Traffic is better, sales are up, profits are high, dealers are buying at NADA and the whole world is rosy. Don’t drink the water. I am not saying you should not be optimistic, and I am certainly not an economic forecaster coming with claims of doom and gloom. However, I am saying that your fortunes in the future will have a whole lot less to do with the economy than what business practices you put into place.
There is an over exuberance in dealer-land right now, based upon the feeling of an improved economy. When you base your happiness and expectations on what is happening in the economy and marketplace, you have given away your power. You are a slave to external forces and a victim to your own lack of personal responsibility.
Many dealers are seeing increased profits based upon fewer competitors and more traffic. Both are fine, but the one thing guaranteed is that both will change. When those things change, many dealers will once again experience the pain of lower sales and lower profits. For many, the pain will occur long before those things change. The pain will begin to occur in good times instead of bad, leaving many dealers frustrated and wondering why.
In good or bad economies, you must build a business with an extremely sound foundation. Your dealership must be built on 4P’s — People, Process, Product and Positioning in your market. If you do not have these four things, your business will experience cracks in the foundation and crumble quickly — no matter the economy or how much technology you have.
People — Do you have written and executed procedures for recruiting, hiring, training and retaining the right people? Are you recruiting people every day? Start to recruit when you want people, rather than when you need people. Do you have a set series of interview questions to give a good and thorough interview? Do you have predictive indicator tests that can help quantify a candidate’s skill set? Do you have multiple interviews or just one with only one person? Do you have an intense training regimen for new hires combining classroom and experiential learning? Do you have an initiation period where a new hire is immersed into their new job with assistance all along the way? Do you have ongoing daily coaching to personally develop your team members and provide constant feedback channels?
Process — Do you have written, actualized and reviewed processes for everything in your dealership. Sales process, deal process, save-a-deal process, one-on-one coaching process, make-ready process, F&I process, service drive and service work process, office process etc. Randomly pull 10 deal folders from last month and review your worksheets for how the deal process worked. Can you tell me you have a consistent deal process? If you don’t have a consistent process, I can guarantee that your sales, gross profit and CSI are lower than what they should be. Is everyone and everything being held accountable through constant review?
Product — Do you have a written, actualized and reviewed process for your inventory? You must quantify to qualify. What are you stocking and why? What are the real numbers behind this? Do you have an inventory turn plan that treats your inventory as an investment that maximizes ROI and yield per investment? When do you review this, who is in charge and how are they held accountable? Do you have programs in place for seasonable and model year changes? Do you restock based upon today’s data or yesterdays gut feeling or, worse yet, what your used car manager likes to buy?
Positioning — What is your SDP (Specific Defining Proposition)? What is the story of your business that will connect buyers to you? What is your market? What media will you use? What is your message to reach that market? What are your competitors doing or not doing? What are the opportunity gaps in your marketplace? Do you have a marketing calendar for the year? Do you have holidays, seasonal and other events plotted and planned? Do you have a traditional media and digital media program that practices intentional congruence to multiply your affect on the marketplace? Do you have a written, formalized customer communication system that segments and personalizes your messages to your current customers, based upon who they are and what they have bought to increase customer retention? Do you have a social media communication channel that engages your customers and connects them to everything you are doing at your dealership?
There was an old saying that “Car dealers at times made money in spite of themselves.” That statement can no longer be true. The margin for error in the automobile business is now very slim. The successful automobile dealer can no longer be just a great entrepreneur, but now also must be a great business person. This is not a forgiving business anymore. The marketplace today rewards speed, agility, adaption, process and the ability to learn combined with action.
Do not get wrapped up in arrogant over exuberance in the marketplace. Doing so will create a cruel master that victimizes and enslaves you to every whim of Wall Street, manufacturers and politicians. Dealer beware, you must be much better than you ever have been before!
To get my FREE Special Report “The Shocking Truth about the State of the Automotive Industry” e-mail me at info@tewar.com.