Do you have a strategic plan for the second half of this year? Granted, the retail automotive industry has been on a roller coaster lately. But now is the time to assess your dealership’s performance over the past two quarters and set some milestones to achieve your end-of-year profit metrics. A successful second half of 2022 will require some flexibility and willingness to change behavior.
Looking ahead, there are several factors which spell opportunity for dealers to capture notable revenue in the second half of the year. Strong consumer financial positions, credit terms which remain largely favorable, and continued pent-up demand bode well for savvy dealers. While the Federal Reserve has raised interest rates and recession rumblings linger, consumer financing is still discounted when compared to rates during the Great Recession. According to the Federal Deposit Insurance Corporation (FDIC) quarterly report, aggregate monthly personal income has rebounded to pre-pandemic averages and auto loan volume has recovered faster than in previous down-turns.
For dealers, these favorable credit terms also spell revenue opportunities for those who strategically manage their inventory purchasing and pipeline sales. While inventory and supply chains remain an issue, the wheels are beginning to turn and factories are cranking out more units, albeit maybe ones without heated seats or auto-folding mirrors. Used car inventory is also improving, with bulk-sellers like CarMax reporting sufficient inventory to meet 30 days’ worth of demand. Rising interest rates may also be working in the industry’s favor for once, prompting a bit of a cooling effect on demand and allowing OEMs to catch up.
Savvy dealers who embrace new selling models and offer pre-order purchasing with flexible financing are positioned to secure more than their share of sales. Digital-first hybrid sales models are expected to continue to gain traction, with appropriately trained sales teams easily moving the customer through the sales and finance processes to final delivery.
How do you maximize revenue opportunities in the second half?
Incorporating F&I product education at the pre-order stage can:
- cultivate greater customer satisfaction with the entire purchase
- increase the total revenue
- protect the financing portion from outside competing lenders
Ensure F&I options are clearly stated on the website in a consumer-friendly manner. By helping consumers evaluate all the benefits available to them ahead of time, F&I managers can more easily build value and make the sale.
Maximizing Revenue Opportunities on Pre-Owned Inventory
As you work to increase your used-car inventory, it’s important to remember that you don’t have to rely solely on the manufacturer’s CPO programs. Utilizing a third-party CPO program on your other used inventory can:
- differentiate the dealership by giving customers greater confidence in their purchase
- drive more online and in-store showroom traffic
- set the stage for higher PRU and VSC product penetration
Finally, all of these opportunities fall by the wayside without training that includes all aspects of the sale, including financing, F&I products, and compliance. Your people are your most valuable asset. Dealer principals who invest in their teams will optimize revenue potential in 2022 and beyond.
As your strategic business partner, and F&I leader, EFG has the tools and resources to help you capitalize on revenue opportunities in the second half of 2022. With our award-winning client engagement model, we bring a wealth of industry expertise, business acumen, and tools to drive value for our dealer clients. We’re not just your F&I provider – we are your business partner. Contact us today to learn more about our profitable solutions that can drive success for your business in 2022.