Fed Up?
Fed Up?
You might be surprised to learn the many ways that discomfort is setting in at the dealership level, as the industry feels the impact of being Fed up with the Federal Government.
Despite the somewhat universal acknowledgement that inflation is bad, and should be curbed, many are now reaching, or have long ago reached, a point of frustration with the Fed’s continued rate hikes and the intentionally destructive impact that they are having on certain segments of the economy.
JEREMIAH SHELTON, Vice president of training and development at APCO Holdings and guest commentator for Automotive News warns that the following considerations should already be at the forefront of your dealership’s efforts to digest all that the Fed is stuffing in to the buyer’s journey.
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- Rate objections
- For the first time in a long time, sales and finance-and-insurance staff are being challenged to answer questions about interest rates. Salespeople must be trained to answer these questions appropriately for customers who have contacted banks pre-sale and discussed rates with them.
The desk will need to update their “desk rate” more frequently when penciling deals to make sure they are safe on payment quotes. Finance must be prepared to handle cash, bank and credit union conversions, and to justify interest rates.
- Value selling
- “value selling.” In simple terms, every dealer must decide whether they are going to compete on price or value. In a recessionary market, value is going to win even though customers are looking for the cheapest deal. It sounds counterintuitive until you consider that “value” includes prepaid maintenance, cosmetic coverage and warranty terms.”
And dauntingly, those are just the first two of the nine courses that Shelton sees on the menu being placed before dealers today. He sees the additional considerations that must be consumed as including, but not limited to the following.
- F&I compensation today versus tomorrow.
- Front-end gross falling fast and deep.
- Inflated profit per vehicle dropping fast.
- Customers watching every penny they spend.
- Used-car prices swinging erratically.
- A value proposition and sales process to attract cautious customers.
- Downstream effects of fewer vehicles sold in 2020 and 2021, specific to fixed ops (e.g., less warranty work).
With all of this crowding their plates, it is painfully obvious that dealers are going to need all of the help that they can get to avoid being Fed Up.
Economic factors are beginning to show the signs of slowing that the Fed presumably needs to see in order to curb their efforts to slow the economy through rate hikes, so hopefully the ebb of this tide will closely follow the flow, but, in the interim, dealers must intensify their efforts to help customers better digest all that is being shoved down their throats.
At BDC United, our close contact with thousands of customers daily, provides us with a unique insight in to the mind set of the customer, and an equally unique ability to help shape that mindset to overcome concerns and instill confidence.
Don’t suffer the discomfort of having your customers over Fed – Let BDC United help you more effectively communicate to your leads that your dealership is equipped to help them get the most value for their car buying dollar, regardless of the current economic climate.
https://www.autonews.com/guest-commentary/how-car-dealers-can-adapt-interest-rates-squeezed-customers