The auto industry and the American dream go hand in hand. Ever since the first Ford Model T rolled off the assembly line back in 1908, the country has been crazy for cars, especially those made in the U.S.A.
We are fortunate to have some of the biggest and best automotive dealerships and reconditioning centers in both the USA and Canada as ReconTRAC clients. Throughout the years, we've been able to learn more from them than we could have ever imagined. What's really exciting, is that with this knowledge and understanding of what really works the best, we can take those best practices and apply them to how we evaluate and fix other dealers reconditioning processes.
Historically, May has long been a productive month for used car prices. In fact, last month was the 28th month in a row of used car price gains. Up 4% over last year, these price increases are good news for dealerships, but only if you’re turning over inventory.
With prices the highest they’ve been in years, dealerships will want to make the most of this by increasing their sales and maintaining a steady supply of used cars that are ready for the sales floor. One of the most important factors in the maintenance of your stock is the reconditioning process.
The automotive industry is changing. The average operating profits for dealers dropped by roughly $105,112 in 2018. It's now down to -$13,338. Expenses as a percentage of gross profit climbed more than 2 percentage points from 98.7% up to 100.2%. All of this comes straight out of NADA's recently released annual financial profile of America's car dealerships. This all seems like bad news for dealerships. But the story is still far from finished.
These days, the average cost of a truck is hovering around $50,000. More expensive trims can easily go for upwards of $80,000. With prices like these, you're pushing in on luxury sedan territory. For that price, you could get a BMW with a motion-operated infotainment console or a sound system designed to mimic some of the worlds greatest concert halls. But features like these are conspicuously absent from even the most expensive pickups. Some don't even have features that are now considered basic like touch start. Why is this, and is it going to change anytime soon?
Margin compression is a widespread problem in the automotive industry, one that doesn't discriminate between new and used dealerships. But these shrinking margins don't mean your profitability has to suffer. By making a few adjustments you can not only remain profitable but also grow your business — even with these tighter margins.
According to CARFAX, the value of a vehicle can drop 20% in its first 12 months of ownership, and will continue to drop 10% annually afterwards. That means that the vehicle may lose 60% of it’s value in the first 5 years of its life!
Let’s start this year with a powerful article, featuring the auto industry trends expected for 2019, including New and Used car sales, embracing the consumer in the internet age and using technology to optimize your sales potential!
The National Automobile Dealer Convention is early this year and it should prove to be just as exciting and informative as always. Whether this is your first time attending or you're a convention veteran, here's what you need to know about this year's show.
If it sounds too good to be true, it probably is. That's a lesson that a number of investors from all over the country learned recently. According to an indictment published by The Baltimore Sun, three men have been arrested for running a $364 million Ponzi scheme. Kevin Merrill, Jay Ledford, and Cameron Jezierski were indicted on charges ranging from conspiracy to money laundering.
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