Self-Financing Stirs Interest

First of all, to the many Chrysler and General Motors dealer friends and colleagues who received the letters that their franchises were either being cancelled or not being renewed, please know our thoughts are with you and the many members of your staffs, during this difficult time in your lives.

Through the first four months of 2009, the seasonally adjusted annual sales rate (SAAR) stands at 9.5 million vehicles. Economists agree there will be some degree of improvement in the selling rate as we go into the second half of 2009, but I don't believe anyone thinks it can climb farther than the low-10 millions prior to year-end.

The most positive consumer news I've heard recently was the improvement in consumer confidence which rose to 39.2% in April; its highest level in 2009. This is a start. As we all know, this improvement in confidence must translate into action before we can start to rebound as an industry.

Faced with a tough market, auto manufacturers will be forced to become even more aggressive with their consumer incentive programs as we go into the summer selling seasons, which should improve our traffic and sales for both new and used vehicles.

On the subject of used vehicles, as is customary, I attended last month's annual National Alliance of Buy Here, Pay Here Dealers conference in Las Vegas. NCM was a Platinum Sponsor of that industry event.

The NABD was founded in 1999 as the only organization focusing exclusively on the needs of the large and growing buy-here, pay-here industry.

NABD is a special interest group dedicated to improving the quality of dealers through education and ongoing training. The organization also promotes the interests of self-finance dealers accross the nation.

First, it was encouraging to see the number of new-vehicle franchised dealers in attendance. Some are already in the buy-here, pay-here side of the business.

But many other franchised automotive retailers are looking for an additional profit center which this certainly represents.

Represented were all three categories of dealers: high-line, import and domestic. Most attendees were U.S. dealers, but I spoke to franchise dealers from Canada, Mexico and Australia who were looking at new opportunities.

Both the new- and used-car dealers were enthusiastic groups because this business is growing. Believe it or not, there were even lenders present looking to work with dealers.

As a follow-up to this conference during the month of June, NCM and NABD will hold three webinars as a matter of educating dealers considering buy-here, pay-here as an option.

The call will be hosted by NCM and will feature a new-vehicle dealer who is heavily involved in this business, NABD Chairman Ken Shilson and a partner with Shilson, Goldberg, Cheung & Associates.

I will reserve comments and advice on the used-vehicle segment for my associate, Tony Albertson, whose column also appear in this publication. But I do know there were 36.5 million used vehicles sold in 2008. This segment, along with parts and service, must be areas where dealers focus and maximize their market opportunities.

I would encourage you to utilize all the tools available to first help you identify both the available opportunities and the methods of capitalizing on them.

We have six months left in this challenging year. Now is the time to kick it up a notch.

If you will strategize with your management team, and then employ the best practices you have learned in your careers, you can get a head start or be on the leading edge of this recovering market. I believe in the adage “a good offense is the best defense.” It's first down.

Good selling!

Tony Noland is the president and CEO of NCM Associates, Inc. He can be contacted at [email protected].