Plan for the Tough Times

There's good news and bad news out there, but it's the negative news that creates consumer uneasiness of the type we're seeing these days.

The recent rash of negative news (gas prices higher, the situation in Iraq continues, quarterly earnings aren't so hot) has affected new-vehicle sales. Comparing March 2003 to March 2002, new vehicle sales are down 4.4% or 174,170 units.

If new-vehicle industry sales in 2003 come in near 15.5 million to 16 million units (as many predict), we are looking at 1998 and 1999 industry sales levels. The sales volume has the potential to be higher based on two factors, the manufacturers willingness to maintain the current incentive level and the economy strengthening early in the third quarter.

For many years I worked under the misassumption that if I increased volume, increased profits would follow. It doesn't always work. So what can you do?

First, I would suggest closely monitoring your sales volume and total dealership gross. If you see a consistent pattern of decreased sales and gross developing, having a plan in place to properly align expenses with gross is essential.

Check past year's financial statement, and compare the sales and grosses with the number of personnel you had on staff. Were you able to generate comparable or higher gross with less personnel? What about other specific expenses? As we've all heard, temporary expenses have a way of becoming permanent. Has this happened in your dealership?

Specific actions I would suggest include looking at all personnel, then assigning them a value. If you need to reduce personnel count, the decision has already been made based on the value-versus-expense study completed beforehand.

I learned a valuable lesson in my retail life from a dealer: Most times it's better to pay one exceptional employee higher wages for a position rather than have two average employees. It's amazing how good personnel, after having tasks explained, step up and perform.

Look at individual expenses in the dealership, then assign each one a grade value. For example, “C” expenses are the first to be cut while “A” category expenses are the last to be reduced.

At the same time we are addressing expenses, we need to take a hard look at our retail game plan.

Maybe now is the time service advisors become proactive and call customers to tell them about your expanded quick services, tire program, Saturday hours, etc. A detailed daily work plan of 10 telephone calls per advisor will help this program succeed.

While speaking with customers, the advisors might also advise them of any new-vehicle incentives and the dealership's certified pre-owned vehicles.

You may need to have your sales manager spend a few minutes each day for a week training the advisors on proper telephone techniques.

The same game plan as outlined above needs to be employed by the sales force. While making calls to familiarize potential or existing customers with current incentives or availability on a specific product, sales personnel should be making customers aware of your expanded fixed operation services.

Special-order parts and manufacturer recalls represent opportunities for personnel to contact customers for appointments. The benefits are obvious.

True, we are facing uncertain times but the following quote characterizes today's auto dealer: “Tough times never last but tough people do.”

Good selling!

Tony Noland ([email protected]) is the president and CEO of NCM Associates, Inc.