Dealership Development, LLC Blog

Vehicle service contracts or VSCs give car owners peace of mind. These contracts are valuable commodities that protect used vehicle owners against the inevitable cost of repairs that life and the road will throw their way. So what are the specific benefits of signing a VSC?

Federal regulation compliance in 2012 cost the average franchised auto dealership their earnings from a sale of 106 vehicles, representing more than 21% of the dealership’s before-tax net profits. 

According to a report by the non-profit Center for Automotive Research (CAR), the major portion of this cost is due to regulations related to vehicle loans, employment, and bookkeeping. Compliance with repair, marketing, sales, and business operations regulations was responsible for the remainder of this enormous cost. Given the increase in regulations since 2012 and the additional price of meeting state and local regulations, it’s clear that a significant difference to dealership’s earnings will result from improving compliance efforts. Automotive compliance is a complicated and time-consuming effort requiring ongoing research, training, and auditing.

Making the Sale for Car Dealerships:

Little else is more important to a car dealership than training their employees to provide the customers the information they need when selling a vehicle. Car salesmen have a tough pitch to make considering a car is one asset people are buying that depreciates in value as soon as it is driven off the lot. People want to make their investments wisely, buy a car that is going to last well, is going to have few problems, and is going to hold as much value as possible if they ever want to resell their car in the future.

As a car dealership that's succeeded with record sales this year, are you sure you can retain those customers for the future? With car sales being one of the most competitive industries, how can you be sure they'll keep coming back to buy cars from you, or refer their friends?

A customer retention program is a typical procedure all car dealerships use to assure that their customers keep coming back.

Any F&I department understands that a lot of pressure comes with the territory due to sales expectations, but are you helping your team succeed to the best of their ability? Are you offering the best F&I products available for your target market and are you taking the time to train your team for all the changing demands?

If your F&I department keeps missing the mark on the latest trends, it's time to get some help.

Are you reviewing your monthly numbers only to discover that your contracts in transit are in the upper six figures? Contracts in transit-or CIT-are when a contract to fulfill a car loan isn't paid in full due to various circumstances. Either the person who bought the car can't make payments immediately, or there's a hang-up in the transit of money.

All of this can signifcantly affect your cash flow and place you in financial jeopardy.

The world of sales is never easy, though it becomes a lot easier when a sales team knows what it's doing.

Have you observed your sales team's techniques lately? They could be missing some very important details in their sales approach and you don't even know it. As the owner or manager of an automotive dealership it is your job to make sure your sales team stays up to date, to be performing up to expectations. So are they?

Not long ago, purchasing and selling online was something very few knew how to do. However, selling online has shown new, customized, and varied ways of performing a simple task and has resulted in efficiency, innovation, and a higher earning rate. Online selling has become the answer to those who are looking for an item they can’t find locally. It has been even more convenient for people who have a limited amount of time and for those who—due to different limitations—cannot physically visit a store.

Did you know, when it comes to a compliance fine, any chief officer can be fined individually? And the fines are not just issued for leaving physical papers unattended anymore. The advent of car-shopping websites and mobile apps have increased the need for dealer awareness and responsibility in avoiding stolen personal information from online sources.

"If you have a piece of customer information that is not safeguarded properly, there's a (noncompliance) fine of $40,000 per day," says Matt Woods, director for field operations at an Austin, Texas dealership consultancy service group in a recent report from Automotive News. What does this mean? That one unlocked cabinet in an unattended office could result in astronomical fines—one for every file. Not only does this lack of security result in fines, it also manifests as loss of customer’s trust and loyalty as well as possible lawsuits.

"Additional streams of revenue."

It’s the catch phrase for how a company or individual can profit even when the economy is down-turning or sales are weak. It’s the sign of an entrepreneur that understands they not only protect your business, but provide opportunities to meet more of your customer’s needs and develop a long-term relationship. A prepaid maintenance plan (PPM) offers both of these solutions--additional income through your service department and customer retention and loyalty, and yet, recent research shows that 65 percent of dealers are not providing PPMs and in so doing they are leaving millions of dollars on the service floor.