Mid-Year Industry Check-In

As the CDK Global outage continues to significantly impact many dealers’ business and ability to serve customers, we want you to know that our team is prepared to help and support our dealers where we can.?Our Insider newsletter and most recent LinkedIn post have additional resources for continuing operations. We hope you will find those helpful in navigating the CDK outage.

Keith Harmison is the Director of Dealer Performance supporting our partners in South Florida and Puerto Rico. He has driven dealership development with JM&A Group for over 16 years.

With the first half of 2024 about to close, we brought in Keith to share what he’s seeing around the dealerships he serves, his expectations for the rest of the year and what dealers can be doing to help improve performance. Let’s begin!

What trends have you been seeing around dealerships???

South Florida is a unique market in the automotive space. There are dealers who follow a very traditional sales process, utilizing tried and true techniques and basic tech. Then there are single point of contact stores, with fixed pricing and iPads, or Virtual F&I, where the consumer completes the deal via a personal device in the comfort of their home and never steps foot in a store.

My market consists of a blend of demographics and ethnicities that stretch from West Palm Beach to Homestead (near Miami) and Puerto Rico. There especially, tradition and relationships are paramount to drive performance alongside technology. I enjoy and respect the personal touch to the sales process on the island.

One thing rings true in the automotive space today - technology will continue to be crucial to the evolution of car sales and F&I.

However, at the end of the day, it’s all about the dealer meeting the consumer where they are at in the process. Being adaptable and expeditious is key. Modern consumers favor data and want questions answered in a timely fashion with the ability to move through the process quickly. On the other hand, we still have a generous piece of the market that prefers the feel of the wheel, a little negotiation, and the sense of victory driving home in their new vehicle.

What industry trends have surprised you so far in 2024??

I’ve been noticing several interesting trends around the dealership:?

Electric vehicle sales vs. hybrid??

EV sales have slowed dramatically in the US as we have crested the hype curve, while hybrid sales have increased. Hybrid technology has really come a long way too - the amount of horsepower, torque and fuel economy coming from these vehicles is very impressive.

Virtual F&I interest increases

From a finance and insurance perspective, the level of interest in a virtual F&I tool from our dealers has been eye opening. I remember being a cautious optimist years ago when JM&A first started talking about this technology and process, and now we have an entire team dedicated to its success and evolution. Dealers are really looking to improve the buying experience. They now include information about F&I products on their websites in addition to when these products are offered in the store.

Margin compression causing a greater focus on people and process

Margins are receding, especially on new cars, and although OEM incentives are slowly coming back, interest rates are still high. Inventory has been steady, at least in South Florida, and discounting prices to stay competitive is necessary. A heavy focus on the basics and team synergy between the finance, sales and front desk staff is particularly important to drive performance in the dealership.

That’s where we come in. Our field associates executing at a high level alongside our partners is at the root of our success. And with our Consulting Solutions team providing best-in-class training for all aspects of the dealership, JM&A can really take performance to another level. We have also recently partnered with RockED to provide self-paced training content that can be pushed to store associates via their mobile device in bite-sized, easy-to-understand nuggets for a more targeted approach to learning and development.

Any expectations for the industry in the second half of the year?

There is some pent-up buyer’s demand due to current interest rates and payments that far exceed most people’s budget. The moment that the consumer recognizes that rates are going to adjust down, watch out. The question is, can the supply keep up with the demand? Customers who are looking for good money on trade-ins, but may have paid over sticker during supply shortages, could face a challenge depending on the market. If it’s a later model vehicle in higher demand, that could be beneficial.

What advice would you give to dealers and/or automotive personnel to maximize performance as the year continues?

I may sound like a broken record, but now is the time to hone your processes. Make sure you have a strong used car team that has a unified commitment to your inventory methodology. Monitor turn rates (maximum/minimum) and stick to them. Reprice semi-weekly or where needed and move the car, be it retail or wholesale. Get back to lot and trade walks with your teams if you are not doing it currently.

Partner with a good F&I provider that follows through on their commitment to push performance and hold teams accountable. Be on your toes, not on your heels. That starts with aligning your goals for the short and long term. Dealer centricity is the name of the game!

Dealers should continue to meet the customer where they are in the buying process. Listen to them, understand what they are trying to accomplish, and guide them or you could lose them.

Be a student of your craft. Read industry periodicals, or listen to podcasts, like JM&A's The Walk Around podcast , to recognize and stay in front of industry trends. We regularly publish free resources that can help you and your team grow in your career as well.

I’m looking forward to finishing the year strong with our dealers! What are your thoughts on the second half of 2024? Share them with me in the comments below!

Thanks for reading our LinkedIn newsletter! We’ll be back next month with a new topic to help you thrive in the automotive industry in 2024. Subscribe to get notified once the next issue is released.