At this year’s AADA National Dealer Convention we were pleased to host for the fifth year in a row, Dale McCauley from Deloitte Industry Services.
With over 17 years’ experience in the automotive industry, specialising in privately owned and operated motor Dealers and related family investments, we were very eager to hear Mr McCauley’s insights into the current state of the market and what makes a dealership excel.
Through the course of his company’s research, Mr McCauley has identified the current state of the automotive industry market, as well as any changes that have affected it in the past year. He found that the sale of new cars is on the up, and has been increasing for the past four years across all states except WA.
While this is positive news for those in the automotive industry, data indicates that it’s also in a constant stage of change. Quoting the iconic James Dean, Mr McCauley said that it is the ability to adapt to these changes that allows dealerships to be profitable even during difficult times.
Another visible market trend is the sale of luxury brands. Sales of Mercedes-Benz models or premium models such as a top of the range Toyota Kluga have increased by 10%.
The sale of SUV models is also at a record high, due to an increase in demand for more versatile, family-friendly vehicles. (You can find out more about this trend by reading our article titled ‘SUV Sales Continue to Soar’ in this month’s edition.)
One of the surprising changes to the motoring market is the main contribution to gross profit. Mr McCauley said parts and services provide 30 percent of the key profits for Dealers, a figure that has increased in the past year.
While the market is in a constant state of change, he said there are still some consistent methods that dealership can adopt to achieve “operational excellence”.
“While it isn’t easy, you don’t have to make it complex. It’s all about brutally simplistic planning,” Mr McCauley said.
By analysing the top five Dealers in the company database, he was able to determine what it is that makes them excel.
“You know what it starts with? They are very good at squeezing the lemon. They’re very good at taking the lemons of change and squeezing them to get lemonade,” he said.
“Interestingly, they’re not as dependent on F&I for their profitability as the average Dealer. Where they are making up for that is, they’re very good at aftermarket, they are hitting their factory targets continually.”
Mr McCauley’s parting advice to Dealers was to drive towards business benchmarks, rethink your tactics, continually raise the bar and work to satisfy existing customer needs in order to excel.