Ready for the new and forthcoming market?
What you are about to read is the reality of where you are based on present market conditions. Many factors have gone into creating this market, with the most notable the difficulty in obtaining parts at the manufacturing level. Simply stated, the manufacturers in general cannot complete the production of the product and get it delivered and ready to sell. Inventories are bulging at the plants and are scarce at the dealer level. Most dealers average about 50/50 new/used. The new market is beyond difficult, and the used market is booming. This brings us to where we are in today’s marketplace.
How do current Sales Market issues affect your business model?
The change from the normal means you are now operating in an unusual mode and your Fixed Operations is seeing dramatic changes in gross profits. As an example, take a store which normally sells 100 vehicles per month and assuming that the store retains around 50% in service. The breakdown is about 12% of pre-owned and 40% of new are using your service department. On the sales side you are losing your new car customers due to conditions you cannot control. This is definitely going to greatly affect your profitability unless you take action immediately. The downside for you is less customer pay dollars in your service lane, greater marketing expenses to try and maintain your store’s historical sales volume. You are going to experience this new paradigm for at least 6 more month or longer.
You are asking yourself “What can I do and what are my options”. Here is something many dealers have already done, and the opportunity is open to you. Using Premier For Life, specifically a loyalty/retention product which has been hugely successful in causing customers to want to use a dealer’s service department. Dealer statistics show us that without a robust program in place the average dealers will see only about 12% of pre-owned customers return for service. With the Premier For Life product in place the retention of pre-owned customers increases and is equal to or exceed what you have experience for new vehicle customers. So, your retention will go from 12% to 70% and higher. You can do the math and see that with these higher percentages your customer pay dollars will increase exponentially. The average customer pay repair order on a 1 year old vehicle is about $100. On a 4-year-old vehicle it is $315! It doesn’t take a genius to figure this out.
Current market conditions will result in a huge increase in customers who find themselves with negative equity and will decide to hold on to their present vehicle for a longer period of time. You want to be in a position to meet their servicing needs and give them reasons to return to your service department.
Don’t wait or hold meetings to decide what to do about these conditions you are facing. Contact Premier For Life. Lock these customers into your fixed operations NOW and you will reap the benefits going forward. Allow us to show you how you can easily weather this storm and come out the other side as a winner.