One sales manager told me recently ‘you can have the best people and processes in the world but if you are not driving showroom traffic you won’t give your people the opportunities to deliver the results you need ‘
In a declining market, or one where values have fallen sharply, car dealers tend to panic and the first thing they do is start reducing their retail prices in order to get a better chance of attracting customers, however this does not always have the desired effect. It often confuses potential buyers who, seeing the disparity of pricing online, lose confidence that the market has again leveled out and that this may be the time to buy.
I recently spoke to a chap who wants to buy a 2 year old Jag XJR and he told me that he was astonished to see the spread of pricing between similar aged and spec models. However the fact that he wanted as low mileage and high spec as possible for his money meant he would simply have to increase his budget, which is the dilemma faced by car buyers but could also be the solution for car dealers.
If there is a dedicated person to monitor the web and update pricing then dealers will be able to be competitive with models which are plentiful and premium price cars which have usp’s. Customers will have a choice; buy a run of the mill example in plentiful supply and get a great deal as result or pay a premium for the more unique examples.
In recent years good dealers with canny buyers will look at models which perhaps others will not touch. For example we all know that white is the latest most fashionable colour and looks great in many makes and models but ask anyone who has been in the business a while and they will tell you that the perception was that white used to be the kiss of death. Also lifestyle colours, as they are now known, like garish green, beige, brown metallic or even our very own Focus and it’s “candy yellow” paint job, are still viewed by dealers as a potential overage car (meaning they won’t shift it anytime soon). However getting the buying price right and making the car look great on the net will smoke out that one person who just has to have that convertible in alpine yellow!
This is where canny dealers can remain profitable by understanding that, as the market changes and cars in some cases are worth 10% less than they were a couple of months ago, they can bail out of this stock replace it with cars at current prices and make up for lost profits. At the end of the day (it gets dark) and it is all about taking your medicine and reacting quickly enough but also selectively enough to the fact that just blindly slashing prices with no methodology is not likely to represent a successful long term business strategy.