The ‘roller coaster’ world of motor dealers
Written by: Philip Nothard
With the end of March upon us, many will be questioning many areas of their business, and endeavouring to gather an understanding where they sit at the end of quarter one.
There’s one foregone conclusion, one month is never the same in the Motor Trade, and with these extreme spikes in both performance and expectations – is there another industry like it?
We set our stalls out for an annual budget, based upon the variable and semi-fixed expenses for departments but the pressures on resource fluctuate at such a rate, that many are ‘stress-tested’ at peak times during the year.
What other industries are dependable on consumer demand, driven by areas out of their control, manufacturer expectations that can alter, dependent on your competitor’s performance and where two months of a year account for 36% (March & September in 2014) of the total.
Many dealers you speak to today are still awaiting new cars to arrive that they have counted as part of their forecast, yet with only a few days left of the first quarter, some are still unsure whether the targets will be met, or they’ll be rushing around to find cars to register – either #Pre-registration or yet more demonstrators.
"Who’s running the business?’’
Businesses are continually looking at how they balance everyone and everything, from ensuring their staff are on board and motivated and potentially just as important, keeping the banks or investors happy in months where every part of the business is bursting.
"Reward and effort misaligned”
More and more in an attempt to smooth this, dealers are looking to increase basic salaries and take the pressure away from these extremes and reliance on ‘big bonuses’ to create a more stable income stream.
“Unknown with only 72 hours to go”
Additionally to this, pressures in new car registrations as a result of these great peaks comes stress on maintaining consumer expectations and deliverables. When you set your indicators based on the resources the business has for the year; when these arrive, there’s always the risk of under-delivering and not meeting those expectations – call backs, etc.
“Challenges on funding limitations and cash flow”
These challenges are not isolated to the new car franchise dealers, these funnel effect registrations that happen on the last days of the month, often create used cars in volume and this inevitably flows through to used-car dealers, logistic operations and remarket businesses.
WHAT DO YOU THINK?
Is the mechanic of the industry flawed?