Profit in a Buyer’s Market: How Dealer Consulting Partners Can Accelerate Your Financial Success

Dealer Consulting Partner

“We finally have a decent supply of new cars on the lot, but my profits are taking a nosedive!” This sentiment is becoming common as the market shifts from a seller’s stronghold to a buyer’s market. While a well-stocked inventory is a welcome change, it also introduces fiercer competition. It leaves many dealers wondering:
How can we grow profitability in this new landscape?
The answer lies not just in experience but in strategic optimization. This is where dealer consulting partners come into the picture to serve as your strategic navigators, steering your dealership toward success amidst the competitive currents of the market. They diligently analyze market trends, consumer behaviors, and the evolving regulatory landscape to equip you with a robust strategy.

The Changing Market

Today, the new-vehicle inventory index sits at a record high of 75 (Q1 2024), a stark contrast to the anemic 25 of just two years ago. While plentiful inventory offers some relief, it also presents a challenge: competition. Here’s the reality: a high inventory level shifts the advantage to buyers. Shoppers have options, and dealerships must find ways to stand out in a crowded marketplace.
This is where the profitability paradox comes in. While low inventory helped dealerships command higher prices, high inventory shifted the balance of power back to the buyer. Although more cars on the lot typically mean more sales opportunities, this abundance also triggers increased competition and downward pressure on prices, ultimately challenging dealerships to maintain profitability. The result of these dynamics? A new low point of 37 for the overall profits index (excluding the pandemic shutdown of Q2 2020).

The Value of Strategic Dealer Consulting: Your Competitive Edge

Dealer Consultants go beyond experience, offering data-driven insights into market trends, consumer behavior, and the ever-changing regulatory environment.
Think of them as tailored strategists. They work hand-in-hand with your dealership, identifying your unique strengths and areas for improvement. Whether optimizing marketing campaigns, streamlining sales processes, or maximizing used car profitability, dealer consultants could provide the solutions and expertise needed to thrive in a buyer’s market.

Three Ways Dealer Consulting Partners Drive Dealership Success

1. Adapting to Market Dynamics and Consumer Behavior

Dealer consultants help you understand the shifting sands of the market and consumer preferences. This allows you to adjust your approach, tailoring your offerings and messaging to resonate with today’s buyers. Dealer consulting partners are your gateway to a wealth of knowledge and resources beyond your individual experience.
For example, the PRO Team supports dealers’ success by providing access to advanced tools like active shopper networks, which utilize sophisticated data analysis to link a shopper’s online activities with the real person behind the screen. This, in turn, translates into invaluable insights for your dealership, such as:

  • Knowing exactly who’s in the market for a new car right now within your target area.
  • Targeting potential customers by name and contact information, not just demographics.
  • Gaining insights into the specific makes, models, and features shoppers are actively researching.
  • Analyzing shopping behavior and intent, including days spent researching and online activity intensity, to determine how serious a potential customer.
  • Discover what car the shopper currently owns and their service history, allowing you to tailor upgrade or service package offers.

2. Uncovering New Profit Centers and Plugging the Leaks

Beyond the traditional focus on sales, dealer consultants can help you identify hidden revenue streams and capitalize on emerging trends. Let’s look closely at your Finance & Insurance (F&I) department. Think of your F&I department as a leaky bucket with missed opportunities. Customers who decline extended warranties, GAP insurance, or other coverage represent lost revenue. Dealer consultants can help you identify these “leaks” and implement strategies and tools to capture every potential revenue opportunity.
Take, for instance, targeted follow-ups. Not every customer makes a final decision on the spot. Consultants can help develop targeted follow-up strategies, like personalized outreach- emails or texts, to re-engage customers who initially declined coverage and address any lingering concerns. What tools do you currently have in place to effectively capture these missed opportunities?

3. Build a “Why Buy Here” Advantage

In a crowded market, differentiation is critical. Dealership consultants play a significant role in helping craft a compelling value proposition, highlighting unique offerings, and creating a customer experience that sets your dealership apart. They can help you explore extended warranties, loyalty programs, or other value-added services that make your dealership the clear choice for buyers.

One such area is the development of a well-crafted loyalty program. Imagine transforming your dealership from a one-time transaction into a trusted partner. Dealer consultants can guide you in crafting a program that becomes a selling proposition, offering a tangible and appealing reason for customers to choose your services over the competition.

Your Path to Success

For more strategies to enhance your profitability, cultivate high-performing teams, and pin down holes in your revenue streams, connect with your PRO Team. We’re ready to work closely with you to understand your dealership’s unique challenges and opportunities and develop a tailored action plan for growth. Connect with us today to start your journey toward enhanced profitability and market leadership.

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