More than likely, most dealers haven’t been the only game in town for many years now. That increase in competition has spurred many dealers to adapt their business models over time. While having flexible financing options...
Change is in the air. We are reminded of that outdoors as another beautiful season of Fall foliage winds down. We are (or were depending on when you read this issue) reminded of it indoors as both presidential candidates constantly try to convince voters that they are the true agents of change. And as dealers, we certainly should be aware that things are changing very quickly around us, and we must be able to quickly adapt to those changes in order to succeed.
We must continue to evolve our overall product offerings and continue to develop ways to differentiate ourselves from the dealer across town (or across the street, in many cases). It may be better facilities, nicer cars, lower down payments, friendlier people, an easier sales process, faster approvals, a longer warranty or a money back guarantee. The point is, we must continually be changing and improving in order to stand out from the crowd.
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No longer can we wait around for traffic to fall in our laps just because we have a “We Finance” banner hung up on the telephone pole by the street. We must be constantly prospecting and contacting our database.
No longer can we just stick an ad in the paper; we need to be utilizing the Internet. I know not everyone is convinced that BHPH dealers need to be on the Internet, but it accounted for over 20 percent of our business last year. These days, when we are fighting to get every deal we can, I’m very thankful to have those sales!
No longer can we can pick up all the vehicles we need from local wholesalers and auctions. If you are like us, you now have to get vehicles from more sources, travel further distances, bid against more dealers, and pay a lot more money than you did when you first started in this business in order to supply your inventory needs. Ironically, as our ACVs have risen over the years, the amount of down payment we average has stayed sadly stagnant. Thankfully, our chargeoffs have not been impacted negatively as a result of that.
No longer can we assume that capital sources which we have always relied upon will continue to be available. All this recent economic upheaval in the market has many of the capital sources a little skittish overall, and in some cases downright standoffish to any business perceived to be in any way related to subprime. We need to be proactive about lining up alternative sources of funding now, rather than waiting to get that very unpleasant phone call from your current source notifying you your line is being called in.
No longer can we rely on just using traditional advertising media. We must be aggressive in trying new advertising sources and third-party leads. This is especially true if you have a good BDC in place that will allow you to track the results and adjust accordingly.
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BHPH used to be all about the financing, and in a large way, it still is and probably always will be. However, it has also become more like conventional auto sales, so we need to apply all those best practices to our model as well.
Be nimble and ready to move quickly when an opportunity arises. Don’t be afraid to try something new, and track the results. Let me leave you with a quotation from Benjamin Franklin that sums it up nicely: “When you’re finished changing, you’re finished!”
