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The Right Ad

The Right Ad Can Make Them Buy Cars

The headline sounds obvious; of course the right ad can make them buy cars. But the next logical question is, “How do you determine the right ad?” You can tell by the way the consumer reacts to it. There are some things that happen when an advertisement is done correctly. Components of the Right […]

Customer Service

Some Old-School Customer Service is in Order

Customer service just isn’t what it used to be. This just in: not all your competitors offer great service. But that doesn’t mean your dealership can’t be different, even if it is currently lumped in with the underperformers. You simply need to decide you’re going to be the catalyst that brings about change – starting […]

Little Things

The Little Things Can Make a Huge Difference

Little things often make a big difference in the automobile business (and in other industries, too, for that matter). You know what we’re talking about; the things that are often forgotten or just completely overlooked. So ask yourself this question: is there something I can do at my dealership that will improve things today? Sometimes, […]

Cut Through the Clutter

Use Emotion to Cut Through the Clutter

With so many choices now available to customers, how does an auto dealer cut through the clutter? Did you know that for the 2015 model year, there are 33 different brands and a whopping 274 models from which a customer can choose? Even if your dealership is the best in the entire country, selling […]

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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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