In a recent episode of the LotTalk podcast, co-hosts John Anderson and Chris Keene delved into the shifting dynamics of the automotive market, focusing specifically on the resurgence of new car sales. The automotive landscape is evolving rapidly, and new car dealerships across the U.S. and Canada are facing unique challenges. However, with the right strategies and mindset, dealerships can not only weather the storm but thrive.
After years of supply chain disruptions and inventory shortages, new cars are finally back. But they're returning to a landscape that looks very different from the pre-pandemic market. Chris Keene passionately highlights that while inventory levels are stabilizing, dealers must recognize that the era of significantly marking up new cars well above sticker prices is over. He emphasizes that dealers must return to fundamental selling practicesāmoving inventory efficiently to generate sustainable profits and consistent customer engagement.
Dealers today face challenges like fluctuating supply levels and unpredictable market reactions driven by media-induced customer anxiety about potential price hikes. These issues underline the critical importance of adopting proactive inventory management and customer-focused sales techniques.
Here are key strategies from the LotTalk episode to help dealers improve sales and management during these challenging times:
Tracking the overall inventory is essential, but Keene stresses the importance of closely monitoring the day's supply at the trim level. Dealers who understand which specific trims move quickly and which stagnate can adjust their ordering and pricing strategies to reflect actual market demand. Doing so minimizes unnecessary inventory buildup, reduces carrying costs, and improves profitability.
A thriving new car department naturally feeds a healthy used car inventory through trade-ins. John Anderson urges dealers to be proactive about capturing trade-ins by consistently asking customers about their current vehicles. Many consumers explore external sale options before visiting dealerships, so having transparent conversations about trade-ins can reveal additional inventory opportunities dealers might otherwise miss.
Communication is pivotal. As customer visits and leads may decline, every interaction becomes even more critical. Dealers should ensure that sales teams and BDC agents provide timely, valuable information to prospective customers. This approach builds trust and positions the dealership as a helpful resource. As Anderson highlights, exceptional service differentiates dealerships significantly, especially during periods of reduced customer traffic.
Dealers tempted to raise prices sharply due to temporary shortages or media reports risk alienating potential buyers. Chris Keene shares a cautionary example from a large dealership group that raised prices prematurely, resulting in plummeting leads and reduced customer engagement. Consistent, competitive pricing attracts steady customer traffic and avoids the pitfalls of short-term opportunistic pricing strategies.
Both Anderson and Keene emphasize adopting a volume-driven approach to sales. Rather than holding onto inventory hoping for higher future prices, dealerships should focus on consistently turning their inventory. Volume sales not only increase immediate cash flow but stimulate other dealership departmentsāservice, parts, and financeācreating a positive, profitable cycle.
Dealerships that navigate the complexities of the current automotive market with strategic foresight and customer-centric practices will be best positioned to succeed. By proactively managing inventory, fostering exceptional customer interactions, and maintaining a focus on competitive pricing and volume, dealers can turn current challenges into significant growth opportunities.
To learn more about best practices in automotive sales management, tune into future episodes of LotTalk or reach out directly to share your experiences and insights. Together, we can drive success in an ever-evolving market.