Car manufacturers and the iPhone generation

599 More

Earning the right to be successful

581 More

Knowledge is power

676 More

Selling cars – it’s all about timing

959 More

Truemag

  • Home
  • About
  • Advertise
  • Archives
  • Contact
  • Subscribe

Modern car dealers – adapt or die!

There is no hard and fast rule on profit margins for used cars but where as in days gone by (maybe 5-10 yrs ago) the margins were in the “metal” or “chassis”, a few things have gradually eroded this. The main culprit is the Internet, which is both the best and worst thing to have happened to the motor trade.

One of the best things is that there is no longer a need to take out expensive advertisements in local newspapers or embark on radio advertising campaigns to attract potential customers with no real measure of success, the price of which could well run into thousands annually.

Information regarding models and prices displayed on a car dealers website can be altered, removed and added to at the click of a mouse. All this means that there is potential for generating far more enquiries for a lot less outlay.

Selling used cars is an extremely competitive business and the hard thing for franchised dealers is that in the past their only competitors were other franchise dealers, nowadays independent dealers are now doing the same if not better job of presenting, pricing and preparing their cars for retail sale.

With the dealers website effectively being an online showroom an independent dealer doesn’t have to have the same facilities as a franchised dealer as long as they can offer a comparable service and pricing structure..

The worst thing about the Internet especially for a franchised dealer is that with information on any make or model readily available and easily accessible the customer can now educate themselves to an extent where they know exactly what they want before they even need to enter a showroom. This empowers them but also (and critically if they are clever) enables them to play one dealer off against another. I have experienced this scenario myself, where a customer will come in and take a test drive and even commit to do a deal only to then play you off a against another dealer 200 miles away for the sake of a few hundred pounds. However this does force the dealer to “sharpen his pencil” if he wants to complete the sale.

In ‘the good old days’ most enquiries via telephone would come as a result of the yellow pages, local adverts or word of mouth, meaning if a prospective customer asked whether you had a particular model, you could ascertain his budget and target a car for him. Before he arrived the advertised price hanger price could be replaced with another which was £500 higher! Once the customer came in did the test drive, loved the car and wanted to buy it, you could then allow them to negotiate you back down to the original price, this was a common practice and allowed dealers to make a good margin. This margin, typically for volume dealers could be £1,000-£1,500 per car and up to £5-£10,000 for the more up market vehicles.

Today the situation is somewhat different, indeed most volume franchises such as Ford, Vauxhall, Peugeot, VW etc would be happy to make £700 per unit, hence why they are always looking for ways of generating more profit opportunities via add ons such as finance, and insurance based products.

So the tips are:

1) Internet research could help you target the right car at the right price

2) There is now a lot of competition and a great deal of choice

3) Don’t be afraid to play dealers off against each other

4) Be prepared for the “up sell”, they will almost certainly let you have the deal on the car
provided they can sell you an add on!

5) Don’t be afraid to wait for the right car if you have a very specific requirement re colour, specification etc., the car will come along that suits your needs.

Finally be ready when they say the immortal line when looking at a used car;
”You really need to make a decision now as one of my colleagues has someone coming in tonight who will buy this car if you don’t”

This is a classic close, don’t buy it unless you are ready to!!!

Jun 11, 2008In51der
  • Franchised car dealers and customer disservice
  • Car Servicing
  • Dealers will soon buy any car
  • Car dealers need to adapt to new buying behaviour
  • The car dealers sale price dilemma
  • Dirty tricks and their modern equivalent
  • Inchcape outperforming Pendragon in EuropeAnalysts claim buyers are turning away from Diesels
    Comments: 3
    1. Tim Rackard
      14 years ago

      The Internet changed a lot of things, and car loans are one of them. People who have tried getting an car loan online are thrilled with the ease and speed, not to mention the good deal they received.
      Cheers
      Tim

    2. Tony
      13 years ago

      No doubt the internet has changed the game up a bit, but often times the most successfull dealerships in the market are still the ones who are heavy on the radio advertising. I wouldnt discount this from my marketing plan just yet.

    3. jake
      13 years ago

      thats a good point often the most profitable dealers are the ones who dont join the internet price discount war,where being the cheapest is seen by some misguided managers as attracting the best customers,which is not neccasarily so remember ‘Curry motors nice people to do business with’ very popular radio and tv ads!!!

    In51der

    Motor Trade Insider - Bridging the gap between the customer and the Motor Trade

    14 years ago Blogcustomer service, profit, Used car110
    Most viewed
    Top 100 UK Dealer Groups
    39,482 views
    The car sales process and the “9 point plan”
    11,503 views
    webuyanycar review – They will buy any car but beware of the asterisk
    6,013 views
    Most commented
    Car sales and the power of silence…
    25 Comments
    Car dealers still not prepared to play the “we buy any car” game
    23 Comments
    A Traders Tale – Part Four
    22 Comments
    Win a pre-loaded Ipod Shuffle!
    19 Comments
    Bargain of the Week – StreetKa 1.6i Luxury
    14 Comments
    Bridal Hair Berkshire
    Fox Body to 2018 Mustang Parts
    and Accessories
    About MTI

    Motor Trade Insider
    is written by people working actively in the motor trade for people on the inside and people on the outside.

    Our aims
    Build a bridge between consumers and the trade, create Interesting and informative content, break down barriers and create better understanding, expose bad practices and rip-offs and promote outstanding products and service.
    Have something to say?
    We are always looking for experienced writers who can write good original quality posts on motor-trade-insider.com. Please contact us if you would like us to consider you. Make sure you give us details of your own blog or a link to some articles you have written.
    2017 © Motor Trade Insider
    Truemag theme by StrictThemes