Pub. 11 2021 Issue 4

10 illinoisdealers.com Automobile Dealer News JOEL KANSANBACK Brown & Brown Dealer Services BILL KELLY Brown & Brown Dealer Services FRANCIS FAGAN Brown & Brown Dealer Services IADA Consultant’s Corner Record profitability makes every dealer wish they had another dealership. How many times have I been asked lately, “Have you heard of anything for sale?” When almost every dealer feels the same way, it does make you wonder if there is some potential future negative in all this euphoria. But first, how did we get here? It’s been a perfect storm that has created record profits. First, most dealers trimmed headcount during the early months of the COVID pandemic. After which, they discovered they could be just as productive with the newly reduced number of team members. When volume came back, most dealerships did a great job, with F&I going to record levels, which they have maintained. The idea that all customers were going to demand remote delivery and therefore F&I income would be in peril never panned out. Customers still want to drive the vehicles and take delivery of the vehicle at the dealership, leaving our traditional F&I model intact. Following these two positives, we have had inventory supply levels change, and as a result, gross profits have surged. Even while dealers struggle to maintain enough cars to sell – generally, most have been profitable due to front-end gross increases, F&I and reduced expenses in headcount and advertising. Advertising left in traditional media is all but gone, and even digital spends are down: why would you advertise if you can easily sell every car you can get your hands on? Floorplan went from being an expense to a credit on the Profit and Loss. This party could continue for a while. Surely F&I results don’t look to be retreating any time soon. The beginning of some new car inventory is in sight and should steadily build. The consumer is still enjoying low- interest rates, the highest savings rate in a generation, and an improving employment picture. But like the Grateful Dead said, “When life looks like easy street, there is danger at your door.” What are we going to find when things normalize, whenever that is? When the tides go out, what and who will be exposed? Here are some examples of things you can look toward to make sure you are ready when the tide turns: • Solid Road to a Sale sales processes have all but been abandoned. When things are this good, managers tend to overlook shortcuts and skipped steps. Do this for several months, and the net result is mayhem: no process, no accountability, and no easy way to manage your way back to a consistent sales process. The dealer or GM should be sitting in on daily meetings to ensure they are happening at a high level of quality and intensity. A best practice here would be to hold a “pre-game meeting,” so level set expectations. • F&I will find out that a customer in a normal shopper mode who When Life Looks Like Easy Street, There is Danger at Your Door