Big Dealers Feel the Pain

admin

Weather woes, slowing sales and staffing challenges are major issues for large-volume dealers, according to those attending a luncheon roundtable hosted by Advanstar, producers of Dealer Expo (and parent company of Dealernews).

Representatives from more than 17 dealers that are members of Dealer Expo's Full Throttle club — businesses reporting more than $10 million in revenue — got together on Feb. 16 with representatives from the show, and Dealernews and Big Twin Dealer magazines to discuss business challenges and strategies for success.

The late winter weather caused a fair amount of concern this year. Where snowmobile dealers had been praying for snow in the northern states, "wheel-market" dealers in other areas of the country were surprised by the late snowstorms, making it difficult to get inventories just right. All agreed that preparing for winter extremes that affect inventory is an annual challenge.

But the dealers identified two more ominous challenges: 1) Slowing sales compounded by excess inventory (that results in having to pay more interest on unsold floor stock); and 2) The growing number of customers who have credit problems (meaning they can't qualify for financing to buy a vehicle). Dealers also cited the increase in lending rates as a concern.

The third biggest issue for large dealers is staffing. Indeed, finding quality applicants and retaining them long enough to make it profitable is a problem for just about all dealerships. Full Throttle dealers spoke to the difficulty in motivating younger employees to work to their full potential, as well as getting departments and individuals to work together effectively.

Other concerns cited by participants included:

  • New ways to attract customers,
  • The increasing sophistication of customers — those come in armed with product and pricing information and challenge the salespeople for the best deal,
  • Competition from Internet-based sellers that discount heavily, and customers who make price their top priority when shopping,
  • Low-priced imports that cut into sales and inundate already busy parts and service departments with desperate requests for replacement parts or repairs,
  • Off-road riding area restrictions and closures, along with liability issues connected with operating off-road riding and racing areas as well as sound restrictions limiting vehicle use,
  • The noise issue, for both on- and off-road riding,
  • OEMs that overload dealerships with product.

Success strategies. Full Throttle dealers were then given the opportunity to informally talk over potential solutions to the above problems and propose general strategies for success.

For example, many dealers addressed the problems associated with low-priced imports. One dealer said his strategy was to refuse to do business with customers that purchased these imports. Conversely, a parts manager from another dealership said that he believed helping an owner of a low-priced import get their vehicle running again is a way to develop future customers.

A caution raised to this act of "good samaritism" was the implied liability of servicing or selling parts for a product with which the dealership is unfamiliar, especially for a vehicle with sub-quality components.

Some dealers said they could put a positive spin on the import situation. Low-priced import purchases bring more people into the market, they noted, and the lost sales were prompting their OEMs to look at how they could make lower priced products to compete with the imports. One idea tossed around was to have a dealer to accept a low-priced import on trade toward a proven product carried by the dealership, then crush (literally) the import trade-in to get it out of circulation and demonstrate to the customer the negligible value of their trade-in.

Most Full Throttle dealers indicated that they believe most, but not all, new vehicles coming from China were of poor quality, but that over the next few years the good manufacturers would thrive and the others would simply go away.

General ideas for business success were as follows:

  • Hire more women. Dealers said that females make great employees and naturally attract other females to do business with their store. Many Full Throttle dealers have female employees, including women in service department positions. Dealers noted that having females in the service department typically improves morale in this otherwise male-dominated area.
  • Use secret shoppers. This is not a new idea, but several dealers said it was an important component to running a successful business. If a dealership's OEM didn't provide this type of service (Harley-Davidson has a Mystery Shopper program), then dealers suggested using a neighbor or friend to secret-shop the store and provide feedback on the facility's layout and the level of customer service provided by staff.
  • Join a state dealer association. When it comes to issues such as overbearing OEMs or restrictive legislation, dealers pointed to the success of strong dealer associations in California, Florida, Ohio and Texas. Full Throttle dealers recommended joining a state association or consider championing a drive to start one.
  • Train the staff. The dealers praised Dealership University for its training programs, and they expressed an interest in seeing expanded offerings, especially in product sales training. RPM Group and MMI also were complimented accordingly. Some Full Throttle dealers invest heavily in training; others, however, said it was too risky given that there's no guarantee a trained employee will stay. Some said that they only train their managers. Most dealers indicated a need to obtain more product training from their OEMs.

Anyone interested in participating in a future Full Throttle Dealer event should contact Josiah Taulbee at (714)513-9641 or jtaulbee@advanstar.com. — Dave Koshollek (Koshollek was official moderator for the Full Throttle roundtable)