OFFICIAL PUBLICATION OF THE Illinois Automobile Dealers Association

Pub. 11 2021 Issue 3

Sales-Slow-Down

Consultant’s Corner: What to Do in an Inventory-Driven Sales Slow Down

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Illinois Auto Dealer News Magazine Pub 11 2021 Issue 3

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If you have been around the retail business for any time, you have experienced a sales slowdown. Such a slowdown can be from a normal economic cycle, possibly a market-specific catastrophe, or maybe specific to a manufacturer image problem, or even as we have seen recently, a pandemic.

Not seen before is a mass inventory problem believed to be tied to chip shortages, affecting nearly every brand. It is unique not just because it is a first or because it is across most brands but also because it has a defined ending. This problem hails without the usual questions about “how long will this recession last?” “How long will the pandemic last?” Or “with the tsunami taking away my shipments, how much will my competitors be able to go after my sales?”

This one has a clear ending and mainly because we have been in a period of unprecedented profitability. Dealers have a unique opportunity to use this slowdown to play strategic offense for the future while also making some defensive moves to set them up for tremendous success.

  1. This is a temporary solution. Hold your team together or amend pay plans where necessary. Keep your sales team intact. Consider doubling the value of a unit sale, increasing F&I-related sales compensation but keep it commission-based. Taking the attitude that “they should have been smart squirrels when times were good” is foolish and shortsighted. Are you saying you do not understand salespeople at all? What share of salespeople saves a chunk of their pay?

  2. Focus on F&I. There is room for improvement here at almost every dealership. Imagine the economic value to your dealership of an extra $400 per vehicle. Having more time to spend with each customer equals the opportunity to not shortcut processes. Instead, be more strategic and maximize each deal.

  3. Focus on Fixed Operations. This is another area with room for improvement in almost every dealership. As managers, now is the time we can go back and examine our shortcomings, review the lack of processes followed, explore the lack of sales, and scrutinize the opportunity to discuss our speed with customers.

  4. Focus on Training. If you want your dealership to sell twice as many cars as you do today, could you do it with the processes presently in place? For example, suppose you have three desk managers who do things a bit differently from one another. Or you have only one person who can appraise trades. Or your four top salespeople do not follow the dealership’s “Road to a Sale” motto. Then the answer is you are not equipped to jump to the next level.

    Use this slowdown to establish your best practices, train on those processes and decide what level of accountability you want to apply to get them done. I assure you that in dealerships selling 1000 cars per month, there is only one process. Everyone knows what it is and there is no tolerance for variation.

    A culture of training starts at the top. Training needs to be a comprehensive ongoing plan – not a one-time event.

  5. Streamline reconditioning. A slowdown in new car sales means a slowdown in trade-ins. Like sales, you want to keep this team together and provide them financial opportunities. Evaluate what is being sent out for work that could perhaps be done internally. Retrain some internal employees on detailing enhancement and cosmetic-type repairs. Use this unique opportunity to look at any department that lacks the processes to move fast and efficiently when times are good.

    Have you considered having a different team or process for lower mileage vehicles – creating a faster turnaround? Check on who is ordering parts and when they are ordered for non-core vehicles. It could be that your one size fits all process is creating unnecessary delays. If bottlenecks occurred during our excellent spring selling season, now is the time to dig into what is causing them and make changes ahead of the impending sales surge. 

For more information, please contact Francis Fagan with Brown & Brown Dealer Services at 312-608-4979 or ffagan@bbins.com. Francis is the Regional Training Director for Illinois and Indiana. At Brown & Brown Dealer Services, we emphasize training. Visit our website for our training calendar and to meet our nationally renowned trainers at bbdealerservices.com.

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