By Kyle Ballinger
From the July issue of UCD
Succeeding as an independent dealer often means doing more with less and adapting to ever-changing market conditions and customer needs.
Thankfully, no matter the challenges at hand, this industry proves over and over that its resiliency, creativity and grit can overcome them.
The past few years have brought everything from scarce inventory to stubbornly high interest rates, but the good news is the automotive marketplace and the economy as a whole are expected to continue on a slow but steady course toward normalization.
Economists are not predicting any job losses through the rest of this year, spending is expected to remain high despite those high interest rates and inflation has cooled. While not ideal, these conditions lend themselves to success for independent dealers who are thoughtful and proactive as they make decisions on everything from inventory to staffing and vendor selections.
While there are many ways to grow your business this year and beyond, here are seven considerations:
- Find the right inventory. As tempting as it may be to get your hands on what’s available, don’t forget that the money is made at the buy. Profits are lower than what they have been historically, so you have to be smart. Find the right inventory based on your past sales, the success of other dealers in your area or any other data you can get your hands on. And source it in every way possible, from wholesale to trade-ins and more. Wholesale prices are softening slightly which should help. Paired with future interest rate cuts, affordability will begin to rise once again.
- Price vehicles based on market trends. Do your research and get it right to both turn inventory quickly and maximize your profit. And don’t get tied to a certain vehicle or price. Follow market trends and adjust accordingly. If a vehicle isn’t working out, move on quickly. Knowing exactly what you have in a vehicle will help you make the right decision at the right time.
- Make the right hires. Find people who free you up to do what you need to do and allow you to focus on how to make your business as profitable as possible.
- Make the right decisions for your business. From recon to transportation and beyond, figure out whether it’s more profitable to bring services in house or outsource them. It’s different for every dealership.
- Market your inventory. One place where you can’t afford to cut expenses is the way you market your inventory. People need to be able to find your inventory where they’re looking. This is one area where cutting costs can end up costing you.
- Free up your cash flow. With a floor plan, you can source more inventory while also saving your cash to invest in other parts of the business. These types of enhancements can generate additional revenue opportunities or create a better customer experience that will help you stand out from your competitors.
- Understand your floor plan. I get asked all the time how to make the most of a floor plan or how to pick the right floor planner. Again, the answer is different for every dealership. One commonality is to make sure you educate yourself on the ins and outs – and floor planners should provide the transparency for you to do that. I also encourage people to shop around to make sure the floor plan they choose is the right one for their business. Make sure they floor any inventory from any source you use and that they provide the services your business needs beyond just funds. And then take advantage of those services – particularly when it comes to technology innovations as the way we do business continues to move in that direction. Those services should evolve over time. You’re always adapting your business and floor planners should as well.
Although the current marketplace has its challenges, it’s in times like these that dealers who are making the right business moves can thrive. If you pair that with vendors who are in it with you – those with the expertise and flexibility to help you succeed and understand your business – you can get ahead of the pack and stay there.n
Kyle Ballinger
AVP, Sales, for NextGear Capital
Kyle.ballinger@coxautoinc.com
