What Dealers Will Do in 2010

There's much talk in the auto industry of the “new normal,” a term that has a double meaning for me, one personal, one business.

Personally, since leaving NCM in July, I have tried, and continue to try, to adjust to a new life of self-employed-normal, and all that means to me and my family. To some extent, I can relate to those “chosen” dealers who have been given a new opportunity.

I can't recall who first used “new normal” to describe today's auto market. In the context of the best-selling book “Who Moved My Cheese?”, it means we aren't going to find a reserve of our “old cheese.”

Why? Well if you will recall, many of us didn't have that reserve in the first place. Sure, we had our new-vehicle franchises, but that business can be cyclical.

Not to worry, we can always count on our used-vehicle and fixed operations business, so, drawing from the story line in the book, I know we will be fine. If there are issues and our capital becomes constrained, we have lines of credit with several sources and that will get us through this. That was the thinking, anyway

In the book, the character Haw, beginning to realize the dire situation at hand, proposes a search for new cheese. But Hem, a companion who is dead set in his victimized mindset, nixes the proposal.

“Slowly losing his denial, Haw realizes that their cheese has not suddenly disappeared, but has dwindled from their continual eating, and, that older cheese was not as tasty, and had become moldy.

“Realizing he must simply move on, Haw timidly enters the maze where, one day, he discovers cheese station N, abundant with cheese, including some varieties that are strange to him; and suddenly realizes he has found what he is looking for.”

Most of us in this business have counted on our cheese supplies to be somewhat constant. We have become complacent in our confidence that we can deal with any situation which may arise. Well, this time we may just have met our match.

We've slowly gotten into the certified pre-owned business, but so has everyone. That has led to a limited supply of overly priced, used vehicles. Customers are keeping their current vehicles longer, so they will spend the necessary money to maintain them. Well, that too has only been true on a limited basis.

A recent survey says dealers are expecting a better year and will probably add to employees to their payrolls.

Service departments and used-car sales are the most profitable business lines, dealers report. Asked to name their most-profitable departments, about 50% said service and 40% used vehicles. Far behind were new cars at 9% and finance and insurance at 6%.

So our new normal suggests that our new retail volumes will remain consistent +/- 7% (my number) with 2009; we have committed to our current employees, regardless of the landscape; the used-vehicle business will grow this year and we will focus on capturing more than our fair share of it.

We will focus our resources on growing our fixed operations and incorporate a philosophy and commitment to customer retention.

We will focus on e-commerce and social media. We will become more visible in our community, often participating in local events. We will continue to manage our cash, demanding that each employee strive to get better in this area.

We will monitor and compare our progress, set aside time each week to communicate with all employees regarding the state of our business, seek their ideas for improvement and get their input for needed additional individual and corporate education.

And we will never forget to have fun and celebrate each day and the victories associated with it.

So, like Haw, (and yes, even finally Hem made it too), let's enter the maze where, one day, we will discover our “cheese station N, abundant with cheeses that include some varieties that initially may be strange to us.”

Suddenly, we will realize we have found what we've been looking for. And, yes, I'm speaking of and to myself, too.

Good selling!

Reach veteran dealership consultant Tony Noland at [email protected].

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