets and liabilities, strengths and weaknesses all factors into the decision-making process. Dealers’ decision-making is not limited to inventory; they need robust retrospection to make the right decision for all their stakeholders- employees, customers, suppliers, and providers. Notably, it would benefit from asking oneself questions such as: How much has my current big box provider costed me, have my profit KPIs and numbers grown since they started working with me? How easily can I access my reinsurance funds? When was the last time I saw my provider’s rep? How much is my current provider invested in my employees? Do they train them based on individual performance? What has my current provider promised versus performed towards increasing my profitability? Remember: Bad decisions made with good intentions, are still bad decisions. — James C. Collins. 4. A disciplined culture to improve from being good to great A dealership’s culture is most often determined by what the dealer and their employees bring to work. For instance, a winning mindset and discipline in attaining goals create a growth culture for everyone involved in the dealership. An exceptionally positive workplace environment has undeniable benefits and distinguishes a good dealership from a great one. A disciplined culture is a major ingredient to improve dealership from good to great. Fostering a positive culture makes your best people want to stick around. Moreover, creating a culture centered around customer experience and giving your employees the power to do what needs to be done to enhance customers’ experience empowers them. However, trusting your staff with authority often means ensuring they have got the proper training they need to make those decisions. A disciplined work environment facilitates management as well as employees being on their best behavior. Therefore, leading by example and setting high standards of conduct among workers is a principle of greatness. Remember: A culture of discipline is not a principle of business; it is a principle of greatness. — James C. Collins. 5. Generosity and giving back to the community: A renowned PNW dealer received the Robert P. Mallon Dealer of the Year award

Read More

A New Gear to Skyrocket the Profitability of Your Dealership: a Valuable Marketing Tool for Dealerships

Get deep insights into your potential customers through this marketing tool for dealerships. Have you heard of the saying, there are no traffic jams along the extra mile? This is exactly what this new gear could do for you. The digital, AI-powered tool gets insights into your customers like no one else does so that you could go an extra mile to learn about your customers. It can help you put your inventory in front of the right car shoppers first and not stop marketing to them until they buy. Additionally, this marketing tool for dealerships could provide you valuable information such as motivation to buy and current vehicle. You might have tools to learn what channels your shoppers are using or who has visited your website are what have they browsed for. But do you know— Which shoppers are active in your market right now? Who is shopping, their name, contact? What are they shopping for, make, model? When and where they are shopping, days in the market, shopping behavior, intensity? Having in-depth information at your disposal would not only facilitate in identifying your target customers and reaching out to them before your competitors do but also in shaping your messaging and initiating a meaningful conversation that sells cars. This is what the highly advanced, Artificial intelligence-based tool could do for you to increase your sales and profitability. If used efficiently, the tool would enable you to do better in core areas of marketing, namely: Positioning Place Brand’s promise and value Measurement/Results A valuable marketing tool for dealerships could help you excel the following crucial areas of marketing: Get in front of your shoppers first— Advanced audience identification technology lets you reach out to shoppers inside and outside your database within 24 hours of them entering the market. Furthermore, this marketing tool for dealerships knows who is shopping, what they are shopping for, how you could effectively position your brand, and where they are in the buyer’s journey so you can engage with them at the right time and before another dealership else. Omnichannel, cross-device targeting— Shoppers actively use multiple channels such as social media, website, email, and devices. Identifying the proper channels and ways to communicate with them would give you an upper hand over your competitors. Brand’s promise and value: Relevant messages and offers— Shoppers are online day and night and across more than six devices. They expect brands to move with them. With dynamic media and creative optimization, you could create messaging that resonates with your customers and appeals to them to take action. Attribution and results— Finally, attributing digital visitors is not a problem with this tool. It tracks every marketing touchpoint to deliver attribution for you to see the results. In addition, the tool gives you rich data based on about 90% of U.S. connected devices and by following over 250 million potential shoppers. Once a shopper is matched to a dealership, the tool deploys omnichannel marketing. As a dealership marketer, would it not make sense to spend your time where it is more profitable and generate the highest ROI. So, it is important to consider questions such as How can I learn about my target audience? How can I reach out to them before my competitors do, and close the deal? What message would resonate with their motivation to buying a new vehicle? Most importantly, is there a tool that can help find all those answers? The answer is YES! There is a marketing tool for dealerships that could help skyrocket the profitability.  We have a tool to answers all your marketing and audience-related questions and some that you did not consider. We are committed to dealerships’ success in all realms. In addition, we are here to help you make the best use of your marketing efforts by utilizing the resources where it matters the most. Call us today or reach out to us using this form to learn more and schedule a demo of how this marketing tool for dealerships could help you significantly grow your profits.

Read More