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Win the Popular Vote in Your Market

Win the Popular Vote in Your Market

Did you remember that a major election year is just around the corner … and you’ll be casting your vote? As you are well aware, the media hype continues to build all the way up until Election Day – the time when important decisions are made. It’s the time when those who ran successful campaigns […]

Your Plan for the Coming Service Tech Shortage

Your Plan for the Coming Service Tech Shortage

If you’ve read any of the major auto retail trade magazines in the last year, you’ll have heard the warnings about the expected service tech shortage. Major players in the industry have been vocal about the lack of qualified mechanics to replace those who are leaving the trade or retiring. According to the National […]

What Southwest Airlines Can Teach Auto Dealers

What Southwest Airlines Can Teach Auto Dealers

Ask any car dealer – heck, ask a business owner in any industry – and she’ll tell you that the secret to success is a happy customer. And she’d be right… sort of. It’s true that happy customers are crucial to making sales. But the way to create happy customers starts well before […]

The Habit You Don’t Want to Break

The Habit You Don’t Want to Break

Yesterday, I stopped at the foot of my driveway to get the mail. When I got back in the car, I buckled my seat belt…and drove to the garage. Why? Was I expecting a head-on collision in the eight yards it took to reach the front door? No, but driving any distance without a seat […]

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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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