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Control the Deal!

Control the Deal!

When the “lowest-price-wins” online car-buying software was introduced about fifteen years ago, it was a fantastic idea. Dealers were happy to accept lower gross profits because their sales volume significantly increased. But over time competition has changed the entire online sales landscape. As more dealers subscribe to these services and copycat companies emerge, the […]

Reach Them Before They Begin The Buying Process

Reach Them Before They Begin The Buying Process

Research shows nearly nine out of every 10 car shoppers begin their buying process by conducting online research. Though most dealers are certainly aware of this, what are they doing – if anything – to make sure their dealership’s Website is top-of-mind with these potential customers? Some decide to put all their efforts into […]

Is Your Dealership Reaching its Entire Addressable Audience?

Is Your Dealership Reaching its Entire Addressable Audience?

Statistics show that during the time an average American spends consuming media each week, about 70% of it is still currently ad-supported. This is great news for those who remain committed to advertising on traditional radio and television. But it should also make a dealer ask the following question: Where are these people going […]

Congrats to Jen Pavlak, JKR’s First 20-Year Employee

Congrats to Jen Pavlak, JKR’s First 20-Year Employee

In 1999, Jen Pavlak was working in the mortgage industry but was looking for a change. “It was a decent enough job but I just didn’t enjoy it,” she said. “It was all paperwork so my interaction with people was minimal … not my idea of fun.” Through a friend, she heard about a […]

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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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