Adam Ouart on Engagement in the Agent Space
Q. How will a third year of flat unit sales affect agents?
A. Going into a third year of flat unit sales, agents need to be helping dealers prepare for reduced vehicle sales. It’s important to remember that this flat sales year is still at record highs when compared to historical unit sales. We’ve reached the peak of just how far sales can climb, so going forward the emphasis needs to be on maximizing profit potential on each sale, and on increasing customer retention by:
- Placing a heavier emphasis on their service drive retention, through F&I product sales. Dealers will evaluate their product menu and F&I pay plans based on those products that encourage customers to return to them for service.
- Training service advisors to better recognize opportunities for maintenance, enhance dealership communication, and sell less expensive consumer protection products from the service drive.
- Increasing transparency around the F&I process as a whole by providing information about the consumer protection products they offer online. The goal with this is to streamline the F&I process with more educated consumers, and generate more interest in the benefits provided by F&I products before consumers even enter the dealership to help increase PRU and penetration. Empowering the customer with information needs to continue to be out front and center, regardless of how the customer approaches dealership.
Q. How should agents help dealers maximize their opportunities in pre-owned sales?
A. Pre-owned vehicle values continue to stay strong. Manufacturers have reduced their incentives and are no longer flooding dealerships with too many vehicles. As a result, vehicles are maintaining their values better in both new and used departments. Because of this, agents are be better positioned to offer CPO programs that can cover most of the inventory on a retail dealer’s pre-owned lot. This will help differentiate the dealer in their space, and enable them to capture more front-end margin.
Q. What should agents be doing to protect their own businesses from potential disruptions?
A. Agents themselves will need to evaluate how to insulate their business from shrinking profit margins. They will look at dealership production levels more closely and will be more engaged with dealership operations overall to keep production levels high. We’re also seeing agents ask for more innovative products to implement into customer retention strategies. They are re-evaluating offerings to provide F&I solutions that better matches customer expectations and dealer needs.
At the same time, agents will focus more of their efforts on acquisitions to offset any production level decrease. In 2019, we can expect agents to be more circumspect and selective when it comes to approaching dealers. There will be an increased competition among agents for those higher-volume dealerships, which will force agents to differentiate themselves based on more than just products. Strategic agents will take a more engaged approach to both servicing and acquiring clients, identifying needs, providing training, product menu updates, pay plan support, pre-owned inventory analysis, and even compliance.