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Is the Sky Really Falling? Only if You Let it!

Is the Sky Really Falling? Only if You Let it!

In light of current events, should an automobile dealer continue full-speed ahead with his advertising … or should he “cut his losses”, resigning himself to the fact that things are going to slow down in the next month or two? The popular story of Chicken Little comes to mind. You remember it … she’s […]

How to Turn a Customer Complaint into a Positive

How to Turn a Customer Complaint into a Positive

No matter the level of customer focus at a dealership, there will be times when a customer complaint must be addressed. While there is a small portion of the general public you’re not going to please no matter what you do for them, most people just want to believe they are being treated fairly and, […]

Bid Farewell to These Discontinued Vehicles in 2020

Bid Farewell to These Discontinued Vehicles in 2020

For the past several years, we’ve brought you a list of discontinued vehicles that have ceased (or will soon cease) production for good. The cars on this year’s ledger do nothing but reinforce the notion that today’s car buyers are far more interested in SUVs than cars. This Year’s Discontinued Vehicles Buick Cascada: The […]

Radio Attribution Study: Extreme Ad Value for Dealers

Known as the Automotive Radio Attribution Study, the recently compiled report conducted by LeadsRx and iHeartMedia revealed what we’ve known all along: Radio is one of the best ways for an automobile dealer to get the most out of their advertising dollars. The two companies combined to execute the largest study ever conducted on […]

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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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