Currently, there are signs that the Canadian market is improving, but it will remain in a state for flux for the next 12 months as the impact of the
This year,
Some positive signs
On the consumer side,
The economy is showing signs of improving, which means that the buyers will be out there. Consumer finance is beginning to become more freely available and that spells good news for retail car sales.
Many of us are in the 2010 financial forecast mode right now trying to figure out how we are going to recover the lost profits of 2008 and 2009. And most of us, I’m sure, are expecting an uptick in business.
It’s there to be had, but keep in mind that consumers today are very smart and have an abundance of information about the vehicles we sell. They also are trained bargain seekers, especially when it comes to the monthly cost of ownership. Never has it been more important for dealers to have access to competitive consumer vehicle financing. A good consumer-focused program can see vehicles quickly disappearing from our showrooms and lots. On the other hand, a poorly crafted consumer financing strategy can cause vehicles not to move at all.
In times like these, vehicle quality is assumed by consumers. It’s the deal that makes the difference for them.
As part of our budgets we should all have an idea of our monthly, weekly and daily targets for our dealerships. Break the big picture down into many little ones. React to deviations early.
Free-agent customers
The market in 2010 will be filled with free agents, those customers looking for a new place to conduct their automotive business. As dealerships close and reposition themselves throughout 2010, many customers are going to be dislodged. How many we get will depends on how astute we are locally and our brands are nationally.
These customers will need wooing. By my count, we are headed towards a 5,000-service-bay reduction in the Canadian dealer network. This conservatively translates into more than 10,000,000 customer-pay hours up for grabs. You can do the math, but multiply that by your door rate and you may break your calculator.
Where those customer-paid bay-hours land will have a direct correlation to where they purchase their next vehicle. And then after that, where they get that new vehicle serviced. If you don’t catch those customers now, how many years are you going to need to wait before they return to the market?
Does your 2010 business plan take this opportunity into account? What are your strategies to make sure you get your fair share of the customers that are out there? Many of those customers will have a tendency to migrate to the aftermarket. How can you influence that tendency to increase your business?
These are all good questions that you need to answer in your own local markets. And they are not easy questions to answer.
More questions
You’ll need to look at your local advertising message and make sure it is consistent with the customers you are trying to attract. Look at your website. Potential customers will. Will they see what you need them to see in this current market? You might want to get a complete stranger to look at your site and determine your message. You’ll be very surprised by what they see that you don’t.
Look at your media spend. How do you get the right message out quickly to capture these wandering wallets?
Consider the competitiveness of your door rate. Would a small reduction help you attract some new customers? If you have idle capacity, would you not be better to fill that capacity at lower rates than to leave it idle?
Your brand has a role to play here, too. Your brand must help you attract those free agents to your store; not your competitor’s. The brand message must be well thought out.
Your finance partner has a role to play as well; you must be competitive. Monthly rates do matter.
To do nothing, and wait for natural consumer gravity to kick in, is not really an option here. Sure you will pick up the ones and the twos. But don’t you want the 20s, 50s and 100s?
These are indeed interesting times. Unquestionably, 2010 will be an amazing year for some… but a disappointing year for others. I know which side of the pendulum I would like to land on. I don’t like being disappointed and I’m sure you feel the same. So take the steps now to make sure you’re on the right side at this time next year.
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