What’s New in the Used Auto Business
There is much ado about “The New Normal” in the world of business. (See the May 2003 issue of Fast Company for an interview with Roger NcNamee, the technology investor who coined the term.) What is the new norm, and what does it mean for the used auto business?
Those of us entrenched in the vehicle industry have learned to watch the trends and stay flexible. We moved fast and took risks in the “new economy”. When the recession arrived, we scrambled to adapt and looked for ways to stay profitable. Now the marketplace calls for the best of both approaches — savvy ideas, smart choices, skillful execution and solid performance – accomplished with a renewed mandate for forthright business practices.
In 2002 the nation experienced 1.5 million bankruptcies from businesses, families and individuals that, until the filing, enjoyed a good credit rating in spite of the fact that their revolving debt was at a level which consumed most or all of their monthly income.
Sub-prime lending is becoming part of The New Normal in the automobile business with each passing day. Every dealership has more than enough special finance customers visit their dealerships daily. Where are the deals? Where are the lenders?
The New Normal is forcing dealerships to reevaluate their used vehicle business. How are they addressing the increase in decreasing credit scores? We all realize that a customer’s credit score does not equate to an IQ score. Someone is selling to these people. Are you getting your fair share?
The New Normal is realizing that Sub-Prime is now prime time auto business. And how we profit from this new marketplace segment has become as important as the profits themselves.
The New Normal is training your employees to implement a sales process that treats special finance customers with respect and dignity. It is recognizing that these customers have the right to choices about vehicles, payment plans, and where they choose to spend their hard-earned dollars.
The New Normal is admitting that we are in a people business as opposed to a wheels business. Our business is generated by relationships. The future of our business depends upon productive relationships with the customers and lenders, employees and vendors who will make subprime primetime in the new used auto business.
I look forward to meeting each of you on The New Normal Road to Success.
Dealer Marketing, June 2003.