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Saving Dealership Dollars

July 22, 2021

As I talk to sales managers, it’s almost a uniform cry: “Business is returning – the only thing holding up the rebound is a lack of auto dollars.” This is true for understandable reasons.

All you have to do is drive by any car lot and see the lack of cars available. The recent microchip shortage, combined with a recovering economy, has resulted in car dealers selling out their fleet with little to no marketing. This is the case for most brands. So why advertise?

There are several important reasons why car dealers need to continue advertising.

Service
I have always found it unusual that most car dealers focus mostly or solely on advertising cars for sale, which yields a small margin. The hope is once you buy a car at their dealership you will get it serviced there. The service is where dealers get the biggest margin. Now that consumers are holding onto their cars longer, and delaying buying a new car, their existing car will need service. This is a great opportunity to promote the high-margin service center. Advertisers should focus on expertise and reliability, reminding car owners to protect their investment.

Buy Your Old Car
If car dealers have low inventory, why not remind car owners that they buy used cars? CarMax and Carvana are promoting their car buying service. Advertisers can get consumers into the showroom and give them cash for their used car. This transaction can also build a relationship that will pay dividends when that seller becomes a buyer.

Brand Maintenance
During the onset of COVID, we talked about the importance of brand maintenance. Car dealers have spent years and untold dollars building a brand. It seems shortsighted to cut back on advertising just as the economy is recovering. Why weaken, or even lose, your brand recognition when the economy is showing robust growth?

The chip shortage is expected to end soon, and the car lots are going to fill up again with product to sell. Above are three impactful reasons to convince car dealers to wisely invest in advertising, even with a current shortage of cars on the lot to sell.

If you’d like support building a strategy for increasing your billing, we invite you to reach out to us here.

-Charlie Sislen, Partner

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