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Four Challenges Dealerships Can Turn into Opportunities

Mar 13, 2019

Current trends point to a solid year for dealerships in 2019. A more robust economy has fueled consumer confidence, but vehicle sales are dependent on numerous factors, including interest rates, energy prices and technology innovation. Dealerships need to remain agile and flexible to remain profitable. Below we’ll identify some of the challenges and corresponding opportunities that dealerships should focus on in 2019.

Challenge: New vehicle sales are predicted to slightly decrease

Estimates for new vehicle sales are anticipated to decrease by 300,000 units to 17 million, according to JD Power. While this is a negligible decrease, most predict another strong year for dealers overall. Projections indicate that there will be 17 more new models rolled out than were introduced in 2018. It’s likely that we’ll see an increase in interest rates, which may also have a negative impact.

Opportunity: Make up the difference in used vehicle sales

Most dealerships have focused much more heavily on new sales in recent years (largely because of manufacturer pressure), but there’s a strong market for newer, pre-certified used vehicles.

Challenge: Attracting and retaining qualified service technicians

This problem certainly isn’t new, and statistics indicate it’s getting worse. Veteran techs are retiring without replacement, qualified techs are hard to find, and competition is fierce. This will be a challenge for dealerships to face in 2019, but with it comes an opportunity.

Opportunity: Create or promote tech programs at local community colleges and technical schools

Capitalize on the movement toward promoting trades by partnering with community colleges or trade schools in your market to promote existing tech programs. If they aren’t providing them, help to get one started. Also consider instituting a peer-mentoring program in your dealership to help rookies learn from veteran techs before they retire. In addition, consider incentives for employees who refer qualified candidates.

To avoid losing qualified technicians to competitors, dealers must think outside the box to offer employees incentive to stay. It’s not strictly hinged on compensation.

Challenge: Catastrophic weather events

If history has taught us anything, we know that mother nature is unpredictable. And major weather events have been major disruptors to the automotive industry. No part of the country is exempt, but hurricanes have been especially unkind in recent years.

Opportunity: Have a business continuity plan in place

A good business continuity plan can be the difference between opening the doors after a catastrophic event or closing for good. If you don’t have a solid, actionable plan, make 2019 the year that you create one. If it has been awhile since you’ve visited and updated your plan, make that a priority as well.

Don’t forget that business continuity applies to more than just weather events. The threat of cybercrime and data breaches continues to rise, and dealerships must manage their risk through proactive cybersecurity and continuity planning in the event of a breach. For more information, see our recorded webinar, Managing Cybersecurity Risk for Dealerships.

Challenge: Customer retention

Consumers are holding on to their vehicles for longer periods of time because of factors such as reduced warranty lengths and long-term car loans. If consumers are not purchasing vehicles, they are fixing what they have. With technology at their fingertips 24/7, and convenience top of mind, dealerships must work harder and harder to exceed customer expectations and focus on developing relationships to retain loyal customers.

Opportunity: Enhance your service department

A well-managed service department is a source of profitability. More people are turning to dealerships to manage their car maintenance throughout its lifecycle. Consider growing your dealership’s service department as a part of your business development plan. Car maintenance is perceived as an inconvenience by consumers. If you are able offer a convenient pickup and delivery service, you remove the inconvenience and build loyalty with happy customers. Retirees looking for flexible part-time hours and a little supplemental income are great candidates.

Leveraging Dealership Opportunities in 2019

Successful dealerships identify challenges and seek opportunities for continuous growth, even in steadier times. If you would like to discuss the challenges and opportunities in this article, contact one of our professionals today.


Steve Hewitt, CPA
Dealerships Practice Leader
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