6 Challenging Scenarios Dealerships May Face in 2015

New-car sales this year will reach more than 16.4 million units, the best performance since 2007. We are all quite thankful. Can we expect a repeat in 2015?

Yes, in fact, says Reuters, citing J.D. Power, Edmunds and others. That is certainly a cheerful forecast for all of us who rely on auto sales and services for our livelihoods. Still, OEMs and dealerships alike will face increasing pressures on their business operations.

Some of these challenges are likely to be:

1. Increasing Competitive Pressures

Consolidation and acquisition of dealer groups by those with very deep pockets puts them in strong position to own their markets.

2. Sales Pressures

Improve facilities, train staff, focus branding, master inventory management, and add technologies that make sales, F&I and service processes more efficient, streamlined, and profitable, including those that improve lead conversion rates and disrupt the traditional buy cycle to put buyers back in the market sooner.

3. F&I Pressures

Federal compliance regulators, including the Consumer Financial Protection Bureau and its influence on markup and the sale of add-on products, require F&I practitioners to be especially diligent to comply and still maximize profit.

4. Service Pressures

Greatly improved vehicle quality is keeping vehicles on the road longer, up to nearly 12 years, Equifax reports. This older fleet presents attractive service agreement and service repair and maintenance opportunities. Tools such as data mining can help dealers source and recapture inactive and lost service business and, supported by a strong in-dealership all-makes/models service strategy, conquest new service customers.

5. Recall Pressures

Despite significant improvements in overall vehicle quality and durability, OEMs recalled more than 3.9 million vehicles from mid-September through late October alone! These recalls do not include the recent 7.8 million vehicles involved in recent airbag issues.

6. Uncontrollable Pressures

Some market challenges like terrorism, pestilence, and climate activities we can at best only pray about.

Dealerships should consider adopting new ideas and technologies that should help them improve profitability opportunities in 2015. New technologies for F&I, service, and inventory help dealers boost per vehicle retail profitability, streamline service operations to maximize bay utilization, and improve inventory turn and gross.

Technology that can help the dealership create its own market can be a highly effective profitability tool. By its use, almost any dealership can boost the sale of another 10 to 20% additional units a month.

Prospects for a good 2015 appear on the horizon. To be positioned to maximize return on your share of this predicted 16.7 million unit market, consider investments that will help you service more customers faster, convert more prospects to sales, and create your own buy cycle to keep their existing customers in market more often, ensuring their valuable retention.

Boyd Warner is a co-founder and former CEO, and now co-chair, of AutoAlert®, Inc. (www.autoalert.com), the most advanced lead generation solution available on the market today. Contact him at boyd@autoalert.com

Boyd Warner

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