Automotive retail is like the coastline, it often....

[Jeff Kershner]

Some wisdom from the community with @CliffBanks, Brian Allan and Berk Boeckmann:

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Cliff Banks: The more things change, the more they remain the same.

Looking through recent automotive retail-focused stories on WardsAuto (I worked there 10 years) and had to grab a screen capture -- the headlines could have been written years ago.

In 2018, I was writing about dealer subscription services -- none of which survived due to the fact they didn't pencil for either the customer or the dealer. And now they're back for a second round. Not sure what has changed since 2018...

At some point, the industry will figure out it's best suited as a used vehicle play.

And used-car leasing. We were writing about that nearly 20 years ago. We're still waiting for it to take off.

The "Leasing Showing Signs of Life" story? Well, we can write that one (and have) every few years.

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Brian Allan: So very true. Bert Boeckmann often said about the car business, “Automotive retail is like the coastline, it often changes appearance, but it’s still where the water meets the sand.”

Subscription… I agree that used vehicles are the play until OEMs subsidize new, which I believe will be accelerated to gain EV adoption. Consumer leasing didn’t become a significant percent of retail sales until OEMs stepped in with subsidies, marketing, and training.

Used leasing… I believe used EVs will also accelerate used leasing especially with current tax advantages leveraged by savvy dealers, franchised and independent.

Cliff, you are the best!

 

[Alex Snyder]

Bert Boeckmann often said about the car business, “Automotive retail is like the coastline, it often changes appearance, but it’s still where the water meets the sand.”

So true. And here we are with the market shifting back to the normalcy of 2019 within the next two years. S&P Global is showing light vehicle sales trending up and getting back in line with pre-COVID year SAAR in 2025.

This means dealers are not getting the profits per deal they once were. The gut reaction by some has been to cut expenses. It seems they're taking the decrease in business as a sign of bad times, but they're forgetting the last three years were just an anomaly. It is time to sharpen the pencil and expand the marketing budget! Competition is afoot again, and you have two years to get your shit together.

I don't know about you, but I'd love a crystal ball on knowing what was coming. Dealers are blessed!

 

[Jeff Kershner]

So true. And here we are with the market shifting back to the normalcy of 2019 within the next two years. S&P Global is showing light vehicle sales trending up and getting back in line with pre-COVID year SAAR in 2025.

This means dealers are not getting the profits per deal they once were. The gut reaction by some has been to cut expenses. It seems they're taking the decrease in business as a sign of bad times, but they're forgetting the last three years were just an anomaly. It is time to sharpen the pencil and expand the marketing budget! Competition is afoot again, and you have two years to get your shit together.

I don't know about you, but I'd love a crystal ball on knowing what was coming. Dealers are blessed!

Heck, I bet most dealers that did cut back in 2019 have kept their marketing expense line item at a minimum change over the last few years, since then. We sure did. Only RECENTLY have we begun to shift gears to "to sharpen the pencil and expand the marketing budget!" With that in mind, we are a smaller luxury brand with little to no competition within a 60+ miles range and AOI.

 

[Jon Singo]

Gross per used has been, and is still tanking. The inventory squeeze is real and what you do find has a 25% chance to be a land mine. I've been championing lease to own and other financing alternatives but it's been falling on deaf ears. This is going to get worse before it gets better. We need consumers leasing new in order to replenish our depleted used supply. In the meantime dealers need to find ways to incentivize buyers back to the market with ways that make vehicles more affordable.

I've got a lot of ideas but I'm not sure any are good answers. Time to get lean, mean, and think outside the box!

 

[mironmiron]

So true. And here we are with the market shifting back to the normalcy of 2019 within the next two years. S&P Global is showing light vehicle sales trending up and getting back in line with pre-COVID year SAAR in 2025.

This means dealers are not getting the profits per deal they once were. The gut reaction by some has been to cut expenses. It seems they're taking the decrease in business as a sign of bad times, but they're forgetting the last three years were just an anomaly. It is time to sharpen the pencil and expand the marketing budget! Competition is afoot essay again, and you have two years to get your shit together.

I don't know about you, but I'd love a crystal ball on knowing what was coming. Dealers are blessed!

I agree that the car market is shifting back to normal. However, I disagree that cutting expenses is the right way to respond to this. I think dealers should be investing in their businesses and preparing for the competition that is coming.

Instead of cutting expenses, I think dealers should be investing in marketing and advertising, training their salespeople, and improving their customer service. By investing in their businesses, dealers can position themselves for success in the years to come.

Cheers,
Miron