Car Dealership Guy

Auto loan availability is heating up ??

It’s as if a dam has burst. Auto lenders have suddenly turned more aggressive. Post-election, three separate lenders approached a friend who’s the COO of a 40+ store dealer group … All three urging him to send more consumer applications—some even asking for applications that don’t fit traditional underwriting profiles.

As dealerships standardize, acquisition efforts may require a new focus. Ourisman Automotive Group's COO, Jack Ballinghoff, suggests targeting areas with less competition and fewer smart players. Here's how dealers can gain a competitive edge. ? Stream the Car Dealership Guy Podcast now on your favorite platform.

As recalls continue to rise, there may be growing opportunities for dealers. CEO of WarrCloud Inc. Jim Roche suggests that actively managing recalls can grow service revenue. Here's how dealers can maximize recall work and enhance their service departments. ? Stream the Car Dealership Guy Podcast now on your favorite platform. #WarrcloudPartner

[NEWS] Nissan is making huge cuts as it fights to stay competitive: The automaker just announced it’s slashing 9,000 jobs — around 6% of its global workforce. The reason? With vehicle sales slowing, production costs rising, and inventory piling up, Nissan is feeling the pressure. And its financial strain is steep. CEO Makoto Uchida is calling it “a severe situation,” and plans to cut costs by 400B yen ($2.6B USD) to get back on track. Bottom line: With a leaner operation and fresh models on the way (hybrids included), the automaker hopes to strengthen its market position. Read today’s top automotive stories, presented by Overfuel: https://lnkd.in/eTc5N4u8 (Data source: Nissan / Reuters)

[NEWS] Rivian stumbled last quarter but is betting on a swift turnaround: The automaker’s Q3 earnings fell below expectations, with revenue and production targets both taking a hit. Why? Supply chain snags, especially a motor component shortage, slowed down deliveries. On top of that — losses are mounting, with each vehicle costing Rivian $39,130 — up $9K from last year. But the automaker isn’t out of gas yet… It’s backed by $6.7 billion in cash, including a $1 billion boost from Volkswagen. And CEO RJ Scaringe remains confident — saying Rivian has made key strides in cost structure improvements thanks to new manufacturing processes. Big picture: Rivian's outlook may be bumpy for now. But, the upcoming $45,000 R2 crossover could be a long-term game-changer. Read today’s top automotive stories, presented by Overfuel: https://lnkd.in/eX29tYV4 (Data source: Rivian / CNBC)

I can’t believe I’m finally doing this… Car Dealership Guy x Sam D'Arc

Are dealers walking into a profitability trap? After a couple of years of supply chain chaos, record profits, and inventory shortages, we’re supposedly heading back to "normal"… Pre-2020, dealers were grinding on sky-high incentives, shrinking margins, and overstocked lots. Nostalgic yet? And as we edge closer to what used to be “normal,” it’s clear — Going back to the old playbook could spell trouble. If dealers want long-term profitability, it’s time to break from tradition. Because the reality is — dealership profits are dropping. Margins on new cars averaged $2,326 through the first nine months, down 33.5%. But still way ahead of pre-pandemic days. What's driving profits down? Inventories are climbing, giving buyers more choices — but it also means fewer cars are selling above MSRP — aka slimmer profits. And with more cars in stock, costs are piling up... By Sept., floorplan expenses averaged $109,000 vs. last year’s $24,000 profit. The silver lining? Dealers haven’t lost all pricing power. Inventory is still about 20% below 2019 levels. But not all brands are created equal and nuances make a difference. Nissan, for example, is struggling. Its U.S. dealerships saw profits dive to a 15-year low — still wrangling with excess inventory and a lack of competitive products. On the other hand... Toyota and Lexus are keeping margins and throughput high. Luxury brands, too, are weathering the shift. Their average gross profit on new cars is $5,573, only down 17%. What's the takeaway here? Dealers’ top priority right now is protecting profitability across the board. But there’s a catch — Many "pandemic hires" from 2021-2022 have only known the high-demand, easy-commission market. And with that type of economic environment mostly gone — Many stores with inexperienced talent find themselves “weak and bleeding,” as one dealer told me. In the used car market, things have been more challenging since prices have corrected much faster. The used car market is finally stabilizing after a rapid price correction — but they are starting to become more predictable. Leading some of the most successful dealers to prioritize volume, reconditioning, and customer retention. This could mean lower front-end profits, but this is typically balanced out in the finance office. Even F&I profits are getting squeezed with today’s high car prices and interest rates. There's room to get creative... Simple strategies, like showing a buyer an insurance quote, can lift F&I gross by 18%. Then there’s the bedrock of dealership profitability: service and parts (gross profits here are actually up YoY). With car owners hanging onto vehicles longer, demand in this area remains strong. So, what’s next for dealers? Embracing the balance by sticking to fundamentals. The days of hitting easy home runs may be behind us, but steady singles and doubles will win the long game. Read the breakdown here, together with Lotlinx, Inc.: https://lnkd.in/e6DFJh45

[NEWS] 36% of consumers are interested in buying cars digitally: But only 5% of vehicle purchases happen fully online. Why? Consumers believe that they’ll get a worse deal or find less inventory online. Consumers don’t know digital retail is an option. These are basic misconceptions… And with the right marketing, education, and tools, they could be fixed pretty quickly. Bottom line: Traditional car shopping is still the overwhelming winner in today’s market. But dealers working to make digital retail viable may be best positioned for the future. Read today’s top automotive stories, presented by Overfuel. https://lnkd.in/gbuFu5j8 (Data source: OC&C Strategy Consultants)

Even with increased inventory, new car prices remain stubbornly high: Avg. price of a new car is $48,451 — still up about 20% from five years ago. Why? 1. Rising MSRPs due to inflation and tech-loaded vehicles 2. Automakers’ focus on higher-margin models 3. Elevated auto loan rates The result? Many longtime new car buyers are still priced out of their desired vehicles, joining a growing wave of consumers turning to the used car market (or settling with heavily incentivized?new vehicles). (Data source: Cox Automotive / Bloomberg)