At the beginning of October, Cox Automotive reported that while new vehicle sales declined 1 percent at the end of September, overall sales are up19 percent year-over-year. For used vehicles, sales increased 4 percent at the end of last month and are up10 percent year-over-year. While this might sound like a rosy projection for the remainder of the year, there are some troubling factors.
Auto loan rates moved higher to start October with an average new vehicle loan trending up to 9.95 percent and a used vehicle loan is tracking at 14.16 percent. Consumer sentiment is dipping down as the rate of inflation continues to impact Americans. Additionally, new vehicle supply is up 15 days year-over-year and holding steady, meaning vehicles may not move off your lot at a steady clip.
But there is a much bigger issue impacting your vehicle sales – failure to negotiate! I’m not talking about the hard-nosed, fight for every dollar type of negotiation. I’m talking about engaging closely with customers, understanding their needs and financial situation, and working with the entire dealership staff to find the right car for the customer.
During the pandemic, vehicle inventory was limited, and dealers were able to charge a solid mark-up on each unit. Interest rates were low and consumers with some incentive cash were willing to pay a higher price. With little-to-no in-store engagement, the sales team took the order online, handed the customer over to F&I to close the deal, and confirmed the delivery date with the factory.
Fast forward to today and the world of retail automotive is very different. New vehicle inventory has largely returned to pre-pandemic levels and consumers have a host of makes and models from which to choose. The increase in hybrid and EV models has also increased significantly, complicating the buying decision.
Engaged dealer sales teams can work with the potential buyer, ‘negotiating’ to determine the vehicle must-haves and the nice-to-haves to place the buyer in a vehicle they can afford. It takes honed skills to hold these conversations. For experienced sales professionals, that muscle has atrophied a bit. For new team members, today’s selling environment is new territory. And, for F&I team members, the concept of working with the sales team to provide training on affordability is often a foreign concept. Collaborative engagement and negotiation is a critical skill and many dealership teams are lacking in this department.
The good news is – these negotiation skills can be reinvigorated or quickly learned through focused training. While practicing effective negotiation is an art, the mechanics of engaging, earning the customer’s trust, and discerning their needs can be taught by seasoned trainers.
There is one additional benefit to effective negotiation that involves the entire dealership team – an engaged service drive. Rather than waiting for the customer to need service or a repair, collaborative negotiation involves the service team at the time of the sale. Even if it’s a simple introduction – or a detailed explanation of maintaining an EV – bringing the dealership team to the negotiating table demonstrates that the customer isn’t just another sale. This level of engagement creates invaluable customer satisfaction.
As you create your 2024 business strategy, make sure you are investing in your people across all departments to perfect their collaborative negotiation skills. Work with your provider to deliver training that puts customers in the right vehicle. Make sure your team is well prepared to sell – not just take the order. Our proven team of EFG trainers bring years of sales experience to your team. At EFG Companies, we’re more than an F&I provider, we’re your business partner with years of expertise in the retail automotive industry. Contact us today to learn more about how our team can help you achieve your winning strategy.