It truly is an exciting time to be in auto sales.
The “technological disruption” brought by the Internet came with all sorts of gloom and doom news for auto dealers—claims that the days of commission-based profitability were over, that competition would force smaller dealerships out of business left and right, that new car sales would slump as a thriving private sale used market dominated, and other dire predictions became commonplace.
Then, just as most dealerships were starting to get used to the “new normal” (and while some dealerships were learning to thrive), the Great Recession hit and brought car sales crashing down along with the rest of the economy. Some dealerships and more than a few sales professionals were ready to toss in the towel after this double-dip roller coaster, but those that gave into the pressure were about to miss out on the ride of a lifetime.
2015 saw the sale of almost 17.5 million cars and light trucks to US consumers, edging past the previous 2000 record of 17.35 million and reaching a dollar amount of $570 billion—a nice chunk of change in an economy that is growing but still not entirely certain.
In fact, that uncertainty played an indirect role in 2015’s record-breaking sales numbers; with the US Federal Reserve keeping interest rates low to bolster the shaky growth seen in many US economic sectors, car buyers found cheap money for getting into the latest and greatest vehicles manufacturers and dealerships had to offer. Rates are starting to go up, albeit slowly, but this is due to greater consumer and analyst confidence in our economic growth and there’s no indication it will lead to a sales dip in 2016.
Signs are good that the auto industry will keep going strong for years, and many are even predicting a new record set in 2016 and possibly 2017, as well.
It isn’t just the outright sales of cars and light trucks that made 2015 a banner year for dealerships around the country. Leases, which are still more lucrative for most dealers in most cases, accounted for 29% of new vehicle sales in 2015—up from less than 17% just a decade ago.
Used car sales were also up for many US dealerships, further bolstering profits and giving savvy dealerships a great opportunity to form long-term relationships. The successful sale of a previously-owned vehicle can lead to regular servicing revenue and a lifelong customer who will be trading in and buying again every few years, on average.
Of course, all of these record-breaking, profit-making opportunities are only going to the dealerships that are best prepared to take advantage of them. Are you making the most of your pre-owned and new car inventory?
Keep checking out this blog for regular, up-to-date insights and contact us any time to see how our Dealership Video Showroom can boost your online presence and help you close the deal!