Just one month into 2019, and we've already received the dire prediction (from NADA) that sales are expected to drop to levels the auto industry hasn’t seen since 2014. According to Bloomberg, the decreased demand for sedans accompanied with increased demand for SUVs could bring about the “Next American Car Recession.” 

What Happens When New Car Sales Drop

With forecasts like these, some dealers cut advertising expenses and even lay off employees, while others double up on their ad spend. The outcomes of  knee-jerk decisions will vary because results will depend on the demographics and geographical locations of those dealerships.

Regardless of the choices dealerships make, a decrease in auto sales can only mean one thing: the opportunities to close a customer will also decrease. These opportunities include both the customers walking on to the lot and those reaching out via third-parties and dealership websites.

Dealership Staff & the Added Cost of Slowing Sales

Wasted time and effort have a monetary cost. And, at the dealership, those costs include fixed expenses, like hourly wages or salaries. In fact, popular website Glassdoor places the average salary of a BDC agent at $32,000 per year, and, if you look at the open positions advertised, five of the six advertised positions are at car dealerships.

What does this mean? BDC agents follow up with leads many times in their attempt to contact a customer much less engage them and/or sell a vehicle. The average closing rate on Internet leads is around 7%, according to industry expert Steve Stauning. That’s a lot of following up with dead-end leads and costly for a dealership.

It’s more crucial than ever for dealerships to be more efficient with the leads they get. 

Lead Quality Outperforms Lead Quantity, Always

In an economic downturn, dealerships need to understand that fewer opportunities make it increasingly important to have the right tools in place to optimize those, the staff available to connect with and engage consumers who are in-market and capture as many sales as they can. Lead quality will trump lead volume or dealers risk losing sales to competitors by continuously having staff chase the 93% of leads that will not end up in a sale.

Dealerships need to ensure that they have an action plan in place for 2019 to take advantage of all opportunities that come their way. Failure to do so will only result in a sales downturn, harshly affecting dealership profitability. Dealerships who are prepared, staffed and have the right tools in place to take optimal advantage of opportunities will feel less of an impact of a sales downturn and may not only prosper but may find themselves gaining new customers at the expense of their competition.