Dealers Should Make "Business" Resolutions for a Prosperous New Year

It is a time honored tradition that most of us, at one time or another, have joined in – the New Year’s resolution.  Common resolutions include changes for personal improvement such as losing weight, quitting smoking or exercising more.  It is just as important for dealers to make “business” resolutions: those changes that will have a positive impact on their businesses for the coming year.  Here are a few examples of areas that dealers can resolve to improve:

Floor Plan Financing – It was not too long ago that dealers were under dire pressure regarding their floor plan lines.  The financial meltdown and subsequent recession caused many lenders to either tighten their lending or, in some cases, leave the market entirely.  This left many dealers at the whim of the lenders.  Many experienced an increase in rates and stricter provisions regarding curtailments.  As the credit crunch has eased and markets have stabilized, dealers are again fielding calls from lenders regarding their floor plan lines.  Numerous other finance companies have also taken the opportunity to expand their markets.  The increased competition has created more favorable rates and terms for dealers.  Dealers should resolve to investigate the available options for floor plan financing.  Well capitalized dealers have interest rates under 3%.

Working Capital and Property Financing - Financial institutions find they are flush with cash and need to put it to work.  With real estate values stabilizing, rates at historic lows, and lending requirements loosening, dealers may able to refinance existing loans at more favorable rates and terms. It may also be an ideal time to obtain financing for projects that have been put on hold.  Of course, this all must be balanced against the costs involved to refinance.

Review and Refine Procedures – What are the tasks and projects that you or your employees never seem to be able to complete? What procedures that are ultimately considered time wasters continue to be done?  Dealers should resolve to review and refine the policies and procedures of the dealership.  This may include when and how staff meetings are scheduled, how the flow of information and documents go through the dealership or even the appearance of offices.  Dealers should also evaluate where the bulk of their time is spent each day.  Are you managing your dealership or are you constantly putting out fires and dealing with issues that should be addressed by managers?

Estate and Succession Planning – One aspect of the current recession is that the worth of auto franchises and related real estate has been depressed.  This provides an excellent opportunity for the dealer to begin or accelerate the transfer of these assets to the next generation at little or no cost.  Individuals have a lifetime gift exclusion of $5 million that is scheduled to expire on December 31, 2012.  Dealers should resolve to consult with their legal and financial professionals to begin the process.

Review and Revise Marketing Strategies – As consumers trend more toward web generated research and advertising, dealers must adapt accordingly.  It is estimated that over half of all vehicle purchases begin with some sort of internet research.  Dealers should resolve to reevaluate their web site and internet presence to capture this audience.  Some examples would be the enhanced use of interactive formats (for service scheduling) and refinement of their search engine optimization keywords.

Customer Service – The lasting impression that a customer has of a dealership is not the vehicle they purchased or the repair performed, but the way they were treated.  While most dealers use the CSI metric as their measure of customer satisfaction, dealers should also strive to go above and beyond their customers’ needs to create a memorable experience that will generate repeat business from the customers, either from them personally or referrals.

As 2011 ends and dealers reflect back on the results of the year, they should also begin to look forward and create a list of “business” resolutions that will create growth and success for 2012 and beyond.

If you have any dealership management questions, please contact Paul McGovern at pmcgovern@downeycocpa.com.