Manage for Results in ANY Environment

The auto industry’s longest stretch of growth has come to an end.

According to the automotive publisher Wards Auto, the auto industry has experienced the longest period of growth since the infancy of the automobile. “The industry cycle has peaked,” says Adam Silverleib, Vice President of Silko Honda, in the New York Times Article, Car Sales End a 7-Year Upswing, With More Challenges Ahead.

This slowing of growth can be attributed to a combination of factors, including a saturated market, and signifies that the industry is now in a new “push” phase, according to analysts with Edmunds.com. Increased discounts and incentives mitigated last year’s drop in sales with discounts and incentives equaling 11.5% of sticker prices, up from about 7% a few years ago, according to Mark Wakefield, global co-head of automotive and industrial at AlixPartners,

Last summer our founder, Alan Ram, predicted an eminent tightening of the industry in an article entitled The Writing Is On The Wall. In it he reflected on how good times form bad habits, and predicted a cardiac event for the industry in the not-too-distant future. Alan questioned, are Dealers and General Managers going to wait to make the changes that will be necessary to not only survive, but thrive? Let’s face it, most dealerships biggest “expense” is missed opportunities to do business.

It’s Not Who Sells the Most, It’s Who Spills the Least

As Alan pointed out, there are three huge areas where car dealerships can stop “spilling”:

1) The Telephone

The inbound sales call is a huge profit leak for most dealerships. Take the time to sit down and listen to call monitoring to ensure your people are maximizing those opportunities and bringing customers into your showroom. Successful dealerships treat inbound calls as seriously as a customer in the showroom. A team that is trained to direct the call to a customer coming into the dealership is critical in today’s automotive environment. Alan wrote:

“While most managers will chase a customer all over the showroom and out to their car in order to avoid missing a deal, they don’t seem to worry nearly as much about customers getting blown out all day every day on the phones.”

2) Unproductive “Waiting” Time 

The culture at most dealerships today is to stand out front of the showroom and wait for business to walk in, “1992 style.”

Customers, however, are visiting less dealerships in person than they ever have; they’re researching online and on social media, and they’re back to the phones with click to call off mobile. Rather than just standing by the front door waiting, successful teams are bringing in these customers proactively. The most successful dealerships in today’s business environment aren’t waiting for things to happen, they’re making things happen.

“If your salespeople are spending hour after unproductive hour standing around waiting for customers, you need look no further than your managers for the reason. Those are the same managers who are most likely sitting inside “hoping” someone brings them a deal today.  Nothing will slow you down faster than managers who don’t really know how to manage and drive activity.”

3) Working Service Back to Sales

Salespeople and Managers maintain laser focus on the limited pool of opportunities in the showroom, while there is exponentially more activity coming in the back for service. These are people that, if presented the right opportunity, the right way, at the right time would very likely buy a car. These people are more likely to bring you a fair gross profit because they have not yet shopped your competitors or done research online. If 3% plus of your service clients are not converting to sales, you’re missing a huge opportunity for not only volume but gross profit as well.

The tightening of the car business in 2018 means you must be proactive and shift from how things have been done in the past.

If you’re serious about doing the right things come to one of our Management by Fire events where we’ll show you how to manage activity, drive traffic to the showroom, and hold your team accountable to results. More information can be found at ManagementbyFire.com or by calling 866-996-4665.

Laura Madison

Vice President, Sales and Training

Alan Ram’s Proactive Training Solutions