ORLANDO, FL ‚Äď In 1984, a young Tom Murray quit a construction job paying $3.50 an hour and went to work for an auto dealership.
At first, being a car salesman almost made him yearn for the relatively happy days of lugging around heavy objects in a hard-hat zone.
‚ÄúI witnessed two fights in the service department,‚ÄĚ Murray says. ‚ÄúThen there was a fist fight between two salesmen trying to grab the door handle of a customer‚Äôs car as he pulled up to the dealership. He hadn‚Äôt even got out of his car yet.‚ÄĚ
Murray recalls his first customer, a farmer missing three teeth, who was trading in an oldF-150 pickup truck. They got along well, going back and forth doing the deal. Then the sales manager aimed the man toward the finance and insurance office. There, he endured nearly two hours of product presentations.
‚ÄúWhen he came out, he looked completely different,‚ÄĚ Murray recalls. ‚ÄúI wanted to show him the features and benefits of his new vehicle, but he said, ‚ÄėSon, give me my keys and don‚Äôt make me ask you again.‚Äô‚ÄĚ
The car business has changed in the last 25 years, becoming more friendly for customers and less combative among staffers.
That has been evolutionary. But something of a revolution now is occurring in auto retailing spurred by recent traumas, such as the recession, credit crisis and automotive-sales slowdown.
‚ÄúThe industry is changing at a pace I‚Äôve never seen before,‚ÄĚ says Murray, now president and chief operating officer of Resource Automotive, a training, consulting and F&I services firm for dealerships.
To get dealers and lenders through with a minimum of scar tissue, he proposes a ‚Äúcall to arms‚ÄĚ at an F&I Management and Technology conference here. ‚ÄúAs the basketball coach, Pat Reilly, said, ‚ÄėBe an active participant in your own rescue.‚Äô‚ÄĚ
For lenders, that means ‚Äúfocusing on quality over quantity, focusing not just on you but on the dealers on whose success we depend,‚ÄĚ Murray says.
For dealers, he says, it means the further jettisoning of old ways in favor of better practices, such as reducing used-car inventory turns from 60 days to 30. That‚Äôs done by pricing vehicles competitively, systematically tracking what models sell best and stocking accordingly.
‚ÄúYou don‚Äôt need to be an inventory guru, but you need to understand that part of the business,‚ÄĚ Murray says, adding that it will not only help the sales department but also boost F&I profits.
‚ÄúWhat does inventory have to do with F&I?‚ÄĚ he says. ‚ÄúEverything. You can‚Äôt offer F&I products on cars you don‚Äôt sell.‚ÄĚ
The F&I department has become a primary profit center for dealerships. Two years ago, it contributed on average 31% of store profits; today, that‚Äôs nearly 53%, Murray says.
But he worries that F&I staffers, trained in sales effectiveness and proper techniques, might regress. That‚Äôs because dealerships, in an effort to reduce costs, are cutting back on training.
‚ÄúThere has been a 67% drop in training,‚ÄĚ Murray says. ‚ÄúA golf instructor once told me 90% of his students, left to their own devices, go back to their old habits in 30 days.‚ÄĚ
He worries dealerships are losing too much service-department business to independent repair shops.
‚ÄúCustomer retention is woeful, because there is a perception that service work at a dealership costs too much and takes too long,‚ÄĚ Murray says. ‚ÄúIt is a $10 billion a year industry. What dealerships don‚Äôt get of that, places like Jiffy Lube do.‚ÄĚ
Dealerships need to provide products and opportunities that pull customers in and keep them, not push them away, he says. ‚ÄúOne study says six of 10 people who bought a vehicle never stepped foot in the dealership again.‚ÄĚ
As experts such as Murray call for dealers to recalibrate, one dealership group started doing just that when it sensed the economic weather was turning bad.
‚ÄúWe are in a situation now where we really are strategic and keep an eye on metrics,‚ÄĚ says Richard Ackman, variable-operations manager for Germain Motor Co., a 15-franchise, 21-store, 5-city operation based in Columbus, OH.
‚ÄúIn 13 months, we went from almost no planning to planning and forecasting,‚ÄĚ he tells Ward‚Äôs. ‚ÄúWe teach managers to use those tools to make decisions. It‚Äôs hard to change to that from just getting up every day and doing deals.
‚ÄúBut when you look further out ‚Äď when you take the numbers and put together an action plan and then wrap measurements around it ‚Äď you get results, even in a down economy.‚ÄĚ