Why Are Dealers Seldom Right? A Brief History

   So many trainers like to tell you when they started in the business, how great they were and how they single handedly saved a manufacturer from near ruin. Not my thing. I’m simply stating that I sold my first vehicle for a dealer in January of 1979 for the purpose of this article. What I’m sharing, I’ve participated in, witnessed or at least saw from a distance. In other words, I was there.

    As I got to be about 6 months into the sales end of the business, domestic dealers were placing ads showing Japanese imports wrapped around telephone poles, crushed by larger, “safer” American cars. Dealers were puffing out their chests and proclaiming that Japan will never take a large chunk of the market. Being impressionable and a Veteran, I listened, quit my job at the Toyota store and went to work at a Chevy store. Right at the height of the 2nd Arab oil embargo.

    I went from earning about 5 times as much as I should have been (I was on pace to make just over $45,000 in 1979) to barely covering my gas expenses in the demo I was given. You see, the Chevy store’s inventory consisted almost entirely of Caprice Wagons and Impalas. My demo, a traded in bread truck with a 4 speed on the floor and one seat for the driver. They operated on a weekly up system. That meant the first guy in on Monday got the first customer, second guy, second customer and so on. I started on Monday and saw my first customer on Thursday. But, our domestic dealers initially refused to change.

    The next model year, 1980 gave rise to the “X” Bodies from GM. They were named Car of the Year while leading the world in recalls. And the dealers were chanting. Front wheel drive will never be the mainstay in autos. Other than trucks, it’s a minority now to have rear wheel drive.

    Late 1986, Ronald Regan and Congress eliminated the tax breaks for interest and changed the rules for leasing. Once again dealers screamed, “The end is nigh!” Yet within a few years, interest rates dropped and the auto industry had record year after record year.

    By the mid 90’s, due in part to some dealer practices, compliance became a real issue. In fact, companies that focused on teaching compliance sprang up all over the country. Menu companies and even some F&I providers began forcing menus on dealers. As usual, they complained that this was going to cost them significant profits, customers and future sales. Historically, we now know that proper menu use actually increases profits as well as customer satisfaction.

    The late 90’s brought dealers face to face with a new tool – the Internet. For many, it was just a passing fancy. It served no real purpose for dealers. In fact, many had to be dragged kicking and screaming to use the cookie cutter web sites provided by the factory. It took a while, but successful dealers adapted and began using the web as a tool for all departments.

    2008 – The Bailout. Dealers were hit with fewer floorplan choices, tighter credit and even letters from the manufacturer that they were being closed. Many said we would never return to those record years of prosperity and that financial restrictions will make it all but impossible to sell to the average consumer. Yet, 2015 and 2016 were record breaking years and even though many predicted a slowdown, it looks like 2017 will be another one for the books.

    After so many missed predictions, you’d think opinions of the future might change, or at least be tempered. Nah. Today, dealers are faced with the growing opportunities available on the Internet. The very customers they want to attract, spend more time online and less time in line than any other generation. 90% will search for what they want on the web and visit 1.5 dealerships before deciding. The previous generation of buyers, spent no time online and visited an average of 5 dealers.

    Ask dealers what they think about buying cars online and the answers will range from, “Never happen,” to “This will be the end of dealerships as we know it.” The latter is probably more accurate but not for the reasons dealers think. With all the information online and the millennial buyers growing and the Boomers shrinking, dealerships as we knew them will have to change in order to survive.

    I offer a simple solution. Instead of fearing customers being able to purchase cars online and eliminating the dealer, why not learn how to attract, sell and build a relationship with consumers using the Internet as a tool rather than ignoring its immense popularity? Imagine the forward thinking dealers who engage customers the way customers want to be engaged. What does the future hold for them? Those who adapt are most likely to still be in business when the “Next Big Thing” occurs and be able to handle it and even grow with it.

John Fuhrman, is Director of Training for OptionSoft Technologies. He works with progressive dealers looking at technology as a tool and using it to succeed in a market that is changing faster than ever before. He designs sales and management training programs for client dealers who want to maximize performance using today’s technology. He has just released the 20th Anniversary Edition of his first sales book, "REJECT ME - I LOVE IT! 21 Secrets for Turning Rejection Into Direction" His email is, jfuhrman@otiservices.com

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