What's Easy About Owning/Running a Car Dealership

[joe.pistell]

NOTHING.

This is one reason why dealers (as an industry) are struggling with change. We're tough on ourselves to hold ourselves to higher standards. Why has the change been so long and difficult?

BECAUSE.... Selling Cars Ain't Easy (or profitable). If it was easy and or profitable, you'd see giant and powerful investors pool large sums of cash together to create giant "category killer" stores like:

Walmart
Best Buy
Home Depot/Lowes
Toys-r-us
Dicks


AutoNation, CarMax, Lithia, and many more and NOT killing mom-n-pop stores like WalMart, Best Buy and the others have. The publically traded stores have access to large pools of investor cash and none are rushing to open lots of new stores over the USA


Hell, to put the difficulty into context, we all know how many restaurants fail each year, they fail because it's not an easy business. P. F. Chang's China Bistro has 204 restaurants. The single largest automobile retail is Auto Nation and they have only 215 stores. There are 17,500 dealerships in the USA! Historical Dealer Count

If selling cars was easy, Walmart would not have failed Wal-Mart's entry into used car business draws little reaction - Buffalo - Business First


I need to ratchet down my frustrations from un-met expectations because we're all in a tough business!

Steady goes it.

 

[ddavis]

A crusty old Sales Manager once told me, "This is the easiest, hard job you will ever have or the hardest, easy job". A thirty year old statistic from NADA: 87% of automobile salespeople are gone within a year.

Joe, nobody promised easy. I believe you would have gotten bored and been gone, long ago, if it was.

 

[john.quinn]

I dunno... almost a year wearing a vendor hat now, and I find myself musing: Wow, sure was easy just selling cars. haha!

 

[ddavis]

I dunno... almost a year wearing a vendor hat now, and I find myself musing: Wow, sure was easy just selling cars. haha!

 

[joe.pistell]

Guys, its not about you two or me, I am painting a picture so you can see a world that's bigger than just cars.

Sometimes you cars guys just cant see past the moat.

 

[Kelly Wilson]

I split a cab when returning from DSES & DD13 last night with an architectural consultant to lenders. "If banks are that tight with giving money to builders for 500 inc companies, I can't imagine what people in the Auto Biz have to go through."

 

[yagoparamo]

Is not easy to run any business, period.

 

[ddavis]

Hell, to put the difficulty into context, we all know how many restaurants fail each year, they fail because it's not an easy business.

Joe, here is my RANT:

My first taste of recession dates back to the Carter Administration and I have been through many since. When dealerships operate on low single digit net margins the effects of market downturns can be catastrophic.

People buy cars because they got a good deal. What is a good deal? It is a matter of perception. To most, it is a figure that would put every dealership out of business. Early, in my career, we held all of the cards. We had all of the information and most people were clueless when it came to buying cars. The internet has changed all of that.

When it comes to car dealerships, profit has always been a four letter word. People will go to the mall and pay Dillards (clothing) 400% markups and Zales (jewelry) 600% and not bat an eye. The thought of a dealership making anything is unacceptable. What is new to me, is this perception that all business and profits are evil. If America thinks that Banks, insurance companies, oil companies, and the like, are evil, just imagine their perception of car dealerships. I have always been thankful for TV evangelists and attorneys.

The dealership is fueled by self interest. Departmental managers are only interested in the well being of their departments and there is very little give and take. Reconditioning is too high. The Used Car Manager is steeling trades and the New Car Manager is bumping them. The Internet department is whoring out our cars (excuse the language). It is an uncommon manager that sees the overall picture.

We have been involved with the internet for a decade and most stores have not embraced it. The problem remains, how do you sell cars, over the internet, and make money? It is essential that you have people that are able to see the whole picture. They have to accept that the internet is the market. They have to manage their three largest variable expenses with that in mind.

 

[yagoparamo]

Joe, here is my RANT:

My first taste of recession dates back to the Carter Administration and I have been through many since. When dealerships operate on low single digit net margins the effects of market downturns can be catastrophic.

People buy cars because they got a good deal. What is a good deal? It is a matter of perception. To most, it is a figure that would put every dealership out of business. Early, in my career, we held all of the cards. We had all of the information and most people were clueless when it came to buying cars. The internet has changed all of that.

When it comes to car dealerships, profit has always been a four letter word. People will go to the mall and pay Dillards (clothing) 400% markups and Zales (jewelry) 600% and not bat an eye. The thought of a dealership making anything is unacceptable. What is new to me, is this perception that all business and profits are evil. If America thinks that Banks, insurance companies, oil companies, and the like, are evil, just imagine their perception of car dealerships. I have always been thankful for TV evangelists and attorneys.

The dealership is fueled by self interest. Departmental managers are only interested in the well being of their departments and there is very little give and take. Reconditioning is too high. The Used Car Manager is steeling trades and the New Car Manager is bumping them. The Internet department is whoring out our cars (excuse the language). It is an uncommon manager that sees the overall picture.

We have been involved with the internet for a decade and most stores have not embraced it. The problem remains, how do you sell cars, over the internet, and make money? It is essential that you have people that are able to see the whole picture. They have to accept that the internet is the market. They have to manage their three largest variable expenses with that in mind.

People buy cars because they need to get from point A to point B faster than walking. Getting a good deal makes a difference from whom they will buy the car. We forget that we have a product that is needed and that we should have information and be helpful to the customers about that (educate and advocate). The Internet changed the equation so the customer knows more and they find us less useful, willing to pay less.

 

[ddavis]

People buy cars because they need to get from point A to point B faster than walking.

Yago, I already assume that they have a want or need for a vehicle. To avoid walking is not a motivation for a Corvette buyer.