The automotive retail industry has seen some fluctuations in the last few years. And as things stabilize with the economy, you’re probably wondering what’s next. Dealers have been seeing record profits while struggling with inventory shortages at never before seen levels. But you already know this. So, the question becomes, “Where do we go from here if we want profits to remain high?”
Think of it this way. As the economy grows and contracts, there are opportunities for you to rightsize operations. Times have been good and the sun is surely shining down on dealerships across the country. With record profits comes new opportunities to create a foundation for you to weather the next storm.
When the pandemic first struck, many voices were giving diverse opinions about how to act. Lots of dealerships took some bad advice and made some misinformed decisions. Others hunkered down and walked into a brave new world. An increase in interest in vehicles for a variety of COVID-19-related reasons brought more consumers to dealerships. Profits were slowly going up. But as buying was on fire, there was a new storm on the horizon. The chip shortage and inventory shortages.
The global semiconductor chip shortages, coupled with the easing back to normalcy following strict regulations during the pandemic created a problem causing dealerships to see inventory falling. But this didn’t stop consumers from needing transportation. Instead, demand increased further. This naturally caused prices to go up, allowing dealers to hold even more gross on every transaction. Once again, more profits for everyone.
But this seriously begs the question of what happens next. Some say the automotive retail industry is fragmented with a steep separation between mom-and-pop shops and the big franchise dealer groups. As it stands, the groups are growing larger and larger. This is the direction where the industry is headed. But without a focus on what happens next, or an understanding of how much profit is too much profit, opportunities are created for new storms to sneak up on everyone.
To battle this, consider your operations as a whole. What changes have you made since 2020? What changes have you made since last year? The world we live in today is starkly different from the world of yesterday. The same can be said for what the world will be like in ten years, months, or even weeks. So while the short answer is that no profit’s too much, you need to be forward-thinking and consider what you are doing with those profits.
Modern dealerships need to look beyond a 3-dimensional view of their operations. Much like a car, you need to operate with a windshield and a rearview mirror. You have to see what’s in front of you, but you also need to see what’s behind you. A car is also equipped with side mirrors to give that full view into where we are going. Much like the layout of any automobile, these features are equipped in order to ensure we safely reach our destination.
So, when you apply that same mindset to your store, think beyond what today looks like, what yesterday provided, and what tomorrow will bring. Technology has made a world of difference in this regard. But if you are using yesterday’s technologies, you risk harming yourself in the future. Even when it comes to profits, if you want to sustain heightened growth, then you need to ask yourself the tough questions.
One last area that this touches on is the customer experience. Look, the modern consumer knows what’s going on. They are more plugged in than ever before. They are aware of what the impact of the pandemic was and how the chip shortage caused shortages. They understand what this means to profits, pricing, and availability. You can’t hide the fact that the law of supply and demand is working. So, be open and transparent with consumers as they navigate through an often frustrating automotive landscape.
Knowing what moves to make for your dealership doesn’t have to be difficult. You don’t need a crystal ball to predict the future. Take advantage of the gains you have made in the past couple of years. Without knowing what’s to come, invest in yourself and your team, as the best time to fix the roof is when the sun is shining. New solutions exist to help you turn the corner into the future while empowering your staff, selling more cars, and holding the most gross possible.
The road might be winding, but MAX Digital is here to help you along the way. Together, MAX Digital can bring your dealership into a sustainable, and healthy business model. Profits are up, that’s for sure. But if you want to continue that upward swing, then you should consider next-generation tools designed to help your dealership in a multitude of ways from merchandising to inventory management. Schedule a free consultation today and discover all the ways MAX Digital can help your dealership.