|
|
The automotive credit market with auto dealerships is still a very fragile. Underwriters that are looking at dealership and auto groups portfolios more carefully to try and find reasons to lend, but with the previous track records of inaccuracy and turnover this decision could threaten the employment of an underwriter not making the same shift in current banking philosophy. Lenders are looking for the proof that a potential borrower’s story is correct and there is a strong chance of sustainability within the borrower’s working industry. Gross profit is great if you can turn receivables fast. Slow cash after continuously chasing titles, sales, service, and parts receivables from customers’, lenders’, manufactures’ government entities (titles) is slowly going to choke your cash. Automotive Dealership Managers really need to pay attention who they are doing business with where a receivable created may become a choke point in cash flow. Add up a few of these scenarios and one department can intensely effect how your liquid bottom line is influenced. Good cash management with lead to the automotive market opportunities.
|
|
As the selling season kicks off around the U.S. auto markets dealerships are continuously trying to round up pre-owned inventory. Over the next year we will all see the effect of the cut in 2008 automotive production. This will come in the form of harder to find pre-owned vehicles. As the demand begins to surge back to populous levels the inventory short fall will take a whole of dealers that are selling to meet the demand. Dealers should really look to take advantage of this market landscape by schooling your sales staff to assist in the procurement of fast turning inventory. If you cultivate your current service and prior sales records and let the consumers know that the current vehicle they are driving is of interest to the dealership you will be able to not only acquire solid inventory, but put a few deals together that you may not have had prior. Make it your mission to let everyone know that purchasing a customer’s vehicle would be the preferred way of procuring inventory. CarMax has turned this concept into a very successful business model that we could all learn to follow.
|
|
Are you getting your share of the market? This is a question that auto dealers across the country ask on a continuous basis in variable and fixed operations. We are hearing the automotive manufactures displaying and announcing the uptick in sales volume as we move into the selling season. The combination of pent up demand and manageable day supply (national average hovering at 75 days) at the dealership level is impacting the gross profit of most automotive dealers throughout the country. In the areas that the unemployment rate has not moved down from the above average unemployment rates however, these dealers are not seeing this positive swing in business. In some areas where the unemployment rate is leveling, dealers are still in a mixed bag of growth. Through the economic meltdown dealers turned to management that was less intuitive on dealing with a down market to put savings to the compensation line. Some of these management teams are not skilled at managing expenses, inventory, and people which are the ingredients that put automotive dealers in a position of grabbing market share and growing the net profit. By evaluating the market conditions around you through product market saturation you can really view your dealership’s current efficiency and make the necessary adjustments to staff that will provide your store the horsepower to participate in the current growth that the automotive industry is seeing as a whole.
|
|
Well we have completed the first quarter of 2010 in the automotive industry. There are a majority of dealers that are seeing a very strong increase in business in both variable and fixed operations. The dealers that are experiencing the increases in business have worked very diligently to put the right people and process’ in place and have the mindset to go after this growing market. They have kept their skill levels sharp through the tumultuous period and are ready for the business to come to them. Having a P.M.A. (positive mental attitude) will guide your staff and store away from the doom and gloom so you can get your share of the pent up demand that exists in every automotive market in America.
|
|
In today’s automotive market, depth of knowledge is a determining factor that all dealers should apply to their hiring decision and should be used as your main guide. At Dealership Experts we have found Dealers and General Managers basing hiring decisions on gut instinct in which we advise they rethink their strategy to hire and develop talent that will be long term. When faced with a position to fill we need to drill down and uncover the failure of the previous post holder. Did we fail them or they fail us? In both cases you will have the ability and knowledge to recruit the successor that will be tailored for your dealership, organization, and management style that will lower your personnel turn and increase you E.S.I. (employee satisfaction index).
|
|
For car buyers, four words mean the difference between going home in a new sedan or their old clunker: You Loan Is Approved
Buyers are hearing these words more often these days, spurred by a trillion-dollar government program that provides guarantees when those companies make auto loans at a quickening pace. And consumers are paying less to borrow. It’s a bit of good news for the auto industry where 2009 sales are hit a 30-year low of around 10 million automobiles sold.
December saw an uptick in auto loan approvals for consumers with average and above average credit as auto finance companies tried to clear out inventory.
N.A.D.A. has also quoted, used-car prices also have stabilized due to limited supply, making used-car loans more attractive to banks and we at Dealership Experts believe that this trend will continue.
It could take another year for banks to trust consumers enough to return to normal underwriting habits. It’s far from the freewheeling days of the credit boom of 2006, when U.S. car and light truck sales reached 16.5 million.
