Market indicators are certainly trending up these days for retail automotive dealers. According to J.D. Power and LMC Automotive, new-vehicle retail sales for May 2021 are expected to be the highest ever recorded for the month of May. Total new-vehicle sales for May 2021, including retail and non-retail transactions, are projected to reach 1,555,600 units, a 39.6% increase from May 2020. The seasonally adjusted annualized rate (SAAR) for total new-vehicle sales is expected to be 16.7 million units, up 4.7 million units from 2020.
Rising costs do not seem to be impacting consumers yet. While labor and inflationary concerns are capturing headlines and many people are just beginning to emerge from their pandemic bunkers, consumers are on track to spend $53.1 billion on new vehicles in May, the highest on record for any month. Total retailer profit per unit, inclusive of grosses and finance & insurance income, are on pace to reach an all-time high of $3,245, an increase of $1,678 from a year ago and the first time above $3,000 on record. Coupled with the strong retail sales pace, total aggregate retailer profits from new-vehicle sales will be $4.5 billion, the highest ever for the month of May and up an astounding 162% from May 2019.
The used vehicle market is also showing record numbers, with average trade-in values rising to $6,201, an increase of $3,229 (up 108.7 percent) from a year ago. According to the Manheim Used Vehicle Value Index, April delivered three straight months of records as wholesale car prices came in at 194.0, which beat year-ago figures by 54.3 percent and was nearly a 15-point jump from the prior record set a month before (179.2). The value for pick-up trucks alone jumped 77.9 percent!
On the surface, it would seem as though everything at the dealership was rosy. But things have changed while we were away, cloistered in our pandemic bunkers. Consumers plunged head-long into the online buying model, doing nearly everything from researching to purchasing on their electronic devices. Dealer general managers and their sales teams may still be wondering, ”Where did our customers go?” Those customers are still there, but they are living online, engaging with sales and F&I pros who are comfortable meeting them on this new playing field.
Fortunately, this situation can be remedied with some focused, accessible training. This month, EFG debuted its modular Training Subscription Service, that when piloted during the pandemic, resulted in an 18 percent lift in profit per unit sold (PRU) for clients post-training. EFG’s subscription-based training model includes both digital and in-person options, delivering timely tools in a learning environment that works best for each employee. The service also supports the new digital retailing model many automotive retail dealers are rolling out.
When the pandemic forced dealers to pivot their sales model for both in-person and online sales, EFG was ready. Aside from the company’s award-winning in-person classroom training, EFG had already invested heavily in building its media-rich digital training platform. This foresight allowed EFG’s trainers to continue driving dealer success through live, on-demand training. Additionally, students were provided with an in-depth library of training articles, videos, and podcasts on topics ranging from compliance and overcoming objections, to adjusting to the “new norm.” Our partners who beta tested the platform this spring, saw 30 percent higher performance increases, over clients not utilizing EFG’s training.
One of those partners is George Vasquez, General Sales Manager at Moritz Kia Ft. Worth. George and his team have used EFG’s in-classroom training for decades, and over the last few years have taken advantage of the company’s digital platform. With the subscription service bringing both together from a formal training strategy and pricing standpoint, they see an opportunity to accelerate their success and to increase performance standards.
While sales are certainly on the comeback trend, a 30 percent increase in PRU is measurable revenue. Make sure that sales revenue stays at your shop, and not the competition down the street with subscription-based training from EFG.