Many of us in the media industry have seen clear evidence that auto dealers continue to step-up efforts during the past year. They want their business back. In light of all the streamlining and economic “belt-tightening” they’ve put in place, today’s dealerships stand to be far more profitable than they have in decades.
Before you head to your next automotive meeting, equip yourself with five key trends taking form in 2011:
1. U.S. automakers have momentum
American automakers are enjoying a surge, on the heels of Toyota recalls and the earthquakes in Japan. Ford just announced its largest 1Q profits in 13 years. Expect GM to take the top spot from Toyota in overall volume. Even with this momentum, some are forecasting a soft spot in 2Q for domestic makes.
2. Upward pressure on auto prices
With Japanese auto production limited for the first half of 2011 — Toyota alone is off by about 40,000 units — auto prices on the lot will increase in 2Q and 3Q. GM has already announced a $123 per-unit hike on its models, and according to Ward’s Auto, Ford isn’t planning on using incentives to grab the vacated share left by the Japanese void.
3. Stronger emphasis on pre-owned sales
Those of you following Adam Armbruster on Twitter know not to be surprised if your Honda or Toyota dealer calls to downsize or cancel their buy. You’d also know how to replace those auto dollars in your market. Steve Finlay of Ward’s Automotive has some interesting insights on today’s used car shopper.
4. A stronger lease market
Those of you following ESA on Twitter know to prepare for a potential surge in lease financing. It’s no secret that lending is still tight; less than two-thirds of all Americans own their homes today (lowest level in 13 years). Be ready to seize this short window of opportunity in the auto lease market.
5. Leanness is still “in”
The silver lining of the prolonged recession is that auto dealers have created more profitable operations. With an even stronger focus on margins, they are looking for ideas to continue this trend. Electronic media like local broadcast television and internet serve up efficiencies they can’t find elsewhere.
These five trends have created a unique window of opportunity in the auto category, but act soon — the rate of change in the auto world is frantic!
NOTE: ESA + TVB are presenting an Automotive Webinar, Real Auto Answers, on Friday May 20th @ 11:30 AM EST. Be sure to register soon … we’ll be live in over 200 sites across the U.S.
Dave Eckstein is a partner in the firm ESA & Company, based in Red Bank, New Jersey. Dave specializes in highly profitable market share growth for local business and gets a kick out of demonstrating a declining cost of customer acquisition for his clients.
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