Dealership Training Economy Industry Trends

Preparing for a Different Kind of Sales Season

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It’s officially fall which brings football, cooler temperatures, and 2022 vehicle models. We can predict that at least two of those things are happening this year. New vehicle production challenges continue to linger. Chip shortages, supply chain disruptions and factory shutdowns still plague our need for new inventory.

According to Cox Automotive, only 1.2 million new vehicles were ready to roll onto lots as of July 19th, compared with the average inventory of 3 million. In August, dealers reported just under 1 million new cars on lots, 72 percent lower than August 2019. The major manufacturers have projected production reductions well into the fall, making the new inventory forecast even gloomier.

Regardless of inventory challenges, dealer profit margins continue to stay healthy. While light vehicle sales fell nearly 18 percent in August compared with a year ago, the average sales price hit a record $41,000, according to J.D. Power. Improving economic indicators and the semblance of a return to ‘normal’ has made consumers more willing to pay more for the vehicle they really want as opposed to settling for the vehicle they can find.

While consumer demand bodes well for dealers, you will need to approach the autumn sales season a little differently. Consider these options to keep your profit margins healthy.

Reservation Education

One of the biggest trends for 2021 has been the reservation model. Dealers are selling not just what’s on their lot, but also what’s in their pipeline. However for this model to truly work, consumers really need to understand the process. For example, when a customer reserves a vehicle, they often must pay their down payment at the time of reservation. At this time, they may be thinking that the current manufacturer incentives will still apply when the vehicle is delivered, weeks, or even months later. However, this is not always the case. While some manufacturers may “lock in” their current incentives at the time of reservation, others do not, meaning that the incentives could change drastically or disappear altogether, resulting in significant changes to the vehicle’s price.

While this can potentially be very frustrating, dealers can use this as an opportunity to create ongoing communication with their customers to educate them on not only the reservation process, but also the finance process. At EFG Companies, we recommend implementing a sales funnel around orders for delivery, where sales team members reach out to the customer by their preferred method of contact at the following touch points:

  • When a VIN is assigned
  • When production is complete
  • When delivery date expectations are set
  • To provide a final delivery date and introduce the finance manager to set expectations on the process when the customer comes to the dealership to take delivery

By building in these communication touchpoints, dealers can create a more streamlined approach to F&I while also providing superior customer service.

Customer-first Mindset

Dealers who put the customer first and actively search for the vehicle that meets their customer’s specific needs are more likely to lock in the deal. This is not a new mindset, but in today’s tough inventory market, it does require more legwork on the front end. Partner with the customer to understand not only what they want, but also what they can afford. Then work to secure the vehicle that best works for them. This type of partnership makes your dealership an advocate for your customers, giving you five stars on the Google review, a thumbs up on Yelp and a few personal referrals. And these days, those recommendations are gold.

This year’s sales season might be different, but it can be very profitable if you use the right approach. With more than 40 years of experience helping dealers whether economic ups and downs, EFG Companies knows what it takes to generates lasting results. Contact us today to get started.