For the past two decades, the auto industry has been going through dramatic changes. Over this period, mass-use of the internet has caused dealers to change the way they approached car sales completely. This shift also created endless streams of data from a multitude of different sources. It's from these streams that it became necessary for successful operations become agile in sorting through thousands of metrics to understand their business, recognize where the opportunities existed, and decide how to act on them to add to their bottom line.
Just when it felt like we were getting used to the landscape, our entire industry changes seemingly overnight. We now find ourselves in a new environment where a global pandemic has forced many dealerships to suspend business. Open or not, the dealers we serve are working to transform their operations to continue providing services and retain customers. While it is essential to think about the here and now, retail automotive professionals must also be prepared to look and plan for the future.
What To Expect Next
When this pandemic is finally over, there will be a pressing and urgent need to rebuild and restart our industry. Many of the things we were forced to change our business processes will likely never return to the old status quo. The most successful dealerships that emerge post-pandemic are the ones who are innovating and evolving today! They are learning to use remote tools and technologies more efficiently and are setting themselves up for future success by working out all kinks in their new processes now.
Improve Digital Retailing Capabilities
It has been known for years that customers are becoming more dependent on the internet to make their vehicle purchases. In the 2019 Car Buyer Journey, Cox Automotive stated car buyers are spending 61% of their total shopping time online, up from 57% two years ago. While this may seem daunting, it also provides you with tremendous opportunity.
For the most part, car buyers are favoring digital retailing and even remote purchasing with delivery. Numerous dealerships have quickly transformed their traditional sales process to make it as virtual as possible to comply with proper social distancing protocols. Now that customers have had a little taste of this, I don't believe that our industry will ever completely go back to the way it was before. While many saw this type of changing coming, not many thought the transition could have been this swift. Be prepared to continue to offer these services even after the social distancing protocols have been lifted.
Remote Access to Data
Having the ability to monitor and see data in near real-time, from a remote location, is one of the key pieces to successfully evolving into this new environment. We can no longer manage our overall business and strategy with the traditional monthly meeting with any level of efficiency. In today's competitive landscape, you must be able to make real-time decisions and adjust immediately to changing conditions. To accomplish this level of understanding, it requires remote access to your most meaningful data and engaging everyone on your team. Additionally, you will require data to be delivered in a manner that is fast, meaningful, and easy to understand. Anything short of these critical requirements will quickly phase out of your dealership.
Choosing Trustworthy Vendors
As much as this pandemic is impacting your financial statement, you can bet that it’s also impacting every vendor that supports your dealership as well. With the numerous start-ups that have entered the automotive space recently, many of them may not be financially stable enough to weather this event. It’s critical that you carefully choose who you are entrusting your data, and your dealership’s future, to safe and reliable partners.
With the current social distancing protocols in place, you understand how important it is to keep communication lines open to all employees. If your team is lacking the proper platform to effectively communicate with one another, look for one that allows all departments to communicate about receivables, inventory, OTDBs, and open ROs without ever having to even be in the same building.
This communication is key to driving your cash flow and keeping everyone on the same page. Additionally, it also helps drive accountability by allowing managers to monitor the process and provide feedback at any time. Keeping your communication channels open will allow more of your hard-earned income to become profit on the financial statement.
One of the biggest stresses on dealerships right now is keeping on top of your inventory. Dealers need to ensure they have the right mix of vehicles on their lot and are not letting vehicles sit and age without a plan of how to address them. Your variable operations team needs to determine the true daily cost of a vehicle, so you can determine when you should keep it and when you should wholesale.
Be Forward Thinking
At a time when the future state of the economy is questionable, it is important to remember that you need partners who can identify, quantify, and support your specific business needs. This is exactly what NCM does for our dealers. As a company that has specialized in dealership financial data since 1947, we’ve been entrusted to help our dealer partners utilize benchmark reporting, composites, software tools, and peer-collaboration.
If you need a specific tool that can help solve the needs we addressed in this blog, our recommendation would be to look into axcessa®. This software seamlessly connects to all major DMS platforms, provides remote access to data, and is delivered in a format that will allow you and your team to act immediately. If you're interested in learning more, schedule a free demo at any time.