New car sales formula

I think the phrase is ‘America sneezes and we catch a cold’ however, in the case of new car manufacturing and sales it seems that America catches a cold and we catch double pneumonia! Despite the bailout package introduced to stimulate the business of the big 3 (Ford, Chrysler and General Motors) in the states, plants continue to close and jobs keep being lost. GM has announced more job losses and the others are sure to follow suit. Honda, Nissan and now even Bentley in this country are already shedding jobs. The ripple effect will be felt globally, 60% of Nissan losses will go in Japan, but the associated damage to suppliers and companies who rely on a buoyant new car industry for their own success is also having a major say in what shape the business of new car sales will be in the next few months.

Wherever you look car makers and dealers are trying to find ways of enticing people to buy new cars, interest rates (for those that qualify) are at an all time low and discounts are now advertised in cash terms before a customer even steps into the showroom. As we have long predicted new car sales are no longer a profit opportunity for dealers, but now offer just a slim chance of attaching other products which may help generate some income. Used car sales both here and abroad are probably the only area which is keeping many dealers afloat at present and as we report wholesale prices rising still further due to major supply issues, car makers who do not act and try to rebuild some consumer confidence will oversee yet more redundancies and factory shutdowns.

Dealers we are speaking to tell us that they expect first quarter new car sales to be more than half what they were last year, and with much working capital tied up in unsold new cars the situation needs careful and constant monitoring. Like a research scientist or chemist a car retailer will have to keep tweaking the formula until he sees some positive outcomes, so diligence and attention to detail will prove to be the key to success.

It has become a recurring message but sales staff must maximise every lead and manufacturers need to compel potential buyers to compare finance deals between new and nearly new in the hope that, with major discounts consumers may be tempted to crossover to the “dark side” of new cars. Who would have thought that after all these years it would become the norm to buy a used car, used car salespeople had the same stigma attached to them as estate agents!

There are probably many new car sellers who would currently love to be that unpopular!