By Tom Hampton
Well my friends, with fall approaching in what will undoubtedly be THE most remembered year for a generation, where are you at in your dealership’s growth?
GROWTH???!!! Yes, growth, especially in these current uncertain financial markets, is CRITICAL! Growth may at moments look just like surviving, however understand that without growth your business may not be around for 2022. Why am I looking so far forward?
Five years ago, I started preaching on-line business is a MUST for future growth and in March of this year, COVID drove that lesson to the BANK! Now that I hopefully have some of your attention, on to the matter at hand! HOW to grow in a negative economy. It all boils down to the deciding factor that drives all businesses… Supply and demand!
First, let us address supply, or in our case, the lack thereof! Inventory is costing us retail (or better) to supply our lots, so we have a couple of choices; Continue to eat the losses all the way to extinction or pass the cost on to the end user. For the retail independent dealer that relies on outside financing, that is one scary step to take while repositioning themselves for growth (and one I have seen tons of dealers taking). LTV is not about to keep up with current wholesale and that means larger downs with skinnier margins (hello add-on’s!). Customers will see the effect in the market and yes, you may not be the cheapest guy on the block, however you WILL have the car they want.
There seems to be some new App or website to pop up daily in the trade magazines to help dealers either sell, buy, transport, or finance inventory. It very well may be time to take your “I buy cars” program up 3 levels from where you are currently. My advice, start an aggressive referral program. In that program, instead of paying a $250 bird dog for sending a buying customer, pay up to $500 to BUY a good car (cheaper than auction) from your customer. Spend some money and have some business cards made up with your buyer referral program. Go around to every garage, transmission shop, and tire shop you can get into. Be sure to leave a blank referred by line on the back so they can get their little bird dog ($25-$50) just for putting out your cards and sending you cars! Be proactive in getting online and searching for local sales; The early bird catches the worm! Talk with the local union halls and make a donation for every vehicle you buy from one of their members. And don’t forget that sweet little old lady at church who barely drives her car anymore! With some imagination, sweat, and perseverance, who knows what niche you can create.
Right now, I have several dealers buying everything with a clear title under 180k – 200k. What they do not want, sells quick for cash or they run it across the block still making money! The “box” no longer exists for how or where to get your inventory! Go exploring! The fresh air and fresh perspective will do you wonders!
VALUE will be another factor in growth over the next 18-24 months in this business. Please remember, what is of value to you, may not hold the same for your client. Convenience of purchase, transparency in finance, along with front door services are fast becoming standards. How do you measure up? How secure is your network (value point here) with all your applications and client information? Growth in these times may look like pruning time for a while, cutting away old ideas, practices, and habits. Pruning allows for new growth, which inevitably, will bear more fruit and sustain long term health!
I can ramble on for many pages on this topic without any issues, however… take heed my friends. The next year and a half will can make or break your dealership My hope is, you see your dealership begin to take new definition and growth! Any way you slice it, DEFINITE change is coming to your dealership.
I have said my peace, and hopefully brought some light into what may be a bleak outlook. We can not only survive this; we can really grow with this current situational economy. Supply and demand are centuries old and it will forever be the fulcrum this business THRIVES on! Relationships have taken center stage in our business. Continue building great relationships by keeping it real, pertinent, honest, and positive every time you communicate with your customers! First impressions will only get you so far, so remember to say hi and follow-up when necessary.
We’ve created a Facebook group dedicated to keeping professional Buy Here- Pay Here dealers and dealership employees on track and up to date with the industry through a network of support and guidance! We encourage you join and share! https://www.facebook.com/groups/950701648698454