In the meantime those with good credit need apply.
Consumers with credit scores between 720 and 850 – can get a 36 month loan with an average monthly interest rate of 5.74% down from 6.65% a year ago. On a $20,000 car loan, that’s a saving of nearly $300 over three years.
This being said, the cost of borrowing has risen for people in the bottom credit tier. A consumer with a score of 500 to 589 has seen an average rate climb to 18.56% from 16.47% a year ago. That translates to an extra $751.68 over three years. Banks are still nervous about loaning money to risky borrowers due to the high rate of unemployment, foreclosures and late payment increases since the financial crisis began.
All being said, 2010 should be a positive year both automotive dealers, lenders and consumers as the wheels begin to roll in a positive direction.
|
|
As the Toyota Motor Company makes every effort for damage control over the brake debacle, the rest of the automotive manufactures are driving this event forward to try and take additional market share. Ford Motor Company was the first to lead the charge in an automotive advertising campaign that targeted the Toyota customers that are teetering on the fence. With Ford’s recent successful restructuring results tilting the till in their direction they are wasting no time on an opportunity to capture more of the automotive market.
Toyota has handled their recent issues with acknowledgement, solution, and now damage control. I would anticipate this automotive giant to aggressively attack their customer base with some fantastic, high value incentives to stay with them through what has turned out to be the largest recall in automotive history. I think they really showed how fast they could react corporately, unlike some lumbering giants in our industry that may have handled this different and more importantly less responsive. It will be interesting to watch as we continue to see the onion peel back and a fast paced automotive company react with precision.
|
|
Well here we are beginning the 2010 year in the auto industry. This year will bring an awaited recovery to the dealership environment. We must not forget that it is about the people that we hire to play the pivotal positions within the dealership. Dealership management has a lot of talent to chose from and must take advantage of this. There are some talented automotive people that are ready to join your team. It is easy to take the first applicant that applies so we can move on to our next task. More thought needs to go into adding a member to your team. Can they perform at a high level? What is the applicants depth of knowledge? Does the applicant have multiple talents that can be utilized? Having strong interchangable parts within your staff will provide you with a foundation for the future. Let's hire smarter in 2010 and build a team that will exceed expectations and forecast.
|
|
There is a lot to be said about the lending in the auto retail market at this time. It would appear that auto lending is still lagging in scope to where we all used to be. By taking the sub-prime markets out of the dealership portfolio’s it has put a real damper on the amount of volume that most dealers are able to sustain. Some dealers have seen as much as a 60% loss of volume and gross. This really effects the how dealers stock the pre-owned inventory and must maintain a very strict turn-cycle, otherwise wholesale loss will increase and inventories in general will get out around. Having a strong pre-owned director managing the pre-owned inventory is essential to watch these lending patterns and hope we see some lenders step up to this void in the automotive landscape.
|
|
Automotive dealerships all provide service (auto repair facility) to their customers. As customers are now in a pattern of trying to stretch more use out of the current family vehicles, service advisors around the country are seeing an up-tick in traffic and writing more service. Turning this into more gross depends on if you have service writers, who just write up the order and do little selling of preventative maintenance on the vehicle rolling through the service department. And then you have the dealerships that really understand that service advisors, those who actually identify, diagnose, and explain how preventative measures can save vehicle owners future maintenance and repairs. A consulting approach on the service drive can turn the increase in R.O. volume into gross profit and increase the dealership absorption that will surely add to the net profit of any dealership. Service advisors are also effective when it comes to fielding incoming service calls that should always result in appointments, when service writers are called they treat the calls more like “411” and provide enough information that enables your customers to shop the issues with their vehicles. Examine if you have service advisors or service writers and determine how you can increase your fixed gross profit, which will eventually float those customers into your showroom.
|
|
The next generation of automotive talent is underway, while the industry progressively down-sizes the number of dealerships. With the unemployment rate soaring auto dealers accross the country are adjusting their lineup like a fantasy football draft. This is an incredible opportunity for auto dealers to develop new talent and more importantly change the culture of their dealerships. Other industries are squeezing an incredible amount of talented sales and management people into other employment sectors, and many see the auto industry as a great fit. Embracing these new faces will be key for future generations of managers. The industry as a whole should really look to see how the new people are being managed and take this time to develop and cultivate the group of talented people we are getting filtered within our industry. We have to grow these people and manage them different than we have in the past. This generation of talent does not respond well to the normal pressure tactics that have been used in the past to manage employees. If we adjust our thinking and grow them right, our newly created culture will generate higher C.S.I.
