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Alfa Romeo

Alfa Romeo Returning to United States Later This Year

The Alfa Romeo brand is coming back to the United States later this year, with the reintroduction scheduled for this June. After several false starts, it appears that everything is finally in place for this return to come to fruition. The last Alfa Romeo vehicles to make it to the United States were exported in […]

William Clay Ford

William Clay Ford Sr. Commemorated with Ford Scholarships

When William Clay Ford Sr. recently passed away (just five days shy of his 89th birthday), he left behind a legacy that will never be forgotten. As an automotive icon, he’ll be remembered for his many innovative designs and ideas. As a man, he’ll forever be recognized for his integrity and willingness to give back […]

automotive dealerships

Automotive Dealerships Similar in Number; New-Car Sales Up

Automotive advertising is apparently working very well, though automotive dealerships remained similar in number last year. What changed significantly was the average number of new vehicles sold per dealership. Numbers compiled by Urban Science, a Detroit-based retail consulting company, showed that as of January 1 of this year there were 17,838 auto dealerships, a dip […]

EPA Reducing Sulfur

New Rules: EPA Reducing Sulfur in Gasoline

The EPA reducing sulfur levels in gasoline is a move that was not wholly unexpected. Specifically, the EPA’s new regulations mean that sulfur content in gasoline will be cut by two-thirds. It is considered to be a big benefit for automobile owners in multiple ways. The reduction of air pollution and tailpipe emissions are just […]

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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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