Gary Biskup on Diversifying Revenue Streams in the Independent Automotive Space
Q. How will independent dealers address the challenges of another year of flat unit sales?
A. While 2019 is looking like another flat year for new sales, it has a much different look for pre-owned. While pre-owned values remain strong, independent dealers need to take this time to diversify revenue streams, and find other ways outside of unit sales to increase customer retention. More independent dealers are realizing that they are leaving a significant amount of money on the table by not having a service bay and are beginning to invest in infrastructure improvements, or partnerships with local service centers to foster longer-term consumer relationships and create repeat business.
Q. What will be the top priority for independent dealers in 2019?
A.Independent dealers need to become much more selective when it comes to inventory management to make sure that all the vehicles they sell can be covered by the F&I products they sell. We’ll also see dealers begin to strategically use F&I product sales to foster repeat business. Teams will be trained on how to effectively position the benefits and terms of F&I products, with the message that once the coverage ends, bring the vehicle back to the dealership and trade it in for their next vehicle. This will help create a three to four-year sales cycle for repeat business.
Q. After pulling out of the subprime space in early 2018, lenders are beginning to come back to the space. How will this affect independent dealers?
A. Yes, lenders are reevaluating the subprime space and are beginning to get back in. They are even slashing rates to stay competitive. However, this does not mean that they have changed their lending criteria. To fully reap the benefits of lenders getting back into subprime, independent dealers need to focus on cultivating lender relationships. This means training their teams on each lender’s credit tier qualifications, stipulations, look-to-book expectations, etc.