The Real False-Positive of Selling Cars During a Pandemic
Let me guess — you’re on the upswing. How do I know this?
Car Dealerships Everywhere Are Crushing It Right Now.
It all comes down to two incredible things that happened this year. Pent up demand and inventory shortages.
After suffering through financial losses caused by the lockdowns, car dealers are now seeing record-breaking sales and record-making profit. It doesn’t matter which franchise, it doesn’t matter the location -- everybody is crushing it. As the saying goes: "A rising tide lifts all boats." Unfortunately, many car dealers think that their boats got much better and that there is no tide.
But, a Word to the Wise...
If you’ve been taken in by the belief that cars sell themselves right now... Then you’re making a big mistake. And that’s because you’re likely ignoring the tools and opportunities to bolster your business for the future. The belief that you can sell your way out of trouble is the real false positive here!
The cold hard truth is this.
The Good Times Won’t Last Forever.
At some point in the VERY near future… Consumer demand will catch up. Automakers will flood dealerships with inventory. And on top of it all, there could even be a second wave of COVID-19. That’s the reality that many dealers choose to ignore. That’s the moment when they will realize that their boat is sinking and that they need all the tools to plug the holes.
And There Will Be Some Who Do Too Little, Too Late.
Don’t be one of those car dealers.
If I could give you just one piece of advice, it would be to find a way to make more money per unit sold now, because that’s the skill that will separate winners from losers when the market cools down.
So What Could You Be Doing Right Now To Bolster Your Business For the Future?
The first place you should look for additional profit is the finance department. Every dealership sells F&I products.
Five Steps to Maximize on Your Sales Today:
- Review and limit the products in your arsenal. Stick to basics — Vehicle Service Contracts, GAP, tire and wheel, combos, etc. Remember that finance managers have limited time to spend with each customer. They can’t show a never-ending list of products, or the customer will just tune out and say no to everything.
- Shop around so you can start making savings. Get a price comparison from another provider. I have been able to save car dealers $400 per VSC.
- Invest in the training of finance managers. You need your whole team to be watertight so that you can ride out the storm. When was the last time you had an F&I trainer in your dealership? Remember that training is something we DO, not something we DID.
- Set expectations and hold people accountable. Clearly communicate the average gross profit and product penetration per deal required in your dealership. Make sure to use a motivational pay plan that encourages both — product sales and gross profit — as well as above-average customer satisfaction.
- Most Importantly — Have. Cash. Ready. The sad truth is that a lot of dealers will not survive the next downturn. You want to be ready to buy these dealerships at a discount. One of the most efficient ways to get cash is to consider a capital advance from an F&I provider. In a nutshell, an F&I provider loans the money and the dealer pays it back through F&I product sales. This is another reason that training and accountability seriously matters.
Strategic and financial preparation makes life easier, so do it now while the music is still playing. It’s time to get your house in order and your F&I department is the natural place to start.