We’ve had an amazing year in new vehicles.

September’s sales were very strong, spurring some analysts to raise predictions that we’ll close 2015 with more than 17 million new vehicles on the road.

2015 chevrolet camaro convertible configurations 300x155 3 Ways To Make The Good Times In New Cars Even BetterAs the good times roll, I like to poke around behind the curtain—to see if dealers are doing as well as they could while the sales juggernaut continues.

In recent conversations, I’ve asked dealers three questions:

1.  Do your sales associates sell more cars on an individual basis than they used to? The question’s intended to determine if dealers are leading their sales teams to achieve higher levels of efficiencies and productivity. Interestingly, the answers I get reflect a roughly 60/40 split.

For 60 percent of dealers, the monthly unit-sold average for sales associates is about the same as it’s always been, roughly 10-12 retail deals a month. Meanwhile, 40 percent of dealers have raised the individual sales associate performance benchmark to 15-18 deals.

2.  What percentage of your new vehicles are online at any given time with a competitive price and proper complement of custom descriptions, photos? This question follows industry stats that suggest only 25 percent of dealers consistently price/market all of their new vehicles online, all of the time.

The stat reflects findings from my conversations. A Colorado dealer estimates roughly half his inventory isn’t priced or marketed properly at any given time. “It’s too time-consuming,” he says. “We do need a better process to be more competitive and consistent.”

3.  What percentage of your new vehicle inventory is over 90 days old? Some dealers don’t track inventory age in new vehicles. Among dealers who do pay attention to new vehicle inventory age, I found that roughly 40 percent of dealers’ new car inventories hit 90 days or more. Dealers cited a combination of factors for the aged units—cars that either they or the factory didn’t get right, or a lack of attention, given faster-selling models in their inventories.

While my findings are not scientific, they do reflect areas of operational inefficiency that, if addressed, would help dealers do even better in today’s record-setting new vehicle market. I asked dealers who have addressed these inefficiencies for tips to help other dealers improve:

Emphasize volume, not gross, in sales compensation plans. “We made the switch about two years ago and haven’t looked back,” says a Midwest dealer who now requires a minimum of 15 sales/month from associates. The dealer says the change followed a realization that market factors—increased pricing transparency, better-educated buyers and stiffer competition—have a greater effect on gross profit levels than sales associates. The dealer also credits a more market-competitive pricing strategy, and “no discount” bonuses for elevating his sales team’s productivity and maximizing front-end gross. The dealer’s next goal: Reduce transaction times to 90 minutes or less.

Use technology/tools to improve new vehicle pricing/marketing consistency, efficiency. The new vehicle manager for a Florida Ford dealership says he used to spend nearly two full days pricing the store’s 600 new vehicles at the beginning of each month. Today, he uses a pricing system that helps him tie incentives to his asking prices and price every vehicle in minutes. The manager also says the technology allows him time to keep up with pricing new vehicles as they arrive from the factory, and stay on top of competitors’ price changes. “I used to spend an hour or two a day checking Autotrader and competing dealer sites,” he says. “Now, I see where I stand on a single screen and make adjustments on the fly.”

Make inventory age reduction a higher priority. Traditionally, dealers don’t believe age matters in new vehicles. But when dealers make inventory age a priority, and focus on retailing units based on time-in-inventory parameters, two things happen. First, they eliminate the shell game of using floorplan credits earned for fast-selling vehicles to offset the expense of slower-moving vehicles. Second, they have an opportunity to redeploy the investment toward better-performing units. “It’s a mental shift,” a Southwest GM dealer says. “Now, my new cars don’t just sell when they sell. They sell when I want or need them to.”

Some dealers may dismiss the need to address these inefficiencies today, when times are good in new vehicles. But here’s a key question: How much more will these inefficiencies cost you when sales slow and times aren’t so good?



I caught a snippet of last week’s debate on C-SPAN around the U.S. House of Representatives bill H.R. 1737. The bill seeks two goals—to roll back the Consumer Financial Protection Bureau’s (CFPB) efforts to limit dealer reserves on finance deals, and require greater public participation as CFPB issues guidance to dealers and lenders.

In the C-SPAN coverage, I was struck by the passion of Rep. Mike Kelly, a Pennsylvania Republican and third generation dealer, who spoke in support of the bill, which passed the House by a 332-96 vote:

“We are a third-generation automobile dealer. I can tell you that it is a people business, not a white person business, not a black person business, not a brown person business, not a red person business, or a yellow person business. It is a business that is done face-to-face. I have sat across the desk from many people, lower income people, who cannot afford to get a car because they don’t have the ability to negotiate the auto loan.

 It is our business, and I am stunned by people who have never done what we have done who have somehow decided that we are racist and that we are overcharging people. We are doing exactly the opposite…Three generations of Kellys have sold over 150,000 cars. You don’t do that by cheating people. You don’t do that by being a racist. You don’t do that by discriminating against people. You do that by working with people….The ability to get these people transportation–private transportation–falls on the shoulders of those who are the dealers. We negotiate in their best interest.

 How stunning to think that somehow we are these predators who are just taking advantage of these poor people who don’t have any financial literacy. That, my friends, ultimately, is the biggest insult you could give people of color or people of gender. It is absolutely incredible to me that we would bring it to this issue.”

The House’s overwhelming support of H.R. 1737 owes in no small part to the work of the National Automobile Dealers Association (NADA). The group has been opposed to CFPB’s efforts to limit dealer reserves since the agency’s initial guidance in 2013.

As H.R. 1737 moves to the Senate, the bill faces an uphill battle to garner enough support to overcome the threat of a veto from President Obama.

I would encourage every dealer and industry stakeholder to do what I’ll do—call your Senators and ask them to support the bill to protect the future of our industry.



On November 23rd, I’ll be on a panel webinar hosted by Automotive News and presented by Hireology. Please join me to hear advice on how to turn your hiring process into a competitive advantage. You can register here.






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