We would all agree the industry is enjoying incredible profitability as a result of an almost perfect vehicle supply versus demand dynamic and new and used vehicle grosses being the best they have been in 20 years (at least).
This follows a rough period for the industry, where the average net to sales was less than 1%, and many Dealers were struggling to break even. As history has shown time and time again, the Dealers that were enjoying better than average returns were those who remained focused on the process and continued to squeeze the lemon for every last drop.
With vehicle grosses as strong as they currently are it is easy to become complacent and the attention to detail and drive to do the “boring things” well can diminish. When I say boring things, I’m referring to the basic parts of the process that in tough times separate the benchmark Dealers from the average ones. As an example, are you still doing and measuring the following:
- tracking leads and follow up times;
- 100% introductions to F&I and Aftermarket;
- contacting customers who out of warranty or finance;
- contacting service customers for next service bookings;
- contacting customers post their dealership visit for customer satisfaction feedback; and
- monitoring grosses and questioning exceptions.
This is by no means a complete list and every department has a list of “boring things” to do on a daily basis, which is what contributes to their success in good and bad times.
While Dealers in the main have replenished reserves over the past 12 or so months, and you should feel entitled to enjoy the rewards, now also represents a great opportunity to reinvest into your people and processes to establish an even greater platform for future success. Who knows when, but we all accept the market and profitability will likely return to historical levels, so those Dealers that have made most of this time and continued to development their people and processes should be well placed for whatever lies ahead.
This article is written by Randall Bryson, Partner, BDO Automotive.