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Online Chat

Online Chat Etiquette for Car Dealerships

Conversations that are part of an online chat are just as important as those that take place face-to-face. Sometimes, they are even more difficult carry out because it’s harder to make your message clear; things can get misunderstood or perceived the wrong way; and online chat lacks the communication that takes place in body language […]

Marketing Mix

Does Your Dealership Have the Right Marketing Mix?

Way back in 1953, Neil Borden coined the term marketing mix to help those in the retail business consider the process through which their products or services (in this case, cars) go from Point A (arriving at your dealership) to Point Z (customer drives off your lot after buying a car). Several decades later, the […]

Record Sales

Dealers, Take a Bow! Record Sales in 2015.

There were record sales in 2015 in the automotive industry, as dealers racked up an impressive 17,470,659 light-vehicle sales last year. This topped the previous record of 17, 402,486 that was set in 2000. It took a terrific last month of 2015 to get it done, but it happened due to a nearly nine […]

Want Continued Momentum in 2016?

Want Continued Momentum in 2016?

The automotive forecast calls for continued momentum in 2016. Last year, Toyota, General Motors, Ford and Chrysler all posted double-digit year-over-year January sales increases … and the industry as a whole was up nearly 14%. Better still, these numbers are expected to continue all year. According to this article in the Wall Street […]

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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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