Joe, here is my RANT:
My first taste of recession dates back to the Carter Administration and I have been through many since. When dealerships operate on low single digit net margins the effects of market downturns can be catastrophic.
People buy cars because they got a good deal. What is a good deal? It is a matter of perception. To most, it is a figure that would put every dealership out of business. Early, in my career, we held all of the cards. We had all of the information and most people were clueless when it came to buying cars. The internet has changed all of that.
When it comes to car dealerships, profit has always been a four letter word. People will go to the mall and pay Dillards (clothing) 400% markups and Zales (jewelry) 600% and not bat an eye. The thought of a dealership making anything is unacceptable. What is new to me, is this perception that all business and profits are evil. If America thinks that Banks, insurance companies, oil companies, and the like, are evil, just imagine their perception of car dealerships. I have always been thankful for TV evangelists and attorneys.
The dealership is fueled by self interest. Departmental managers are only interested in the well being of their departments and there is very little give and take. Reconditioning is too high. The Used Car Manager is steeling trades and the New Car Manager is bumping them. The Internet department is whoring out our cars (excuse the language). It is an uncommon manager that sees the overall picture.
We have been involved with the internet for a decade and most stores have not embraced it. The problem remains, how do you sell cars, over the internet, and make money? It is essential that you have people that are able to see the whole picture. They have to accept that the internet is the market. They have to manage their three largest variable expenses with that in mind.
