FCA US Dealers: Service Revenue Just Got A Lot More Important, from Automotive Digital Marketing.
FCA US CEO, Sergio Marchionne, recently announced plans to reduce the profit on new cars sold within the FCA brands by increasing the invoice prices, while keeping the MSRP the same. This will result in less potential profit for its dealers. The move, as reported by Automotive News, is FCA’s attempt to increase its profitability. This, of course, will probably not result in standing ovations from dealers. In today’s ultra-competitive world of transparency and Internet shopping, dealers are already fighting the race to the bottom and depend on aftermarket, F&I products and finance reserves, just to seek out a profitable sale.
Sales managers can try tactics such as holding more gross, and not discounting the vehicles as much. But the reality is that consumers have too many resources available to get persuaded into paying more, or taking less on their trade. Transparency in the sales process is only going to become more available – in fact it’s going to become the norm. Some dealer groups are already trying to take the entire process online. How hard will it be to undervalue a trade or mark up an interest rate if the consumer can simply open another web browser and look the information up online?
Perhaps some are counting on the walk-in traffic that may not have conducted any research prior to visiting. Sorry to tell you this, but showrooming is becoming more prevalent. Your customers are shopping the competition on their mobile devices – right from your lot. There are even services that allow your competitors to target your customers with ads and offers while they’re standing on your lot. Pricing transparency isn’t going anywhere. Technology advancements will guarantee that.