Six Steps to Recession-Recover an Auto Dealership

ESA & Company | Driving Automotive ForwardThe following article is an excerpt from ESA & Company’s white paper Driving Automotive Forward. The paper provides a detailed plan for auto dealers and broadcast sales executives to navigate the changing terrain in the automotive landscape. Visit ESA’s website or The Catalyst on or after August 21st for more information.

This recession will end. As the market moves closer to recovery, broadcast television sales executives need to Recession-Recover a dealership. There are several tactics to incorporate into the dealer’s strategy.

Present a Superior Value: The consumer wants to see a television message from a dealership that can help her stretch her dollar. Some dealers are moving toward advertising pre-owned cars along with new cars. These used cars are a great value for the consumer, and a higher margin opportunity for the dealership.

How can your dealer present a better value? Some examples include extended warranties, free car washes for life, free airport pick up and delivery, and free service pick up. The question is: what makes a dealership’s product a more attractive value than that of a competitive dealership?

Forward-thinking automotive dealers will use value-based tactics aggressively. For example, the 2009 “Cash for Clunkers” government subsidy program was promoted by many of the largest volume stores in America weeks in advance of the official government rollout.

Offer Zero Percent or Deferred Payment: Americans are not broke; instead consumer cash flow is tied-up in homes and other non-liquid assets. Many consumers overbought during the real estate bubble. Since home sales have stalled they have to spend “real” after-tax money instead of home equity money. This shortage of spending has effectively crimped the “free cash” in the market. Upper-income consumers with cash or more asset liquidity are tenuous to take their cash out of their investments, especially in a down stock market.

Dealers can counter this reality by offering zero percent financing or deferred payment plans. Most dealers can buy-down the financing interest rate. Even for dealers who have never offered this before, the timing is right.

Create new Service Standards: Busy shoppers are using many new ways to communicate with retailers, such as text messaging, email, social media and web chat. Consumers are demonstrating preference to retailers that are more flexible within the purchase research and communication process. As a result auto dealers are encouraged to incorporate new service and communications standards to their marketing models, and to promote these capacities in their advertising.

Eliminate Wasted Ad Dollars: A dealership which has historically advertised on multiple media (or multiple television stations) is likely wasting a significant portion of the ad budget. Approach dealership owners with the proper market-wide reach and frequency models, along with an offer of creative support. Effective cost-shifting of current dollars will decrease the cost of new customer acquisition, thereby improving dealer profit margins on a per-unit basis. Assisting dealers now with their media selection and message will ensure a long-term consultative relationship between station and client.

Help Your Dealer Buy Television Smarter: Negotiate an annual plan instead a quarterly buy, to demonstrate the cost efficiencies of long-term planning. Next, analyze their current cost per thousand. Has it slowly increased as they’ve added dayparts to their TV buys? Reducing daypart count and instead double spotting lower cost per thousand areas such as local news and syndicated programming will provide a more efficient investment while still yielding the proper weekly reach and frequency.

Competitive Analysis: Market share can be bought “on the cheap” when the dealer’s competition stops being aggressive or leaves the marketplace. When competitive dealers reduce or eliminate their advertising presence, your dealer has an opportunity to acquire competitors’ customers. The aggressive posture during economic recovery is a clear signal to value shoppers and abandoned customers. Dealers may also support this posture in their merchandising, setting up discount themed departments to represent this concept visually in their stores.

These are just a few ways to stretch auto dealer television-advertising dollars in a slow market. Recession-recover dealerships right now. They, and you, may not even miss a step.

Adam Armbruster is a senior partner with Red Bank, N.J.-based retail and broadcasting consulting firm Eckstein, Summers, Armbruster & Co. He can be reached at adam @ esacompany . com.

Sources: AutoPacific 2009 Report, ESA & Company auto dealership principal interviews, Automotive News, Wards Dealer Business, AutoPacific 2008, Business Week 2009, The Wall Street Journal 2009, Hispanic Marketing 2009, Nielsen 2009, Arbitron 2007-2009, ESA & Company 1985-2009.

Contributing Authors: David Eckstein, Roland J. Eckstein.

Social Share Toolbar

One Comment

  1. This steps will really helpful to overcome the effects of recession.
    Nice post.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>