If you know how car dealers make their money, you can become a better expediter and win more business, GCH Founder Greg Delgado told dealers at a recent seminar at KnowledgeFest in Nashville.
12 volt dealers can also differentiate themselves from competitors by carrying products that may not be on the typical “menu” of expediter offerings. This can set you apart from the pack so you are less likely to be dropped by the dealership and more likely to be able to set better terms, said Delgado.
One of the major incentives for a dealership to move cars is “flooring”–where the car maker acts as a bank for the car dealer, say at 1 to 3 percent markup per car. It would be impossible for most dealers to finance a delivery of 500 vehicles, so they rely on flooring. If a car is 30 days old, then its financed at 3 percent; at 60 days, it’s at 6 percent; and at 90 days it’s at 9 percent. “Now they are freaking out. That’s why every dealer is so pressed at the end of the month…” Delgado said. Not every employee at a dealer is aware of this or incentivized by it. That’s why it’s important to forge a relationship with the people affected by this directly such as a manager, Delgado said.
Dealers also receive cars from other dealers. They may do this because another dealer’s car has the features the customer wants. Dealer A pays for this purchase with about a 5 to 10 percent markup charged by Dealer B. On a $52K vehicle, dealer A has to make an additional $10K on the car because they are already negative $5K on it.
One of the biggest impacts on a dealer is the Customer Satisfaction Index (CSI). When you buy a car and get all those calls asking you to rate your car buying experience, anything less than a perfect score costs the dealership money. Sales managers, service managers, and general managers can lose 25 percent of their annual bonuses due to one bad score, Delgado said.
Helping dealers add features improves customer satisfaction because the customer doesn’t have to wait the typical six month period to order a customized car or pay more when it’s brought in from another dealer. And the customer gets the customized car they want.
Almost half the 50 to 65 million new cars sold in the US are base model cars that are ripe for extra features. Plus, an additional 40 million used cars are sold each year.
Car dealers are limited by the car maker as to what factory trim options they may offer. But with an expediter, car dealers can add any feature. Taking on expediter business can be the difference between 30 customers on a good day for a 12 volt shop and a 100, said Delgado.
He lists some add-on products that can help the expediter stand out from other expediters. One of these is automatic lift gate openers–struts to add to a vehicle. They are controlled by the factory keyfob and install in 1.5 to 2.5 hours. Some of these have been deleted from vehicles due to chip shortages and there’s a $500 credit on the sticker sheet of some vehicles for the deleted feature.
Another product is the rear hatch foot sensor for foot control. This feature has also been removed from many vehicles. The foot sensor can be sold for $250 and it involves a simple install of power, ground and a trigger, said Delgado.
Another category is wireless phone chargers that are more powerful than OEM chargers so they actually work. Still another category is OEM authentic vehicle specific replacement screens, CarPlay add ons, navigation modules, screens, amplifiers, brake or headlights and radios. [Disclosure: these are categories GCH sells].
One other suggestion from Delgado. Walk around your customers’ car when they come in, you’d be surprised how many broken tail lights you find.
“The dealerships tell us the business they want us to do with them. It should be the opposite. We should tell them the business we can do for them,” said Delgado. If all we do is the business dealerships ask for then, “14 other guys will be knocking on the door to grab that business and that’s why it’s such a problem out there. Versus you going to the dealerships, sitting down with the people who actually make the decisions and whose money is affected, and educating them on the services you can offer them. People have to be willing to spend the time to talk to the right person,” Delgado said.
Retailers may email Greg Delgado at [email protected] for more information.
