My Thoughts – Local Auto Dealers

With the Big 3 Automakers begging the Federal Government for funds to stay away from bankruptcy for at least another quarter, there is brewing a larger mass of businesses shuttering their doors, or at least trying every cost-cutting idea to not shut their doors…the local auto dealers.  

I had the opportunity to talk to a few of the owners and staff to hear their side of the bleak story.  Its not good.  Some had continued down a path of growth expectations and poured their money into expansions of brick and mortar from 2007 into 2008 plans.  Their cash reserves have been emptied as consumers have stopped buying newer cars.  I know what you are thinking, that’s not new to us.  But, the biggest ‘A-ha’ I came across was what the heck are they doing to market themselves?  Did you know that your typical auto dealer has several revenue streams, aside from selling cars?  Think about the Parts and Service you use when you take your car in for warranty work.  Did you know those 2 business models are where car dealers generally make money, as in profits?  They don’t just provide a $30 oil change for free because they can.  They provide parts and services to automechanic shops throughout their general area.  On top of that, their ability to be an Aftermarket Parts Dealer is such a profit-advantage to them they didn’t realize the  bag of money they were holding.  Now for the fun part…

These auto dealers have, I repeat, have (not had), an opportunity to reach out beyond their local geographic region with their Aftermarket Parts and sell to a wider customer segment they never had before.  How many of you have a Mopar aftermarket part on your car?  You can’t buy directly from Mopar, you have to buy from a dealer.  Did you know that the following ‘dealer’ is a local Auto Dealer Parts shop acting as the reseller?  Check them out:  http://www.moparpartsamerica.com/  What do you think of the website?  Not too bad, but, the title says ’America’, yet their messaging says local car dealer.  And how are they marketing to their customer?  Using google adword buys at ~ $3-500/day.  Are they part of an online forum?  No.  Do they monitor car forums?  No.  Are they going to jump on this bandwagon before it rolls right over them?  I hope so…

I am trying to lead them down a path of digital modernization to get them to see the light.  There are local jobs at stake here, and this ‘Parts’ business is a very profitable revenue stream. 

Now, I know they have many other business issues to deal with as the owners continue to lose a lot of $/month from all their dealerships.  In fact, the last 2-3 weekends in a row, they have actually sold more new cars than they ever have in a weekend, even during the frivolous days when everyone had jobs and money(you remember those times, don’t you?).  Selling enough cars can save the overall corporation if it turnsaround consistently, but, I believe those days are still a long ways away.  In the meantime, they need to relook at their business models, re-evaluate how they are doing business and how they are marketing to their customers, current and new.  Digital highway marketing can lead them down the successful path if they are smart and pay attention.

‘Til next time,

SMBGuru

Matt

Advertisement