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AUTOMOTIVE ADVERTISING & MARKETING

Seven Seconds

The Critical First Seven Seconds

Automobile dealers have approximately seven seconds to capture the interest of the consumer during a radio or TV advertisement. At the same time, those critical seven seconds must compel the prospective customer to continue “consuming” the message all the way through its conclusion. This is not an easy task, especially when you remember this must […]

The Enemy

Knowing the Enemy Brings You Closer to Success

Do you know the enemy? One of the biggest mistakes a car dealer can make is only worrying about his own dealership. Certainly that should take up the lion’s share of a dealer’s time and efforts, but ignorance of the other dealerships in his market is a huge mistake, and today’s blog examines the reasons […]

Automotive Co-Op

The Automotive Co-Op Dance between Dealer and Corporate

The monthly automotive co-op dance between auto dealer and corporate entity can be a bit awkward, especially if the dealer personnel are not perfectly in step with corporate, who always “leads” this dance. Just ask any clerical worker at an automotive dealership that handles its own advertising. Even in the best of circumstances, it’s an […]

Not Enough Time

“There is not Enough Time!”

Quite often there just is not enough time in the day for an automotive dealer. There is always something (or someone) demanding your attention from the moment you set foot in your store until the second you leave. If it’s not an inventory issue, it’s something having to do with personnel. If it’s not that, […]

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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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