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Dealership Training Industry Trends Training

Consultative selling

The United Auto Workers strike at a few U.S. manufacturing plants has consumed the daily news cycle over the past few weeks. While new vehicle inventory has largely recovered from the pandemic-induced supply chain issues, dealer principals are closely watching how events unfold before adjusting year-end plans.

As dealers face an uncertain 4th quarter, consumers are also casting a sideways glance at their economic future. According to the Experian State of the Automotive Finance Market Q2 2023 report, auto loan delinquencies rose past pre-COVID levels and new vehicle values continued to climb while LTV decreased. While the Federal Reserve held interest rates steady this month – for the second time this year – rates remained at a range of 5.25 percent to 5.5 percent, the highest level since 2001. But auto lenders continue to take their pound of flesh as the average auto loan interest rates across all credit profiles ranged from 5.18 percent to 14.08 percent for new cars and 6.79 percent to 21.32 percent for used cars.

Americans owe $1.56 trillion in auto loan debt, according to the Federal Reserve Bank of New York, accounting for 9.2 percent of American consumer debt. The average payment for new vehicles was a record-high $742 in the second quarter of 2023, with loan terms up to 74 months, according to Experian. Think about paying $742 every month for the next five years on possibly two vehicles. A lot can happen during that time, including layoffs, unexpected repairs, theft, accidents, etc.

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Compliance

Flex Those Compliance Muscles

The Consumer Financial Protection Bureau (CFPB) has been busy this year bringing lawsuits against auto lenders and servicers. Just this month, the agency sued the servicing arm of U.S. Auto Sales, alleging USASF Servicing cost consumers more than $10.1 million by mishandling customer refunds, double billing for collateral protection insurance and failing to apply excess customer payments to interest. The suit also alleges that USASF Servicing wrongfully repossessed vehicles at least 82 times, erroneously triggered vehicle starter interrupter “kill switches” at least 7,500 times, and incorrectly activated a 10-second series of tones meant to signal late payments 71,000 times. Imagine the consumer’s surprise when their car won’t start or begins beeping – especially if their loan was in good standing or they weren’t informed of these archaic little features when they purchased the vehicle!

Speaking of annoying entanglements, I’m sure your dealership has been busy implementing policies and procedures designed to support the Federal Trade Commission (FTC) Safeguards Rule. While these added requirements may seem burdensome, here’s an interesting way to think about those guardrails surrounding the customer’s data.  So far this year, the FTC has received 5.7 million total fraud and identity theft reports, 1.4 million of which were identity theft cases accounting for $10.2 billion in losses. According to the National Council on Identity Theft Protection, there is an identity theft case every 22 seconds in the U.S. and 33 percent of all Americans have faced some kind of attempt in their lives, with experts predicting this number could increase significantly this year.

While the CFPB and FTC are focused on lender lawsuits and other fronts, there is an opportunity for retail automotive to take advantage of the lull. Now is a great time for your dealership to flex its compliance muscles.

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Dealership Training Economy EFG Companies Electric Vehicles Industry Trends

Educational Revenue Opportunities

Attention agents – it’s time to dust off your playbooks, education resources, and training best practices. Your retail automotive and powersports clients are going to need some knowledge in order to have a successful second half of 2023. Gone are the days when sales teams simply responded to pent up demand and took orders for units. Economic headwinds and rising interest rates are prompting consumers to delay purchases. And growing inventories are erasing those healthy margins logged over the last three years. Agents who focus on electric vehicle (EV) education, debt protection products, and sales best practices will prove invaluable to dealers who need to ramp up their level of customer service for a profitable close to 2023.

Let’s look at some of the issues facing your clients – and how you can help them overcome the challenges.

According to Kelley Blue Book and Cox Automotive, May new vehicle inventory reached its highest level in two years. The average listing price ended the month at $47,172, four percent higher than a year ago. To add insult to injury, interest rates on auto loans also continued to climb in May. Your dealer is working with a lot full of high-priced vehicles and consumers who are increasingly uncomfortable taking out a loan for a new car.  These challenges spell opportunity for agents to serve as the trusted resource for dealers, providing their staff with the tools and resources to make the most of every sale and maximize revenue opportunities.

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