Set the Stage for 2010
The past year has unequivocally been a challenging one for our industry, yet as the economy slowly recovers and consumer confidence increases, we can look forward to a brighter future. As we near the end of the year, now is the time to assess the state of your business and create processes and practices that will build momentum for 2010. Following are five tips that can help you end the current year strong and start off the new year right.
Focus on Core Inventory
When you focus on identifying and selling your core vehicles, you make smarter inventory decisions and maximize profitability. Core vehicles are those that are proven and repeated winners for your dealership; they sell faster and at a higher gross profit on a consistent basis. When you have high-performing vehicles on your lot, you can decrease the size of your inventory and consequently reduce risk exposure, while making more gross profit. Take the time to research inventory technology systems on the market that can help you identify your core vehicles and support your current car-stocking processes.
Review and Fine-Tune Finance Company Mix
In today’s challenging market, you need a broad portfolio of finance companies to meet the diverse needs of your customers. By diversifying your finance company base, you’ll significantly increase the likelihood that you can finance every person who wants to buy a vehicle from you.
Your mix should include national and regional banks, captive and/or independent finance companies, and credit unions. Analyze your look-to-book ratio. Are you offering enough loan options to meet your customers’ needs? With a broader base of finance sources, you can ensure that every customer has a financing option that best fits their individual needs. At the same time, you’ll be ensuring that your dealership books as many loans as possible.
Leverage F&I Products and Accessories
If your dealership is not actively selling F&I products and accessories during the sales process, you’re leaving money on the table. These extras can add significant profit to any deal, and with standardized sales presentation systems and pricing, they’re easier to sell than ever. A customer in your F&I office should always be offered the full range of aftermarket products, including vehicle service agreements, GAP, security theft recovery products, credit insurance and more.
A natural next step is to then introduce accessories. Accessories represent a huge untapped opportunity. Last year, accessories sales topped an estimated $38 billion, and dealerships captured only 10 to 15 percent of that. Upsell DVD players, rims, tinted windows and more, and you could add $100 to $300 to every deal. Unlike the jobber down the street, you can wrap the cost of accessories into the loan and offer warranties and expert installation.
Extend Desking Solution Beyond Leasing
Your desking solution should be more than just your leasing solution. If you are using it to manage only one type of deal, you’re hurting your competitive edge. Your desking solution can help you quickly structure all types of deals – including retail, lease, balloon and special finance programs – so you can present all the options to every customer every time and identify the right finance companies to support your customers’ buying needs. When you extend your desking solution beyond leasing, you will optimize your deals and generate more profitable sales.
Finalize Identity Theft Protection Plan
If your dealership has not yet put an identity theft plan into place, or your plan has not been finalized, you’re taking a big risk. As of November 1, 2009, the Federal Trade Commission will begin enforcing the Red Flags Rule, and your dealership needs to be ready. The fact is that implementing an identity theft program makes good business sense no matter how you look at it. If you unknowingly sell a vehicle financed by an ID thief, the finance company will most likely make you buy back the contract, potentially costing your dealership thousands in lost revenue.
Start putting these tips into action to finish the year strong and build a foundation for a profitable 2010.
Vol. 6, Issue 11