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AUTOMOTIVE ADVERTISING & MARKETING

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Why ROA Isn’t Enough for Auto Dealers

If you’re not aware of the term “ROA”, there’s a good chance you might hear it someday from an advertising executive. If you do, you should ask them a few questions about their goals. Some advertising agencies firmly believe they have done their job well if they deliver their client’s message to the agreed-upon […]

employee-turnover

Discussing Dealership Employee Turnover

Employee turnover at automotive dealerships last year occurred at a 39 percent clip, compared to 35 percent in 2014. This information comes from this year’s annual Dealership Workforce Study presented by the NADA, the organization that represents the interests of new car and truck dealerships. The topic of employee turnover is always a hot-button […]

trust-issues

Having Trust Issues with Your Ad Agency? Read This!

Quite frequently, we hear automobile dealers who aren’t JKR clients say they are having trust issues with their advertising agency – and apparently, this is quite widespread. A 2014 study published in AdWeek showed that more than half of all marketing executives believe their agencies are more interested in “selling” them their work rather than […]

arnold-palmer

Arnold Palmer Was Also an Automotive Champion

The news of golf legend Arnold Palmer’s recent passing was difficult for many, but it was especially sad for those of us who reside in the greater Orlando area. After all, Central Florida was his second home, and he was the driving force behind our city’s premier PGA Tour event at Bay Hill. Additionally, he […]

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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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