AUTOMOTIVE ADVERTISING & MARKETING

Gross Profits

Dealer Gross Profits are Down – But They Don’t Have to Be

JKRAdvertising / Automotive Advertising Advice /

August 24, 2015

Why are auto dealers’ gross profits down in the second quarter of this year when compared to the previous three months? According to a recent article in Automotive News, it depends on who you ask. Some believe that it’s due to competition (including the mass-produced import brands), while others might say it’s because of low gas prices, or even the changing taste of consumers across the county.

Whatever the case, gross profits have taken a bit of a plunge. There are five large publicly traded automotive groups in the United States (Asbury, AutoNation, Group 1, Lithia and Sonic). The Automotive News article included four companies’ numbers in the second quarter.

Asbury’s gross profits were down 10%, coming in at $1,865 per new vehicle sold; AutoNation’s gross profits were down 5.3% to $1,905; Group 1 lost 12%, checking in at $1,551; and Sonic’s gross profits tumbled 9.1% to $1,925.

This news comes on the heels of Fiat Chrysler (FCA) increasing the price their dealers pay for cars by 1% – while keeping the corresponding sticker prices the same. This was done in an effort to increase profits at FCA – and it was done at the expense of their dealers.

The Cure for Low Gross Profits

By now, you’re probably ready for some good news … right? Here it is: your profits don’t have to be lower than they should be, just so you can sell more cars. JKR’s clients enjoy the benefits of attracting not only more customers, but better ones, too! If meeting and exceeding your sales goals (and increasing gross profits at the same time) sounds great to you, you need to call us today. Don’t be satisfied with status quo, when there’s something far better out there for you and your dealership. Want to know how we do it? Call Eric Tigner today at (321) 397-0777.

JKR Automotive Advertising: We Move Cars.

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Post-Pandemic Dealer Gross Profits are Down – But They Don’t Have to Stay There!
March 13, 2024
It is no secret that dealer gross profits per vehicle are down sharply in the post-COVID automotive world. According to a recent article in Automotive News, gross profits of the six largest publicly traded dealership groups plunged significantly from Q4 2022 to Q4 2023. One of them was actually down 35% per vehicle!

The article explains: High interest rates, more expensive vehicles and a steadier post-pandemic supply chain continue to soften demand and bring it closer to pre-pandemic levels. Still, new-car buying has remained strong overall …

This means that, while sales volume is similar, overall bottom lines are lower for many dealers due to the reduced gross profits. What about your dealership?

Being Realistic
It’s time to turn the page! The time for dealers to simply be order takers for people willing to pay MSRP for a vehicle (and in some cases more) has passed and dealers have to work hard once again to achieve acceptable gross profits.

Selling a high volume of cars doesn’t control gross profits, no matter how much you wish this was the case. Correct processes and menu pricing – and strict adherence to them – do!

What kind of processes?
∙ Slow down the transaction! Your sales staff has to once again sell the customer on the features and benefits of every new and pre-owned vehicle on your lot.

∙ Your salespeople and managers should devalue the customers’ trade-in value (politely, of course) as much as possible. After all, if the customer expects you to lower your price, shouldn’t you be able to do the same on their trade? Remember, you’ll have to fix it up, put your name on it and resell it to someone else with all the tenacity you would a brand-new car. So make sure you buy it right … because the profit is made when you buy it, not when you sell it!

∙ To that end, management should be ready and willing to leave the desk and do thorough walk-arounds on each trade to ensure the best outcome for the dealership.

The Cure for Low Gross Profits
If you are like a lot of dealers these days, you could use some good news. Here it is: while you may not have the capability to achieve profit margins similar to those you enjoyed during the pandemic, they could likely be improved. JKR’s clients enjoy the benefit of attracting not only more customers, but better ones, too!

If meeting and exceeding your sales goals (and increasing gross profits at the same time) sounds great to you, you need to call us. Don’t settle for reduced gross profits when help is out there to get you closer to where you’d like to be.

Want to know how we do it? Reach out to Senior Partner Richard Brauns (407) 701-4233 or Partner/Vice President Jon Albert (407) 718-2494 today.

JKR Automotive Advertising: We Move Cars.

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