Next year it will be more important than ever for car dealers to do things right

It’s likely that the next few months will be crucial when looking at the prospects for many car dealers in the UK. With showroom traffic at a 3 year low along with consumer confidence, there will need to be some radical new thinking and some real innovation to attract car buyers.

It never ceases to amaze me that, unlike many retail businesses, in the car trade we often wait for something really bad to happen before changing things rather than being proactive. It can often be simple things like changing the design of the used car sales display or just standing opposite and try to get a real understanding for what customers experience when they come into the business.

However the most fundamental aspect is attitude.

When things are quiet and the phones aren’t ringing are the sales and front line personnel motivated and ready for when they do have customers? Do customers leave with a positive impression of the experience they have been offered?

The other tendency is that everyone gets desperate and sales execs are under pressure to almost hound prospects who have visited the showroom but not yet made a purchase, sometimes to the extent where they can simply be scared off.

There is a fine line between offering a great service and following up on a lead to downright pestering and in harder times it is difficult to find the right balance when achieving targets is so much harder.

The effect on profitability of the 20% vat threshold cannot be underestimated especially when businesses are competing with each other to gain customers and as a result have already cut their margins to the bone. Long gone are the days when cars regularly achieved profits in the thousands; the average car sold for £10,000 will in general be more likely to achieve a £500 profit if it’s lucky.

Technology is certain to play an even greater part in the industry next year with more dealers embracing social media and actually using it correctly. Many will be improving the standard of their web presence and the quality and quantity of the imagery on their used cars.

Car buyers now want quicker responses and more detailed information before even visiting the showroom to make a decision and are likely to respond only to the dealers who provide this.

The finance and insurance side of the business is also more important than ever for both dealers and customers alike. Tie in schemes like extended warranties, service plans and MOT for life are all products designed for the long term profitability and retention of customers who will need to budget for everything in 2012 especially their motoring costs.

The dealers who do this most successfully are likely to remain profitable whilst all around the casualties mount.