While EFG Companies sees some market strength and positive economic and consumer trends, ongoing price concerns and lingering inflation coupled with the heightened political climate spell challenges for retail automotive and powersports dealers through the end of the year.
Company leaders recommend that dealer principals, agents, and lenders maintain a customer-focused approach to maximize revenue opportunities while strategically emphasizing education and value.
According to the Q2 2024 Cox Automotive Dealer Sentiment Index, US retail dealers are pessimistic and cautious, with many seeing a weak market. Dealers continue to face pricing pressures on a variety of fronts. From higher interest rates and longer days-on-lot to parts pricing and labor rates, profit margins are shrinking on all sides. The second half of the year doesn’t look much different. In June, the International Monetary Fund projected that the United States economy would grow more slowly, resulting from weaker consumer spending and a softening job market. In July, The Conference Board corroborated the IMF’s findings, stating that they expected consumer spending to cool further and real GDP growth to decelerate. They do not expect GDP growth to pick up until later in 2024 or 2025 based on if and when the Federal Reserve will cut interest rates.
Despite these challenges that are outside of dealers’ control, EFG leaders see a path to profitability for those dealers, agents, and automotive lenders who refocus on leveraging the things they can control.
President & CEO
EFG Companies
“While continued high interest rates, consumer reluctance to spend, and election year distractions add an aspect of volatility, dealers have plenty of controls in place to weather this uncertain time. Having helped dealers achieve their sales and profit goals through six recessions and 11 presidential elections, we firmly believe that refocusing on controllables combined with a value-based approach to differentiation will lead to success for our clients in the retail automotive, powersports, and lending spaces.”
Jennifer Rappaport
Chief Sales Officer
EFG Companies
“Volatility is nothing new to our industry, and we’ve all experienced markets like this in the past. When front-end margins shrink, back-end margins must expand and we believe the best way for dealers to accomplish this is through optimally-performing F&I products. Our clients’ biggest differentiator right now is the pairing of sales and finance training with our PRU guarantee, which enables dealers to provide better options for navigating the marketplace, positively impacting penetration rates.”
Eric Fifield
Fifield and other EFG executives emphasized that numerous opportunities remain for the remainder of 2024.
Focus on what you can control
Dealers: Set aside feelings of uncertainty and focus your efforts on F&I, training customer service best practices, and differentiating their dealerships based on the value provided.
Focused flexibility matters
Agents: Provide traffic-driving solutions paired with proven training and recruiting designed to maximize ROI are poised to make the most of the opportunities available.
Big-ticket recreation for the win
Powersports Dealers: Maximize online sales engagements, focus on localized financing, bolster service capabilities for older units, and reinforce training for all team members to remain positive.
Embrace change
Lenders: Are you tired of seeing your pool of qualified auto finance applicants shrink? Bridge the gap between price and interest rates with consumer education and protection products and set your institution up for success in 2024.