In past years, I would have been advising you to use the down time in the last quarter of a year to make assessments about your operation. Under normal circumstances it is time to evaluate your staff, look into your underwriting and plan inventory levels for the coming year.
However, 2021 has not been “usual,” and 2022 is shaping up to be similar in the sense that next year will be different than what we have experienced in years past — like just two years ago.
Even with the huge changes many dealers had to endure to operate since COVID there are still many different topics to consider as we move toward a new year.
Talking inventory
I would say that for 2022 inventory will continue to be a shifting challenge. I would not buy “all I could get” simply because I feel the sands shifting and delinquencies are coming up. Sales have slowed from the craziness of the last 12 months and the “chip” shortage is continuing to get corrected. All that points to a continued improvement in availability of inventory which should allow for some price easing.
In times past where there would be issues getting inventory, I have seen dealers “grab” everything they could when all of a sudden there would be rigs you could buy. You would end up with too many of the same type vehicle, some would sell, the others get old. In some cases, we would pay a premium price for a few days when something was available only to see more of them the next week for less.
If the BHPH/LHPH dealers are seeing 5% to 10% increases in delinquencies, think about the big boys like Ally, Westlake, Santander and other of the factory finance company’s numbers changing, as well. I would not want to get caught with a bunch of high-dollar inventory and suddenly there is an abundance of availability at more reasonable prices. Keep buying and selling for sure but I would say the “full lot” rule has not been in effect for a while and it should stay that way into the summer.
Looking at infrastructure
Gene Daughtry
How about your operation’s infrastructure? Have you been thinking about your DMS, CRM or Accounting software not really doing what you need? It could be time to consider paperless operations? Have you have thought there has to be a better way to manage your shop operations and have that integrated with your other software programs?
There are many ways to handle reconditioning and after sale issues that you could consider if you feel the shop is an out-of-control black hole of expense.
Are you still fighting with insurance, either at the point of sale trying to help a customer find some and not have the rates kill your deal? Aren’t you tired of the claim process and almost criminal payouts? Collateral protection or debt cancellation can really change the grind in dealing with insurance and wrecks.
What about car repairs after the sale? Are you buying a third-party service contract or do you have your own? There are good arguments for both methods but maybe now is a good time to research options and make a change for 2022?
Creating a reinsurance company is another move you should consider. Having a reinsurance company is not required for the products like CPI or a warranty but it is the important part of your business that maximizes those products. Are you looking at shelling out a bunch to Uncle Sam or I should say Sleepy Joe these days? Look into setting up a reinsurance company and you could seriously change the flow of your money and future wealth.
If you have not heard of or know what a 20 Group or dealer performance group is you should look into this. There are many successful dealership owners that will tell you it was the best thing they ever did. There is little you can do that is better than being part of a peer group that wants to help you succeed.
Making a list
There is a long list of items you should take time to consider if you want to improve the future of your BHPH/LHPH operation going forward. It is no different than if you want to be healthier or skinnier this summer, you have to make a change that will help you achieve the goal or you will not get there. You cannot get to Chicago if you are driving on Interstate 20 unless you change to another freeway. Improving the future of your business is the same.
Today is a great time to evaluate what you are not satisfied with in your operation and research making a change. You are not going to “blow up” everything and start over but you can make small changes that can have great effect on your future. If you would just stop drinking soda’s or stop eating bread you would be skinnier this summer, look at parts of your business and find something you can improve.
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Maybe a different shop configuration
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Look at underwriting and speeding up or slowing approvals depending on what improvements you need. (Speed up because it is taking to long for customer satisfaction or slow down to be sure who you are dealing with)
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Is it easy for your customers to pay payments (What tools do the collectors have to get money?)
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Do you have a related finance company (RFC)?
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Do you feel lost when it comes to marketing online?
I am in different dealerships almost every week, some for software conversions, others for consulting and procedure writing. In many cases when I go to a dealership to consult, I am doing a review of what is being done and we discuss why. I point out things I would change and often I hear “we knew this.” I become the kick in the butt they needed to get moving, I provide the owner a plan to implement changes they already felt they should do and off they go.
You have heard and seen all the motivational quotes about it is up to you to change. Vision without plans are just dreams. Everyone want to be a lion until it is time to do lion stuff. Always be learning.
If you need help with making changes or not sure what to change, I can certainly help. Call me anytime at (479) 970-4049.
If not me there are many mentors out there and always the peer groups will be a tremendous resource. Have a great holiday season and let’s get ready to make 2022 a year of improvements.
Gene Daughtry has been in the dealership part of the automobile business since 1990. He has created four different BHPH dealerships from startup to mature portfolios, all with complete service facilities. Currently, Gene is the senior consultant for AMS Consulting, part of Auto Master Systems Dealer Management System. Gene does procedure writing, operations training, consulting and offers AMS Digital Marketing and AMS Analytics to BHPH and LHPH dealers. You can reach him at gene@auto-master.com or call (479) 970-4049.
Source : AutoFinanceNews
