Categories
Recruiting

On The Hunt For Talent

Good news! The retail automotive industry just notched the strongest March sales in 20 years! According to J.D. Power, first quarter retail sales climbed 26 percent, a 70.7 percent increase as compared to March 2020. A few other indicators climbed as well. The average price of a new vehicle rose to $37,314 in Q1, nearly $3,000 more than in 2020. Retail profits from new vehicles are also expected to reach record levels of $2,225 profit per unit, up $786 from 2020. Analysts at J.D. Power forecast that March will likely be the second most profitable month on record as total retail vehicle purchases trend towards a total of $48.0 billion.

These indicators clearly signal a positive trend for the first half of 2021. But there is a potential wrinkle. Will you have enough staff – and the right staff – to support those customers driving cars off the lot? People are a dealership’s greatest asset – and often its greatest challenge. In an EFG study conducted among retail dealers across the U.S., 65 percent of respondents said recruiting and hiring high-quality people was their number one challenge.

Every dealer and general manager has made a poor hiring decision in the past, and chalked it up to “we’ll do better next time.” But what did that decision cost you? Our research found that every Poor Hiring Decision® (P.H.D) cost the dealership $75,000!

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Categories
Economy

Springtime Boosts Consumer Confidence. Dealers, Stay Cautious!

For much of the country, the sights and sounds of spring have begun. This year, those green shoots of renewal come with an extra boost of optimism. Temperatures are warming, vaccine distribution is rolling out, and COVID-19 cases are trending down across much of the country. A third round of stimulus checks and income tax returns are hitting consumer bank accounts. Other signs of economic recovery are also evident, including a February rise in total nonfarm payroll employment by 379,000, largely attributed to gains in service and hospitality jobs. The Conference Board Consumer Confidence Index for February continued its upward rally, reflecting consumer’s general optimistic outlook.

With all of these positive economic signs, the retail automotive market should be primed for a great spring. But there are two sides to the story, both hinging on inventory of new and used vehicles. With caution, dealers will need to closely monitor both sides of the equation, as well as listen closely to buyer attitudes to capitalize on the positive trends.

New vehicle inventories are facing an unusual challenge. While factories have returned to work, pandemic-related global supply chain challenges are hindering parts availability. From plastics to semiconductor chips, manufacturers are left trying to source substitute parts, or simply waiting for deliveries. Dealers who are normally looking for space to house new vehicles at this time are faced with too few units. Consumers flush with extra cash are forced to either wait for their car of choice or pre-order vehicles months in advance. A recent Wall Street Journal article characterizes the situation well, indicating the forecasted retail automotive rebound is being hamstrung by situations thousands of miles away.

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Categories
Industry Trends Training

Compliance Training Counts

We are nearing the end of the first full month with the new Administration and there has been a lot of activity from Washington. Vaccine distribution is rolling out, COVID-19 cases are trending down across much of the country, and Congress has a stimulus package to address. All of these actions bode well for the retail automotive industry, which is eager to ramp up sales.

There have been some notable actions around compliance. Former Federal Trade Commission (FTC) member Rohit Chopra has been nominated to head the Consumer Financial Protection Bureau (CFPB). During his tenure with the FTC, Chopra was active in pursuing abusive and discriminatory lending practices. Specifically, Chopra has signaled interest in establishing more protections against auto lending abuses, specifically for members of the military, Black and Hispanic consumers. If confirmed, Chopra would replace current CFPB head Kathy Kraninger.

And, while recent efforts on the virus front look positive, consumers have become accustomed to shopping online and this trend is likely to continue. Dealers who have successfully pivoted to a more digital sales model are expected to continue to see success. But an increased focus on compliance from federal, state, and local entities calls for a solid compliance training refresher for dealer sales and F&I staff.

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