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Record Numbers of Car Shoppers Underwater on Trade-Ins

According to a recent Edmunds.com study, through the first three-quarters of 2016 an astounding 32% of all trade-ins toward the purchase of a new vehicle were underwater (negative equity). Edmunds, the leading car information and shopping network, reports that this is a record number. The 32% figure eclipses last year’s 30% number … and more shocking […]

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Advertise What’s Hot … Without Forgetting What’s Not

Have a product that’s hot on your lot? These days, it very well could be an SUV. According to this article in Autoweek, Americans will buy 10 million trucks and SUVs this year, the first time that will have ever happened in a calendar year. Conversely, car sales are projected to fall below seven million […]

service

Service Affects Your Business Even More than You Think

As an automobile dealer, the level of service you give your customers makes all the difference in the world. You probably think, “Well, duh, of course it does”! But today’s blog is being posted to remind you that it is even more important than the obvious reasons everyone knows to be true. If you don’t […]

six-rs

Nielsen’s Six Rs Show Why Radio Ads Work

Nielsen says radio is a very valuable part of any business’s media mix – including automobile dealers – and it has published a list of six Rs – along with research – to validate their statement. Brad Kelly, the Audio Managing Director at Nielsen, put the list together to illustrate that “for advertisers, radio presents 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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