|
|
Automotive dealership inventory management is something that is talked about often, but is exercised in moderation. Managers that can properly manage new and pre-owned inventory levels are a key component to successful dealerships accross the country. In some cases we see dealers that have managers that know how inventory should be managed, but have their hands tied by the dealer when it comes to creating quick turn. This is a behavior by dealers that have had managers running a department that had either limited knowledge on how or their pay plan was not condusive to adequately manage inventory levels, which can create water and turn issues in either example. Dealers need to define immediately on turn time to the manager that is responsible and make sure that he/she has the understanding of turn time and wholesale loss control. Without a plan in place there is an inconsistancy that will assure inventory problems and the cost could be significant.
|
|
Genius. Yes, I think this advertising campaign that General Motors is launching on Monday is exactly what the potential consumer base needs to enable the automotive giant to begin it's rise to the top again. With General Motors thinning the product line for more focus on brands that are market leaders and losing brands that only offer the consumer choice while swallowing the thin profits of winning lines. The automotive consumer will really look and compare and see that General Motors is aggressively moving forward they are likely to attract those consumers that have abandon the GM model due to lack of confidence. By providing the consumer this return guarantee buyers will consider the brand that has been trusted for generations. The risk is going to provide a solid pre-owned stock pile for General Motors Dealers in a supply low pre-owned market. Great job G.M., and between your talented dealers and this campaign, I would look for increase market share and reclaiming a lost customer base.
|
|
When was the last time you discussed employee satisfaction among your management team? This is a real measurement of your dealership's success, culture, and a glimse into upcoming C.S.I. (customer satisfaction index) scores. Auto industry managers so often use the pressure to performance management style we lose the employee's ability to learn and understand how they can contribute to the goals of the dealership as a whole. Giving your staff, from sales to service, the encouragement to move forward within their position for the greater good of the dealership is paramount to achieving employee longevity and stability within your entire staff. Manager report cards come from the very people they are trying to lead and winning your staff through knowledge, guidance, and encouragement gives great people a sense of purpose and contribution to the good of the entire organization, which will increase performance and commitment. Many dealerships have bought into this philosophy and have slowed down the revolving door of really talented people. Tip: Never have an employee without at least one year tenure shadow, train, or assist in the development of process within your store. This pitfall, where a relatively new employee that does not understand the process, system, or culture themselves attempts to melt a new piece of fabric into the current environment. Great teams are put together one position at a time and the managers should have a weekly staff meeting so they can measure the E.S.I. (employee satisfaction index) within the dealership and all departments. Discussing portions of your dealership culture will enable suttle changes where management can win with the staff while assisting those in need of melting into the entire make up of your store. Measure your E.S.I. and your C.S.I. will soon follow.
|
|
From a dealer perspective, extended warranties on new and pre-owned vehicles have been a fabric of genuine protection for their customer bases for decades and a stream of revenue in variable and fixed operations. Extended warranties enable a dealer to maintain a consumers vehicle and increase customer retention for the dealership. We have seen warranty companies come and go for years, so to us, this is part of the automotive landscape. Dealers are, in most cases, very sincere in backing any of the products that they have vetted themselves and sold at their dealership, and have paid in hundreds of thousands to right a wrong by endorsing a warranty company that has simply run out of funds and reinvent themselves under a new name to continue an assault against our customers and industry for years.
With a rise in longevity of consumer vehicle ownership, fixed operations in dealerships have seen a sharp increase in business and the need for extended service contracts that are designed to insulate the consumer against the cost of repairs that often come in numbers that are not budget friendly to the average consumer that lives month to month. As dealers we must be vigilant in informing the consumer of the advantages to our store bought products vs. extended service contracts that are printed in a number one font and accepted nowhere.
Any dealership management staff should really look hard at the finance department, where a majority of dealership endorced extended service contracts are sold, and have them lift the mask for the consumer that really does appreciate solid automotive breakdown coverage. We can back our product because of our servicing and reconditioning of a vehicle, most of the companies are claiming to back vehicles without a proper mechanical inspection of a vehicle, which makes no sense when the risk to large claims can loom for these companies crippling the ability to process and pay claims. Have your finance department research this and share their finding with our customers.
|
|
As more and more companies continue to down size the automotive industry begins the push to add some of the cross over talent to its' ranks. There are many career choices for solid qualified candidates out in the work force, but many are seeing what the auto industry can offer. With mortgage brokers, investment bankers, hospitality industries, and many more watching the opportunities shrink within the career landscape the auto industry creates a great fit. It is important to note that this industry takes a little time to master, but provides well above average income throughout the learning curve. The training is what will make the difference of a candidate succeeding or failing in an industry that is changing to a consumer driven culture. Auto dealers are emphasizing customer care more than ever as auto manufactures' gear thier product platform toward taking care of customers for retention. Great auto industry professionals are adjusting the current staff to accomodate such movement. As one learns the auto industry you will find you can set yourself up for contiuous employment and self fulfilling accomplishment as you compete to move up the ranks within this gratifying industry. So when considering a career move, look to a business that will always have open arms to qualified individuals that are savy to the many moving parts within the automotive industry.
