In uncertain times, dealers are buckling down and dialed in on what they need
The year keeps on ticking by. We are still waiting, however, for some evidence of normality as we begin to assemble our plans for 2026.
It’s an interesting time; the retail business continues to drive forward, while the overall macroeconomic environment presents a degree of uncertainty not seen in generations.
In speaking with dealers over the past month, there is a general sense of relief and surprise regarding the way the year has unfolded thus far; however, at the same time, there is certainly heightened stress regarding what may yet materialize.
I believe there is a theoretical disconnect between what we thought would happen and what has transpired so far this year.
Looking back over the decades, there is abundant evidence that shows the resilience of franchise automobile dealers.
Currently, consumers are facing new pressures on vehicle affordability. As a result, they are either keeping their current vehicles longer or turning to the used vehicle market to trade up a few years.
Part of this, I believe, stems from the fact that automobile dealers operate several complementary businesses and are not solely dependent on the sale of new cars.
History has shown that when one of those businesses is challenged, the others seem to rally in support. Another part of this is that automobile dealers have significant skin in the game and have leveraged their personal assets to support their businesses.
In other words, automobile dealers have tremendous motivation to succeed. They were wise enough in the beginning to choose a business that most Canadians rely on to enhance their household earning power. Having a vehicle that runs makes reality happen for families, kilometer after kilometer.
I believe the most important part is the team. Successful dealers support and, in return, are supported by great people. Investment in people and giving them opportunities is the backbone of all dealerships. How you guide them to live your collective mission, vision, and values sets your dealership apart.
In times of challenge, automobile dealers can shift gears with the best entrepreneurs in the world.
For instance, when new vehicle sales are challenged, used vehicles take their place. This is happening right across Canada now for various reasons.
Currently, consumers are facing new pressures on vehicle affordability. As a result, they are either keeping their current vehicles longer or turning to the used vehicle market to trade up a few years.
This creates opportunities for profits in used, service, and parts, all of which provide greater percentage margins than new vehicle sales. As entrepreneurs, dealers always have their eyes open, and their ears tuned in to other opportunities.
Some have chosen to purchase additional stores, body shops, parts operations, for example. Others have chosen to spread their wings into vehicle finance, offering lease and loan packages to consumers and fleet customers. Yet others have expanded beyond automotive to businesses such as hotels, restaurants, and real estate development.
One thing I have witnessed is that many dealers are making the distinction between what they want and what they need. As franchises, dealers have no real choice but to invest in their businesses to maintain good, solid relationships with their franchisor.
In today’s business environment, however, many dealers are asking themselves: “Do we really need that?.” At this moment, most dealers are putting their wants aside and concentrating solely on what needs to be spent.
I am seeing some OEM flexibility, as they also navigate through the realities of the current business environment. On top of that, profit and loss statements are being scoured from top to bottom, looking for wasted spending.
Many are reviewing their contracts, getting competing bids with the goal of getting the best value for their money. In some instances, the reported savings are staggering. We all spent time during the COVID-19 pandemic eliminating waste. Unfortunately, some bad habits have crept back into our dealerships. It’s time to look at this again, if you are not already.
Some dealers are looking to refine their processes, change things up, if you will. Our facilities sit idle for many hours. Some dealers are examining how and when they recondition used vehicles to maximize availability of customer pay hours and reduce customer wait times.
Some dealers have changed how they use their sales staff by combining new and used vehicle sales functions and integrating F&I into the mix, creating a better customer experience.
Others are renting or donating space to charitable organizations to support their communities, while others loan staff to help with charitable causes. It turns out that this is a great, low-cost marketing strategy that creates a positive impact for employees and your business’s reputation.
Others have programs with secondary and post-secondary schools that have a positive impact on recruiting. In these uncertain times, dealerships, large and small, could benefit from thinking outside the traditional box. Little things add up quickly and could produce wins for your dealership.
Over the next few months, we will all be putting the finishing touches on our 2026 business plans. If you haven’t already, soon you will be receiving your new vehicle sales volume plan from your brand.
This will drive certain decisions for you, but importantly, not all decisions. Remember, all your businesses require the same level of planning. They are all interconnected and have their own unique potential. Look at the resources that you have invested in and take steps to ensure you are taking maximum advantage on all fronts.
In these challenging times for our customers, employees, businesses, and brands, we must remain focused and avoid distractions. Try not to wander. Keep your organization focused. You can’t control the outside noise and the narrative it produces.
You can, however, control what goes on within your dealership. As you look ahead, spend more time addressing your dealership’s direct needs and try to stay focused on meeting them, rather than getting distracted by unproductive wants.
