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SUV Sales Now Outnumber Sedan Sales

SUV sales are now topping sedan sales for the first time ever – at least that’s the case for the first five months of 2014. A decade ago, no one would have ever believed this would happen, as the SUV landscape was completely different from today’s lineups. These figures are based on data from IHS […]

Automotive Did You Know

Automotive Did You Know Highlights

Today’s blog comes from the automotive Did You Know category. First up is the most expensive state in the union to own a vehicle. Can you guess which one? Probably not. The correct answer, believe it or not, is Wyoming, where it costs drivers an average of $2,705 per year (compared to the national average […]

Chevrolet Volt

New Chevrolet Volt to Make Debut Next January

The new Chevrolet Volt plugin hybrid car is today’s topic. It follows up on an electric vehicle story from last week, and it’s going to make its debut very soon at the 2015 Detroit Auto Show, happening next January. This much-anticipated new Chevrolet Volt will be completely redesigned in nearly every way. While the theme is […]

BMW Charger

New BMW Charger to Cause Universal Charging Networks?

A new BMW charger could be the catalyst for an entirely new nationwide charging network. Those are the thoughts of the luxury automaker, who sees such a charging network as a big key to the success of their new i3 all-electric car. Here’s how they expect it to work: BMW has partnered with a third-party […]

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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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