Article

Looking For Answers?

August 2006, Auto Dealer Today - WebXclusive

by Greg Goebel - Also by this author

From the December 12, 2005 issue of Automotive News came some telling statistics. Maybe some of you saw it, the monthly chart that lists the number of sales per dealership (in the U.S.) for each of the various brands being sold in the country. It breaks out cars vs. trucks for the month, totals them, and then compares that to the previous month.
If you are a Lexus, Toyota, or Honda dealership, you are generally smiling. These three divisions led the country with 123, 119, and 91 sales per dealership for November. Past that, there is more cause for concern than celebration.

Ford 44, Chevrolet 39, Dodge 28, Chrysler 17, Pontiac 11, Cadillac 10, Buick and Lincoln 6 (?!) and Mercury 5 (!!). Is it any wonder that new car dealers often lose money in the new car department? I spend a lot of time consulting with dealers all across the country, and I assure you that I see many dealerships where the cost just to open the doors is more than the gross profit that will be generated on the sale of 11 new Pontiacs a month. Sure, General Motors likes to team Pontiac with Buick and GMC (12 in November), and it’s no wonder why. When combined, the three averaged just 29 sales in November. That total would rank just above the median number of sales per dealership in November, which just 25. It is no wonder that my phone is ringing so often with dealers looking for answers.
So what does all this mean? Well, first of all, it is not new news. If you look at the country as a whole, 2005 turned out to be a very similar year in new vehicle sales as the past three. (That does not mean that all regions of the country performed at the same pace as previous year, just the aggregate.) So for a number of years, franchise dealers (on average) have been faced with the prospect of having to squeeze blood out of a turnip.

Second, the retail automobile industry is not just new vehicle sales. Most dealerships have a number of profit centers under one roof - used vehicles, service, parts, body, rental, fleet and commercial, and I would be remised to not include Special Finance. Some even include boutiques and coffee shops/restaurants. These are vital profit centers, that without them, the average dealer would likely not be able to sustain a viable operation.

The important point here is that unlike your typical retail store – think Target or your favorite furniture store – few retailers are required to be experts in so many diverse operations. Also, few retail industries, if any, are regulated anywhere near the extent that the auto industry is. All this means dealers and their teams require more diverse training and education than most retailers. Another factor to be considered is the average dealership also has higher employee turnover than other industries. The result is that the average store spends much of its annual training efforts in orientation and familiarization rather than personnel development.

Once a year, that learning can be accelerated. Each year in February (or late January) the nation’s dealers converge at the NADA convention. With over 550 exhibitors in the Expo, 49 workshops for every profit center of the dealership, 25,000+ attendees, most every manufacturer, and powerful keynote speakers, there simply isn’t a better opportunity to avail yourself, and your team, to opportunities to learn and develop.

These opportunities are not limited to franchise dealers. While most independent dealers may not have as many profit centers as their franchise brethren, the importance of knowledge and development is just as vital. Sure, it may cost a few dollars more to attend as a non-NADA member; so what? Attend one time and you will never miss it in the future.

I spent over 18 years as a dealer, and I can tell you that there were very few times I missed the convention. Most times, I went with key managers in tow. Yes, there were times I complained about the enormity of it all, or the fact that I was going to have so many key people out of stores at the same time. The simple fact is that the NADA convention is just too good of an opportunity to pass up.

For those that are going, one bit of advice. I learned that you must go with a plan. If you just show up and start wandering, there is so much to see, do and learn. You wind up at the end of the convention realizing that you missed important speakers or vendors that you really wanted to see. Spend time with both the preplanning guide in this issue, and the information online at nada.org to make sure you are aware of all the opportunities at hand, you will be glad that you did.

Vol 3, Issue 2

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