|The year 2008 has proven to be dramatic, eventful and downright stressful for many business owners. It’s almost like it was 1980 all over again. The bailout of the financial sector is now a reality, yet Wall Street is still skittish about the future. Investors have liquidated their portfolios and stuffed hoards of cash into safe havens like never before and the resulting drought in the capital markets has rendered good finance companies virtually useless to retailers as they scramble for hard-to-find inventory, money and sales.|
Consumer retail spending is at a 28-year low, unemployment is at a 7-year high, light vehicle production is at a 14-year low and it looks like car dealers will sell roughly 15 percent fewer new vehicles this year than last year’s dismal numbers. To make business even more challenging, the automotive secondary finance market has been cut by nearly 40 percent over the past six months due to the limited availability of capital, causing used car sales to be off by roughly 30 percent. And who knows what’s going on in the yo-yo market of gas and oil prices. To say the least, 2008 has not been an easy year to be a car dealer.
The plight of the car dealer is being watched by economic analysts because vehicle sales are a key indicator of the economy’s health. The auto industry alone supports roughly 10 percent of U.S. jobs, and dealers alone employ more than one million people and generate 20 percent of the retail sales revenue in most states. Whenever we lose dealerships, many people are affected, including the consumer.
According to NADA, roughly 60 franchise dealers per month—that’s two per day—are closing their doors or downsizing to used car lots. They are literally being hammered financially by the economy, and many won’t survive. We stand to lose roughly 3,000 franchise and another 5,000 independent dealers by mid-2009. So, what is there to look forward to next year?
The answer is change. As in the prophetic words of former GE Chairman, Jack Welch, “When the rate of change inside an institution becomes slower than the rate of change outside, the end is in sight.” The old business model of huge inventories and huge, irrational marketing budgets with razor-thin profit margins is over. What I am looking forward to next year is change because with change comes opportunity.
What do you think Henry Ford would do if he were running Ford today? There are approximately 2,000 Toyota dealers in the country and twice as many Ford dealers; a typical Toyota dealer sold 1,600 vehicles in 2007, while Ford dealers averaged 236 and GM dealers, 202. Do the math! Change is inevitable, and according to Darwinian rules, the weak and inefficient will be weeded out.
I have put together the acronym “FAST” for you as you plan for this upcoming year, and I hope you look at 2009 with a “glass is half full” mindset. Focus on the positive, look for opportunity, embrace change, never stop learning and make it happen.
FAST Thinking Strategic Planning
Once you answer these complex questions, follow your gut instincts and use the experience of your team to set strategic goals and to develop a plan that will improve your position in the market. Prioritize the goals of your plan and identify the top three on which you can focus the efforts of the team. Remember the words of Henry Ford, “Whether you think you can or you can’t, you’re right.” Attitude is everything, but the key is to know precisely the direction you need to steer and drive the business in order to achieve your company’s vision for the future.
Accelerate – Accelerate action and quickly go from planning to execution. Transpose your top three goals into a logical series of operating initiatives that, if carried out over the next six months, would most likely accelerate the movement of the company toward achieving those goals and ultimately in the direction of your predicted vision. Specify and agree on the resources essential to these operational initiatives and the required metrics to measure success.
Strengthen – Strengthen your position by removing the obstacles. Ask yourself what major organizational obstacles might prevent you from moving further toward your goals. Specifically, identify those three obstacles that, if addressed, would most effectively speed the process. Keep your focus on the goals, and get out and clear the path to success.
Tie It Together – Integrate all the preceding activities, and refine them based on what you learn. Continue to learn along the way, and when – not if – things change, react tactically, reassess the situation, redefine the future and plot a new course of action. The key to success for strategic planning is to remember the tactical element that is change—the only true constant in business. This FAST thinking approach to strategic business planning is incremental in nature, but above all, it balances near-term performance with long-term direction. Without the vision of what is in store for tomorrow guiding the way, surefooted small steps in any direction won’t take you far.
Auto retail veteran and F&I products expert Paul McCarthy has joined AUL Corp. as vice president of national sales.