NADA 2016 Wrap-Up: A Few Thoughts As The Convention Closes
For much of the past year, I’ve been concerned that dealers might be forgetting that the car business is cyclical.
I worried that dealers would take the past five-plus years of record-setting growth in new and used vehicle sales for granted. That they would overlook the reality that the good times simply can’t last forever. That they would be caught flat-footed when sales volumes and profitability soften.
But as this year’s NADA convention comes to a close, I’m sensing that some dealers have turned the corner. They aren’t simply waiting for sales to fall off before they make operational adjustments. They’re taking steps today to increase operational efficiencies as a way to maintain, if not increase, their performance and profitability as market conditions become less favorable.
At the vAuto booth at NADA, our new vehicle pricing and inventory management system, Conquest, saw an unprecedented degree of dealer interest and sales. The reason? Dealers realize that, when the rising sales volumes they’ve enjoyed in recent years dissipates, they need to more efficiently and proactively manage their new vehicle inventories to maintain market share and maximize the profit potential in every used vehicle.
As one dealer put it, “I’ve got more inventory and my new car sales are softer. It’s on us to move the needle. We’ve realized that we need to do a better job managing our inventory mix and pricing our vehicles to sell.”
Here are a few other take-aways as NADA attendees and I head home:
- Employee turnover. This remains a persistent problem. At the convention, NADA analysts discussed findings of the 2015 Dealership Workforce Study, which shows overall turnover in dealerships increased to 39 percent, with sales positions seeing the highest rate of turnover (72 percent). Some dealers recognize turnover as a costly drain on their operational efficiency and profitability. Most, it seems, simply regard turnover as the nature of the car business.
- Used vehicle volatility. The combination of rising numbers of off-lease used vehicles, and increased incentive spending by factories to move new vehicles, will likely hasten depreciation in the used vehicle market in the coming months. These factors will require dealers to be ever-more astute about acquiring used vehicles “on the money” and retailing them quickly—a key factor, I believe, that resulted in significant numbers of non-vAuto dealers signing up for Stockwave here at NADA.
- Cox Automotive collaboration. It’s been inspiring to see such a high level of collaboration between Cox Automotive brand team members at NADA. At the vAuto and Stockwave booths alone, we had dozens of dealer referrals from other team members—a sign that Cox Automotive is fulfilling its mission to make the needs of our dealer clients our highest shared priority.
My sincere thanks to the vAuto and Cox Automotive teams, as well as everyone who stopped by the vAuto and Stockwave booths, for making this year’s NADA an extra-special and highly memorable success.