Auto dealerships all over the United States have a common element in today’s auto market, new vehicle inventory. And just when you thought the factory had run low, they show up at your dealership and offer you more. The manufactures are getting more and more innovative with the packaging of some of the vehicles that are moving much slower in this stagnant retail market, or in some cases, not moving at all.
Look at Hummers right now; they are facing doom from all directions. They are expensive to floor plan for dealers, the retail market for these behemoths of GM has all but disappeared, and the manufacture of these vehicles is about to file for bankruptcy. There are some dealers out there that have just finished building brand new facilities that are designed around a Hummer business model. Those are the auto dealers that I really feel for, the factory talked them into the big fancy facility and high rent factors and where are those guys now? Well we all know the answer to that question don’t we. I would hope next time any of these factory representatives are sent out on the mission to tell a dealer that he needs to improve or upgrade his dealership in any way, that dealer brings up the Hummer example. At least they will make beautiful pre-owned outlets.
Beware of the new vehicle inventory monster. Imagine a few years ago, during the height of the auto sub-prime feeding frenzy, that lenders offered to let consumers return the vehicle if they lost their jobs. We may have sold 2 times the vehicles and left a wake of wholesale loss for lenders that would make the real estate toxic assets look like a commodity such as gold. Lenders are very skittish on financing the new vehicles and are not swallowing rebates for negative equity as they used to. So look at your appraisal values and make sure that you are in the market when appraising to move a new vehicle. Don’t hold back a dollar; these vehicles need to be on a strict turn without compromising a large wholesale loss. Have a pre-owned manager that understands the value of a lower day supply in new vehicle inventory. This will promote the new vehicles to move with a strong finance lender relation.
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Automotive Consulting Staffing & Training
Today is another day of uncertainty throughout the auto industry as the lenders that are responsible for keeping the volume flowing in dealership showrooms across America continue to tighten the noose. This is particularly prevalent in areas of the country where median incomes are low and the automotive special finance industry, not only blossomed, but created auto markets within auto markets. In some markets volume is down even further than the average national statistics displayed on the cover of newspapers, magazines, and the internet. One has to remember that these are averages of how much business is off, so if what is reported is 52%-55%, you can well imagine there are a lot of dealers that are off by significantly more than this. This should be alarming for anyone from the parts industry to the showrooms of luxury car lines.
