Automotive Pandemic

I am privileged to work with some of the very best dealers in the industry and am excited to be back on the road meeting with them in person. While discussing their year-over-year performance, one thing stands out: Dealers are reporting record numbers in both variable and fixed operations that have impacted the net profit of these stores.

Here are some of the items that I believe have contributed to their record numbers and creating a significant increase in their net profits.

1. Dealers that were able to remain open found that their processes needed to change and, in some cases, personnel as well. Some needed to eliminate positions and this created the need to cross-train jobs to help accommodate the demand of incoming traffic. We found that our vehicles and services were still very much needed by the public, allowing us to put our best-performing employees in front of our customers.

2. Variable operations began to see a rise in gross profits across the board, both in new and used vehicles as well as in the F&I department. As a result, this caused inventories to decline, which led to a concern of running low on product by year-end. Of course, this assisted in reducing the floor plan interest and in some cases forced the team to become better at acquiring the right inventory. No longer was it a race to the bottom on pricing.

3. Fixed operations were impacted as well, allowing for us to reposition our employees in service and parts. This gave advisors more time to spend with their customers and to just do their job! While repair order count may have been impacted, hours per RO, as well as effective labor rate, increased across the board.  

The net result of this was an increase in operating gross, a reduction in expenses, and record net-to-sale numbers. Keep in mind we started the year 2020 with record-setting numbers in January, February, and part of March. Then along came the pandemic, which I have closely observed and been part of, and which has shown me that we have an automotive pandemic going on.

A pandemic is defined as “an epidemic occurring worldwide, or over a very wide area, crossing international boundaries and usually affecting a large number of people.”
There is a saying I grew up hearing from my grandparents and parents: “Where there is a will, there is a way.”

For me, it has been getting back to the grind with my clients, talking about their wins and the improvements in their business operations that have led to their record numbers this year. And it’s not over. I hope we have all learned how to run our business more efficiently and that it is not a race to the bottom to be competitive in our pricing. There is a lot of talent out there and our customers will pay for great service and great vehicles.

We still have time to finish 2020 strong and make it a great year, if not a record year!