Nine things successful dealers are doing in 2020
Nine things successful dealers are doing in 2020
By Pam Halliday, Sales and Marketing Director at NextGear Capital
With everything else that’s happened this year, you’d be forgiven for thinking that dealers have had their hands full and had no opportunity to do much more than keep their heads above water. But as always when the going gets tough, there are those that sense opportunity. Galvanised by changing consumer behaviours and commercial instincts, many have taken it upon themselves to ‘get their house in order’.
Over the last few months, as restrictions have eased, I’ve had the privilege to get out on the road and meet with dealers who have turned the events of the year to their advantage and set their businesses on the right course for the future.
Here are nine things I’ve observed successful dealers doing:
1. Refreshed facilities
First impressions matter and it’s amazing what a lick of paint or new flooring can do for the reputation of a car dealership. Those that I’ve witnessed build long term brand loyalty have always invested in their on-site facilities.
Even with reduced footfall in dealerships as a result of Covid-19, the majority of consumers would prefer to complete a new car deal in person and a presentable showroom shows professionalism; putting the customer’s mind at ease and making it easier to secure the deal.
2. Get serious about e-commerce
In many sectors, consumers have been moving online for years but historically automotive has lagged behind.
Well no longer. Covid-19 has accelerated a shift in consumer behaviours and online retailing in automotive is the new normal for many. Dealers are adapting fast by ensuring their website is up to scratch, utilising the web and social advertising, and making sure their stock is presented nicely online.
3. Invest in imagery
Talking about presenting stock nicely, with more focus on e-commerce, it makes sense for dealers to ensure their vehicle photography is as good as it can be.
Dealers I’ve spoken to have invested in the professional kit and created dedicated photography areas, either in a booth or in the yard. Not only does having good photography make it easier for your customers to view your stock online but setting up a dedicated area can save time and make taking photos a breeze. No more shuffling vehicles around the forecourt every time you need to take some photos!
4. Video test drives
And it doesn’t just have to be about imagery. Video is fast becoming the go-to e-commerce tool in many sectors and automotive needn’t be any different.
I’ve met with dealers who have overcome the social distancing hurdle and sold cars after taking prospective customers on video test drives. For the right stock, this can be a fantastic way of providing a personalised touch to the otherwise distant online retailing space.
5. Optimised processes
What better time for dealers to review and optimise their internal processes than during a time where there is already so much change happening?
No stone should be left unturned. Those I’ve spoken to have looked at their buying, collections, preparation, and marketing processes to eke out any increase in efficiency there is to be had. Saving time is the name of the game for most and notably the speed at which they get new stock advertised online has been a focus.
6. New stock sources
With quality stock in short supply but retail demand high, savvy dealers are utilising every stock source they can. Nowadays there are a plethora of dependable online wholesale marketplaces with thousands of high-quality, well-described vehicles available.
And let’s not forget about the more old-fashioned way of doing things. Some of those I’ve met have created ‘verbal arrangements’ with other local dealers for the first refusal on their unwanted stock.
When retail demand is high, it’s time to get creative to find the right stock.
7. Focus on aftersales
It’s true that with car production lines under stress and wholesale stock in short supply, there may be fewer cars on a dealer’s forecourt. But some dealers have learned how to squeeze every last penny out of each vehicle to achieve similar, if not more, revenue out of fewer sales.
Post-sale income should be a focus for every dealer for the remainder of this year and onwards. Diversifying revenue streams is now a must so it’s time to look into offering workshop facilities, service facilities, finance options, and more.
8. Dig into the detail
As NextGear Capital’s MD Liam Quegan recently wrote, the devil is in the detail when it comes to keeping on top of costs, so it pays for dealers to have a forensic view of the numbers.
Not only does this make it easier to identify where profit is gained, but more importantly it allows the source of losses to be identified and gaps plugged.
The current market is strong so it may be tempting for dealers to want to spend money to grow. For some, this is absolutely the right thing to do, but it’s important to have cash reserves in place to not be left flat-footed if that market turns.
9. Review funding sources
And finally, another tip from Liam, but one I’ve seen growing amongst successful dealers: diversifying stock funding sources.
Not only that, but making sure that that the lending facilities in place represent best value and are appropriate for that dealer’s way of working.
There are loads of ways dealers can borrow these days and using a variety of funding sources when buying stock is healthy because it keeps your business flexible without the risk of putting all your eggs in one basket.