As we welcome in 2012 it is worth reflecting on what a very challenging year in the motor trade 2011 was. It was a year which saw many dealerships suffering, some having to call in the administrators and some sadly going under completely.
Many car buyers deciding to delay or cancel their decision to buy another car in favour of sticking with what they have, has meant there has been much lower showroom footfall leading to serious price wars between dealers competing for less business.
The other factors include the VAT rise to 20% which is a big drain on profitability and the fact that many buyers decided to buy cheaper older cars with smaller engines which were cheaper to maintain, tax and insure.
However there have also been some positive aspects with fantastic new products and technology coming to the market and, if you speak to Land Rover dealers for instance customers queuing to buy a new Evoque stretch around the corner!
Having attended some used car conferences this year we have seen evidence of an industry which is sharing ways of staying ahead of the game and attempting to deliver better experiences for customers whilst remaining profitable. We have seen how the internet in particular is being used in different ways to give more information to car buyers which is a massive change from traditional ways of interacting with them.
The challenge to car dealers, and will be even more so in 2012, is lead management. Without it there is no business and with showroom footfall some 30% down year on year, dealers who recognise the necessity to generate enquiries will give themselves a chance when it comes to converting leads into sales.
What the customer experiences once in the showroom environment will also dictate the success or otherwise of that business. Engaged staff who are proficient and knowledgeable and who can demonstrate communication skills will be the key to the success of the business as they are the front line between the dealer and the customer.
We also expect dealers to be looking for innovative ways to promote new products, special offers and used car events and although it is a little worrying that there is a perception of the perpetual sale, dealers have to be permanently in the mind of prospective customers in order to sell them cars.
Locating the right stock at the right price is of paramount importance, as the car parc has shrunk by some 600,000 units over the last 3 years there will be a dearth of quality used cars of that age coming to market in 2012 and that will mean premium pricing for certain unique models, but the pressure to turn stock quickly in a market which is likely to decline more along traditional lines than over the past years will also be a factor in used car stock management.
The key for business in the car trade will be to behave like proper retailers who promote their brand and deliver a consistent message and outstanding customer service. Car buyers with greater choice will demand more as a result and the fact that there are more add on products than ever before will enable dealers to be far more flexible price wise on the cars themselves as long as they possess the expertise to sell these products to ensure each deal is profitable.
Hanging on to ageing stock is in no one’s best interest, it just burns money. The optimum time for a dealer to sell a car is within the first 30-40 days so by ‘taking your medicine’ or ‘wiping our mouth’ dealers will be successful if they manage their stock properly and customers will get a better deal as a result.
We are sure that as tough as it is out there for car dealers and customers looking for as much value as possible, we have learned from past mistakes and improvements are continuing. Franchised dealers in partnership with their manufacturers and independents with their wealth of knowledge and experience can continue being profitable and selling cars. However those who do not get involved or sit in their glass fronted offices and think that success will happen naturally are sadly mistaken. The best car business are only as good as the person who is tasked with running it, it is a reflection of them which dictates the success and dealers who do not recognise that everyone needs to be involved will perhaps not be here when we write this next year.
The first quarter in 2012 will be crucial for car dealers as this is traditionally a pointer as to the overall picture of the year and with a positive mindset and some great incentives this can happen, customers are like gold dust and need to be treated as such.
So finally from all of us here at MTI wishing all our readers and followers a happy, healthy and prosperous 2012 and to re-iterate our commitment to continue telling it like it is and hopefully promoting the best business in the world!
Happy New Year!