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2012 WRAP Up To better gauge what’s going on the sales floors of dealerships in the U.S., AutoSuccess and DealerELITE.net have started a new dealer’s panel, where we’ll speak with dealerships from various areas and see how they’re doing, what’s working for them and what they expect for the future.
For the first installment of our panel, we spoke with Jim Evans, owner and president of Evans Motorworks in Dayton, Ohio; Chris Saraceno, Vice President and Partner of Kelly Automotive Group in Pennsylvania and Florida; and Tony Provost, president and dealer principal for Nissan of Bourne in Massachusetts. For our November and December installments, we’ll focus on a look back at 2012, and a look forward to 2013. AutoSuccess: Overall, how was 2012 for your dealership? Did it meet your 2012 expectations? Jim Evans: 2012 has been very strong for us. Our combined new and used sales are up 38 percent over 2011, and, more importantly, our bottom line is up 68 percent, so it’s been very strong. The surprise is that it clearly beat our forecast. We were forecasting an increase of between 15 and 20 percent, depending on the department, so we are definitely pleased how 2012 is going so far. Chris Saraceno: Every one of our five stores is up between 10 and 35 percent. We didn’t meet our forecast, but that’s because we have always made a very aggressive forecast. In the past, we’ve probably been overly aggressive, so very rarely has anyone ever reached a forecast in the 17 years I’ve been vice president here. All the general managers and service coordinators meet quarterly for one full day and review our forecast compared to the actual numbers, and then review our actual numbers compared to where we were a year ago. We ask, “These are your forecasts — you predicted them. Why are we not there, and what are you going to do differently? What can we do to support you?” Tony Provost: Overall, it was pretty good. It wasn’t very good, but it was pretty good. We didn’t quite meet our expectations, but our expectations were pretty high. We wanted to increase our bottom line by about three times what we did last year, and we did it by about two and a half times, so we’re just a little short of that. As far as volume goes, we were off because we had a surprisingly tough June, July and August this year. AutoSuccess: Were there any surprises in 2012? Jim Evans: We did not expect the growth in used cars we saw. We had a strong used car year in 2011, and had actually only expected that to be up about 15 percent; we’ve been very pleasantly surprised how strong the used car market has remained for us in 2012. Tony Provost: The biggest surprise was I don’t think the manufacturer
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Chris Saraceno Tony Provost Jim Evans was as busy as it should have been in the summer months. I think they thought they were going to do better than they did, and at least in our general area, in the Boston zone, and I don’t think it was anywhere near as strong as we expected it to be. And because of that, and this is my own fault, we weren’t as aggressive as we needed to be, and our sales were off. We’re definitely looking at that, and we’re not going to get caught like that again. AutoSuccess: What strategy or tool worked best for your dealership in 2012? Jim Evans: The biggest thing we did was that we went on the offensive, instead of playing defense. We felt now was the time to go after some market share. One of the things we did was dramatically increase our marketing spend; during the prior years we had been cutting back and trying to conserve resources and looking more at the bottom line. We made the decision in 2012 to actually attack the market. Chris Saraceno: Other than our old faithful tools like vAuto and our CRM DealerPeak, we implemented two tools. One of the things we felt we needed to improve on was our recruiting, hiring and employee retention. We partnered with a company called Hire The Winners, which constantly recruits and sends us candidates for every single position. We never stop recruiting — we look at it with a mindset of a professional sports team. Dealerships often hire when they’re desperate to get people. We decided to never stop looking, and our turnover is actually down substantially from what it was in 2011.
We also added a product called Service Turn to work with customers coming into service. Service Turn helps turn service customers with equity into new or used vehicle sales. Before people come into our service department, we know how much equity they have in the vehicle they’re bringing in. We share with them, using the Service Turn process, how they could lower their payment or update without increasing their payment. You can target people exactly and, in many cases, actually save them money. Between all our stores, by working the service department we sold an additional 40 to 50 vehicles from our service department in September. Tony Provost: We started walking our inventory five times a week — new and used cars — got a complete book value (Kelly Blue Book or NADA) on them and put them in the glove box of each of our pre-owned cars. Then we’d pull them out and go over it with our customers during the walk-around; that worked like a charm all year long. Our used car volume is up, our inventory cost is down, we didn’t have as many cars in inventory and we turned them faster than we’ve ever turned them. It was the highest gross-profit year we’ve ever had with used cars, so it worked out well all the way around.
Next month, we’ll look at the marketing plans of these dealerships and what these dealers are projecting for 2013. If you have questions or are a dealer who would like to be considered for the panel, please contact us at thepanel@autosuccessonline.com.