Auto Dealer Monthly Magazine is the daily operations publication serving the retail automotive industry. This automotive publication serves dealer principals, officers and general managers with the latest best practices.
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AC C OUNTING ©ISTOCKPHOTO.COM/MCCAIG erably to fund the growth in units, such as advertising, interest, commissions and drivers, to handle the volume of increased dealer trades and picking up cars at the auctions. More importantly, you have to be sure these expenses don't increase disproportionately to the gross generated. Remember, to make the same net bottomline income, your costs must remain as fat as possible. EXPANDING YOUR MARKET Another factor to consider is your geographic area and the population around you. Can it provide enough customers to supply the sales volume you want to achieve? More and more dealers are realizing the power of the Internet and are using it to drive trafc to their store at a lower cost than the older, more traditional advertising mediums like print, cable, TV and mailers. It's not that these methods of advertising don't work, 12 it's that they may not work as well as they have in the past. For example, I don't know very many people under the age of 45 who read a newspaper. Te more preferable method is to view everything online. People also are spending their time in front of a computer, a TV or listening to the radio while driving. And with the increased use and decreasing cost of smartphones, the computer has become very portable. Te one downside to being a volume dealer is that you leave your operation vulnerable to economic downturns. When the next recession strikes and sales nose-dive, you will most likely be lef with a higher than normal overhead structure, which can totally destroy your bottom line. And it can be very hard to shrink down to a workable overhead factor quickly enough, as many dealers have discovered. Now, everyone hopes this never happens, but it has in the AUTO DE ALE R MONTHLY • M AY 2013 past and will again in the future. So you might want to consult your crystal ball to give you enough advance notice. My crystal ball is still on backorder. HAVE A BACKUP PLAN So, does it make sense to work almost twice as hard to generate the same gross proft? Tere are many ways to make money in this business and it seems there is not a one-size-fts-all method of doing so. If you want to increase your unit sales, start researching dealers you know who have increased their volume considerably. Document their advertising, how many and what type of vehicles they are carrying, how many conventional vs. Internet sales they have, how far away their customers are driving and how many employees they need to do it. Remember, ramping up the volume is only the first part of the plan. You also must figure out how to decrease your over- head expense and become more efficient so there's a plan in place when the economy tanks. You must also be sure you don't increase your fixed expenses too much and keep your variable expenses in proportion to the gross you are generating. Complete a projection of what your grosses and financial statements will look like as your unit volume increases at various stages. Te experts say vehicle sales will increase this year as we plod along in this economy. Hopefully the worst is behind us, but we don't want to forget the past, revert to our old management style and not be aware of what is happening around us. We need to constantly keep accepting change in our dealerships and moving forward to ensure we are never at the end of the race, because the race for better profts and better life never ends. Until next time, take care and sell, sell, sell!