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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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Economy EFG Companies Industry Trends

No Longer A Seller’s Market

While the industry bemoaned the vehicle production challenges over the last few years, dealers were able to sit back and let the sellers’ market work in their favor. Now, with new vehicle production ramping up and the market stabilizing it’s time to use a different approach. For a dealership to continue to see a sustainable level of profitability for the remainder of 2023, dealers must focus on returning to customer service best practices for both sales and the service drive.

The first half of 2023 saw a surprisingly strong new vehicle market as the available inventory issues resolved. For the most part, a heavy push of fleet sales and a resilient, prime-rated, U.S. buyer overcame high prices and record auto loan rates. However, according to Cox Automotive’s Chief Economist Jonathan Smoke, the second half of 2023 will likely not have the rosy sales experienced earlier in the year. “I do not believe we are on the cusp of exciting growth ahead. The market will still be limited by total available supply, but demand will also be limited by the level of prices and rates, which are not likely to come down enough to stimulate more demand than the market can bear.”

In fact, the first glimpse of this decline began in May as new vehicle inventory reached its highest level in two years and interest rates on auto loans continued to climb. May’s average listing price ended the month at $47,172, approximate four percent higher than a year ago. The average transaction price (ATP) for May increased a scant 0.5 percent from April to $48,528, up $251, according to Kelley Blue Book, a Cox automotive company. While Cox Automotive has increased its 2023 new-vehicle sales forecast to 15.0 million, a gain of nearly 8 percent from 2022, the company expects “headwinds will grow in the second half of this year as credit availability and unfulfilled demand become scarcer.”

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EFG Companies Featured Fixed Operations

In Fixed Ops, Coordination Counts

When was the last time you did a health check of your fixed operations (fixed ops) department? How is fixed ops affecting your CSI scores? Is the department helping or hurting your customer retention efforts?

According to Cox Automotive, fixed operations as a profit center is more important than ever in 2023. Dealers should see continued strong dynamics in the service lanes, with or without a recession, as owners try to hold onto their vehicles longer. While the average ticket size increased in 2022, revenue is not a guarantee. In order to be successful in fixed operations, all of the cogs must be coordinated – not only within each dealership’s service bays but across rooftops as well.

Savvy dealers take a holistic approach to fixed ops, sales and F&I with the understanding that each area of the dealership directly impacts overall dealership operations and the total customer experience. While each department might occupy a separate line item in the spreadsheet, failure to understand and capitalize on a coordinated customer service approach reduces efficiency, profitability and customer retention. Let’s look at a scenario where lack of coordination within the service department impacted the bottom line.