May 19, 2022

Vehicle Definition

Comfortable Vehicle

Getting Back in the Auto-Sales Game With Spring Training

Baseball players are in spring training, getting ready for a new season. Is your dealership ready? Not for baseball, but for the season that begins when the chip crisis ends and your lots are full of vehicles again?

Are your employees and managers ready to knock it out of the park, or have they lost their timing? If you want to win in a competitive market, your own spring training may be in order.

As the chip crisis abates, several predictable concerns will emerge. Focus training efforts on the following.

Sales Skills. For the past year, customers haven’t had much negotiating leverage. They have lined up to buy vehicles, and your salespeople have been mostly just taking orders. It’s time to hone those sales skills again. Focus on lead response times, transparency and ways to optimize the customer experience, both online and onsite.

Evaluate your recent hires. Do they have the skills necessary and, if not, what is the learning curve? Experienced staff will still have the skills, but they may have atrophied and need some brushing up.

Financing Skills. As inventory levels normalize, expect pent-up demand from people who have held onto their used cars for longer than they wanted, as well as those who wanted new and bought used. As used-car prices drop, many customers will be in a negative-equity position. It will take some creativity to put together negative-equity deals so you can help customers get into a vehicle they can afford.

In addition, a large percentage of consumers are credit-challenged. If you haven’t been dealing with these customers recently, you may have to find or re-establish relationships with banks and lenders that can fill your special finance needs.

Service Business Slump. For the past year, dealers have been very focused on acquiring inventory and maximizing front-end profits. Selling fewer new vehicles and more off-brand used vehicles means most dealerships will experience a significant slump in service business within the next couple years.

Start thinking about how to create greater connectivity between your dealership and customers. While front-end margins remain high, consider including or discounting prepaid maintenance (PPM) contracts so customers will return for service. Focus F&I efforts on service contracts to create customer loyalty.

If you are part of a dealer group, do not overlook the opportunity to retain customers who have purchased off-brand used vehicles from your stores. If a Toyota store sells a used Honda, give that customer a PPM that allows them to bring the Honda into your Honda store for service, and vice versa.

Brand Erosion. Before the pandemic, most dealerships had clearly defined value propositions. Why buy from you? As part of their brand promise, many dealers gave away free 90-day warranties, free appearance packages or aftermarket products.

But recently, these brand promises have largely been abandoned. Why give away stuff when you have 10 people lining up to buy one vehicle?

Scot Eisenfelder_2021.jpgThe question to consider is, when do you re-establish your brand promise and put those freebies back into the deal? You’ll need to do it at some point. Don’t get caught without something to offer when everyone has vehicles again. Instead, get ahead of the curve and differentiate your brand now. Not only will it improve the customer experience, but as mentioned above, it will help increase customer loyalty and service business down the road.

Major League Baseball’s Opening Day is March 31, and a competitive auto-retail market may arrive sooner than you think. Regardless of the date, it’s time to break out the uniforms, dust off the cleats and immerse yourself in spring training, so your dealership is ready to get back in the game.

Scot Eisenfelder (pictured, above left) is CEO of APCO Holdings LLC.