CDK Global

Today’s consumers demand — and deserve — a fast and modern way to buy cars. The industry has taken great strides to get there, but there’s still a long way to go. Especially when it comes to F&I.

The F&I process is time consuming. Buying a car will probably never as quick as a trip to the store, but it doesn’t need to drag on for hours either. Including F&I as part of an easier, seamless process will help you attract younger customers and transition to Modern Retailing.

It’s no secret that auto dealers are hurting for inventory right now. The lack of new vehicles at dealerships is like nothing the industry has seen before.

Independent auto dealers are making a killing right now. They snapped up inventory before the current chip shortage made it difficult to find quality used vehicles. Consumer demand led to a record 10% increase in used vehicle prices in April — the sharpest monthly increase in more than a decade.

But how long will it last? Factories will return to normal production, and when they do, supply and demand of used vehicles will return to a more equitable state.

It’s popular to talk about the chip shortage – and for good reason. The blows just keep coming. First, there’s the slash in vehicle production. Dealers who typically inventoried 600 to 700 new cars now have fewer than 50. I spoke with a dealer in California last week who literally had two new vehicles on his lot.

Then, there’s the subsequent soaring cost of used vehicles. According to Manheim, index prices are 52% higher than a year ago and are predicted to stay that way through June.

Success in the Fixed Ops department is essential for dealerships. According to the 2020 NADA Data Financial Profile, dealers rely on their Service departments for 30% of their net profits. But for customers of new cars, dealerships are seldom their first choice for service options: it’s commonly estimated that more than 70% of new-car purchasers take their service needs to a third-party mechanic.

Many dealerships are trying to do more with less — specifically fewer employees. If the labor shortage is having an impact on your bottom line, it’s time to think about getting some help.

In the Service department, the biggest negative impact on revenue comes from missed opportunities. Let’s take a look at the three biggest areas impacted:

The theme song to the classic sitcom "Cheers" states that “sometimes you want to go where everybody knows your name.” This is especially true when it comes to car shopping — customers want to go where everybody knows their name.

After all, dealers are in the people business. And what do most people want? Recognition. They want to feel like someone knows them, cares about their wants and needs, and works to fulfill those needs.

In today’s fast-paced world, the best way to remember your customers and give them a "Cheers"-like personal experience is by using a CRM.