THE NEW NORMAL: How are you doing business differently from 2007?

Automotive News is taking a look at the "new normal" in the wake of the recession, credit crisis, franchise network cuts... I'm writing the national overview and the numbers look good on a macro level. Average dealer's net profit is highest since 1986. Detroit 3 dealers boost throughput per store for the first time in years. Debt-to-equity is lowest in several years. Fixed op absorption is record high. How are you doing business differently and are the changes permanent? If you sell domestic brands, especially GM or Chrysler, did you lose dealers in your area and what was the impact?

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Permalink Reply by Dennis Galbraith on May 4, 2011 at 12:17pm

What a great topic Donna! You clearly have a good handle on the economic changes, but I think there may be consumer behavior changes that had a stronger and more lasting impact. Very few consumers or dealers were using chat in 2007. Today, over half of all franchised dealers use chat, and the impacted percent of sales is in the double digits for many dealers. There will always be people shopping from work or other places where voice communication is not an option, so chat is here to stay.

The use of mobile phones also exploded during this time period. It is now normal for shoppers to walk into the store with access to a transparent marketplace in their pocket or purse. That was much less the case in 2007, and mobile devices are certainly here to stay.

The evidence that these things are the new normal is the fact that they are so easily taken for granted. They didn't come as one big event, but they certainly were not in full bloom four or five years ago, and both will have at least as much impact on the way dealers do business ten years from now.

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Permalink Reply by Frank Bachman on May 5, 2011 at 11:44am

Donna,

Something new and different!

It goes without saying that the past three years has brought about a lot of
changes within the automotive sector. All levels from OEM, retail, and
aftermarket have had to make very difficult choices and change many business
practices, that in some cases were decades old models.

One area in which our dealership, Fontana Nissan, is adapting to change is
within our service department. We recognize the industry must do a better
job at taking care of customers after the sale. Fontana Nissan wants to ensure
that our new and pre-owned customers of today remain loyal through the service
process, and ultimately place us in a position to earn their business through
multiple vehicle purchases.

Fontana Nissan recently engaged the services of Clear Mechanic. Clear Mechanic
provides our customers with real time photos of recommended repairs from the
customers' vehicles through a mobile application. Our customers understand that
Fontana Nissan is validating recommended repairs through photo documentation

photos, which brings transparency to the repair process.

Clear Mechanic has provided consultation on a few different levels, inclusive of

providing our dealership and customers with an interactive customer service
library, illustrative service coupons, and most recently our new service repair
photo gallery. These new processes seem to be a hit with our customers, and
although only on the program for a short time, based on our clients' comments we
expect increased traffic, sales, and retention in the future.

Frank Bachman
General Manager
Fontana Nissan