Dealership Experts offers career coaching within the automotive industry for veterans or beginners, let us train you for an exciting career where you will never have to worry about the employment market again.
|
|
As the "Cash for Clunkers" stimulous program begins a wind down after this weekend the automotive dealerships that participated begin the receivables process. Right from the start of this program it took federal agencies over-seeing this auto industry stimulous over 45 days to define the parameters that dealers would have to use that would guide them to the seamless stream of rebates. While some dealers chose to be patient and waited to see how this process would work, many jumped the gun to market with a blitz of advertising anticipating what the rules would entail. In retrospect, this may have created a cash flow issue within previously liquid organizations. Then as the flood gates released the program on the 24th of July dealers rushed to get on board what seemed to be a rebate program much aligned to factory specs, not. It is the responsibility of dealership managers to process qualifying transactions and have a complete understanding of the rules. Just like in our industry advertising, you should always read the fine print. Many dealerships are now seeing a significant amount of claims being rejected due to rules tailored into the "Cash for Clunkers" program that disqualify a large number of transactions due to the eagerness to get their share. The sales results were very promising with the exception of realizing gross profit that may quickly turn into red ink. It will be interesting to see how this funding or lack there of effects the bottom line of these participating dealers that were not process oriented and how they will untangle the knots that are sure to be left at some dealers door steps.
|
|
As a majority of companies reel from the hiring process, the auto industry in entering a hiring boom. Auto Jobs around the U.S. are plentiful and most dealers are offering bonuses to qualified and seasoned personell. We have seen an enormous gap in the amount of employees needed to get the job done with the volume increase dealerships are experiencing. With factories coming on line to meet the demand for autos throughout the country this has opened up employment opportunities throughout the metro areas. Dallas Texas has a shortage of qualified candidates in over 90% of the dealerships in the DFW area. Dealers are offering training to those qualified individuals that are career minded to engage and create the next generation of automotive talent. Job seekers have many avenues within the auto industry. Dealership Experts offers hundreds of employment opportunities to candidates that are willing to learn a new career. E-mail employment@dealershipexperts.com for more information.
|
|
Just as dealerships accross America adjust to government assistance in defibulating the volume in a showroom near you, not really knowing the receivables nightmare that may follow due to lack of knowledge and ability to properly audit individual qualifying transactions, enters E-Bay Motors. Yes, the auction giant will begin assisting General Motors on the west coast in moving new vehicle inventory through the power of an online auction for consumers.
Will this formula sacrafice gross for volume? The answer is in the piloting of the dealerships that have been selected and how far the auto consumer will drive to save $100. If history tells us anything, consumers will drive to save money as with the pre-owned internet market that has enabled many dealerships to reach into markets far away from their PMA and enhance their presence. Gross profit is traded for volume within the pre-owned market and with margins ever so little on new vehicles we could see a trend that impacts the net profit of dealerships nationwide. E-Bay Motors will get fees that could exceed the profit of a franchised dealer in some of these transactions, which should concern all dealers that have invested millions in operations that are seeing the profit margin shrink and expenses rise. Stay tuned for this latest move by the auto experts in Washington that seem to be blind to the reality of gross profit.
|
|
When any individual enters the job market seeking employment there are several things to consider. Are you in search of a job or career? There is a definitive difference in the two. A job is an employment position that you settle for to help you attain your long term goals and asperations and you knowingly go forward with no intent of staying the course with that position. A career is entered with the intent to master the many facets of an industry and become the best at every level that encompasses that particular industry.
So remember, if you are in the market for a job, it is only fair to enlighten your prospective employer of your intent so that the companie's investment in you is true. Companies are more likely to invest in a career minded individual with professional training and the inner workings of the employers business providing knowledge, experience, and time that will give the employee the rewards that come with a career and enhance the value of the employee. A career now becomes your long term goal.
|
|  |
|
Automotive Consulting Staffing & Training
