Categories
Compliance

Take Action Now!

The retail automotive industry is buzzing about the Federal Trade Commission’s recent proposed changes to regulations impacting federal advertising laws and prohibitions on unfair and deceptive dealership practices. The 37-page document outlines six key areas the agency would like to address:

  • Full up-front pricing, costs and finance disclosures
  • Sales process disclosures
  • Add-on product benefits
  • Bait & switch
  • Surprise junk fees
  • Record retention

The public commentary period closes on September 12, at which time the agency will evaluate the responses and make a final ruling. Industry associations – including NADA – requested an extension to the 60-day review period proposal, which the FTC declined.

Categories
Economy Industry Trends

Successful Second Half Requires Flexibility

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.

Categories
EFG Companies

Make the Most Out of Maintenance

Possibly since the dawn of the first dealership, dealers have known the importance of building repeat business through the service bay. The more the customer relies on your dealership for all their vehicle needs, the more likely they will return for that repeat purchase, creating a cycle that can last for as long as the customer is driving. However, that golden cycle of purchase-service-repeat seems more elusive than ever.

According to XTime Metrics and Cox Automotive, for service departments at U.S. dealer franchise locations, the Repair Order Volume Index in January 2022 decreased month over month by 9.0 percent from December 2021, while the Repair Order Revenue Index increased 1.6 percent during the same time frame. Repair order volume remains well below pre-pandemic levels, but revenue per repair set another record high. The service bay was less busy, yet revenue continued to boost the dealership’s overall bottom line, generating an average of $490 in revenue per repair order.

Service revenue proved so lucrative for retail automotive dealers in 2021, that six of the country’s largest dealers notched a 12.6 percent increase in the fourth quarter of 2021 vs. 2020, according to company filings. Clearly, measurable revenue can be driven in the service bay.