Earlier this month, Evan Perkins, President of the Dan Perkins Auto Group, told Westport Sunrise Rotary the automobile industry is benefiting from the improving economy. It’s back, dramatically changed, and, for dealers who have adapted, prospering.
Perkins owns five automobile businesses including Honda of Westport, the number one new car dealer in Connecticut. Car sales started down with the “credit shutdown of 2008” and bottomed out the next year. Banks tightened floor planning programs by requiring more dealer equity in their inventories and tightened credit requirements for buyers. Some even stopped financing the industry.
This targeted austerity program “curtailed inventories,” which, paired with the weak economy, also curtailed showroom traffic. “Sales dropped dramatically,” and 25 percent of U.S. dealerships went out of business, Perkins said.
This distress pushed dealers back to basics, including “focusing on other areas to stay in business.” Many, Perkins included, looked to their service business for revenues. And to attract people back to their showrooms, many also looked to pre-owned vehicles because they could be sold more readily and at higher margins.
Four years on the improving market is a changed market. It has become more customer-centric, and, like most businesses, the car business is increasingly Internet and social media based.
Gone are the days when the buyer needs to go from dealer to dealer looking for the right car at the best price. Buyers are now in a “strong position” as the Internet offers access to “prices from 50 to 100 dealers.”
They can search through sites like autotrader.com and cars.com to identify almost whatever they want, new, certified pre-owned and pre-owned vehicles by make, model, price and distance from any zip code. All pre-owned vehicle listings include full descriptions and photos, some have CarFax reports offering mileage, ownership, service, accident, and damage history.
And buying services – truecar.com and ones through AAA, Costco and USAA – also provide similar information. They guide the prospective new car buyer through the configuration process, and provide the pre-owned buyer with photos and descriptions. They also offer discounts to their members.
Dealers, too, have their digital weapons. Most are for business development, tools such as autoalert.com. This software app allows dealers to identify car owners who “are ready to trade out of their existing vehicle.” They can find people whose leases are close to expiration, who have “equity positions,” who may or may not even be prior customers of the dealer performing the search. This information then provides a conversation starter for the prospecting dealer.
To remediate negative reviews and strengthen its brand, Perkins retains a reputation management consultant who monitors postings and contacts writers of negative reviews with the objective of correcting the problem that led to the review.
Another part of this new digital world is that advertising dollars are shifting from newspaper classifieds to online search. One part of Perkins’ sales programs is purchasing keywords to improve his dealers’ search rankings: Honda of Westport may buy “Honda” and “06880,” so a search including those terms places them near the top of the results.
During the Q&A, Perkins was asked about cars of the future. He told the group his Westport dealership is one of eight Honda locations in the New York market handling their electric vehicle, the Fit EV. Because the car is new Honda offers it for lease only to selected buyers to permit the company to monitor performance and usability.
The other candidate is Honda’s economical natural gas car. Its fuel, at current prices, costs the equivalent of $1.60 per gallon. It uses compressed natural gas and emits water, making it environmentally attractive. But because CNG is not yet readily available in this area, we see few privately owned vehicles. However many municipalities, including Fairfield and Trumbull, have built their own fueling stations and added CNG vehicles to their fleets
The Dan Perkins Auto Group came through the weak economy by expanding its business base, adopting new technology, and stepping up its customer focus and is now a better positioned leader in a more competitive automobile market.
Photo by Hal Levy