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Automotive Promised Land

The Road Map to the Automotive Promised Land

Want the map to the automotive “Promised Land?” Every underperforming dealership needs more foot traffic; in fact, they needed it yesterday! If sales of your brand are up but your dealership is average (or worse yet, below average), it’s time to do something different. You need some answers. You need solutions. You need bright ideas. […]

New Vehicle Loans

New Vehicle Loans Continue to Get Longer

New vehicle loans are being stretched more and more as time goes by. According to a recent report in the Detroit News, the average new vehicle loan is now for more than five years – a big departure from days gone by when most car loans were either four or five years. Today, there are […]

Old Hondas

Old Hondas: Most Stolen Cars in America

Old Hondas, specifically the 1990s-era Civic and Accord, were determined to be the most stolen vehicles in the United States in 2013. This information comes courtesy of the National Insurance Crime Bureau (NICB), a not-for-profit insurance organization. The news regarding the old Hondas is not surprising, as it continues a trend from past years. Why […]

Automotive Sales Future

Forecasters: Automotive Sales Future Looks Good

According to a panel of economists, the automotive sales future will be particularly rosy – for at least the next four years. Spokespersons who were featured at the Center for Automotive Research’s annual Management Briefing Seminar told attendants they predict strong sales through at least 2018. Auto sales have been rebounding since 2010, when only […]

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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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