Many BHPH operators reported lower unit sales versus the same period last year. Two important questions: “Why?” and “What can be done to improve unit sales during the remainder of the year?”
The upcoming NABD East Coast BHPH Conference in New Orleans on November 3-5 will focus on how to find and keep our best customers. This is a great time to network and make each other successful. Good luck during the remainder of 2013 and let’s make 2014 our best year ever!
First Half 2013 Analysis – What Caused the Decline?
1. Tax refunds were slow to arrive and somewhat smaller when they did! Some never arrived at all.
2. Additional payroll withholding reduced low-income earners ($30,000 – $50,000 per annum) take-home pay by $600 to $1,000. This really hurt their liquidity!
3. Gas and food prices increased sharply compared with 2012, consuming more of each customer’s disposable income.
4. The US economy has rebounded somewhat; however, overtime hours and workforces have been reduced.
5. The subprime auto finance industry has been extremely aggressive in buying deals from deep subprime customers with bureau scores as low as 460! Worse yet, these customers are being sold new and late-model vehicles with long repayment terms and very large monthly payments, which they can’t afford.
6. Subprime customers are encouraged to “give back” their existing vehicles by subprime finance companies, and to purchase the vehicles described in 5 above. This has resulted in more voluntary repossessions for BHPH operators.
Ken Shilson Suggests Dealer ‘Do’s and Don’ts’:
- Operators should not change their business models by putting too little customer into too much vehicle. This is a “road map for failure” as documented by more than $11 billion in contracts I have analyzed.
- Operators must not sit back and wait for the market to return. If you do nothing, you cannot expect different results.
- The answer is to rebuild a stronger bond with their BHPH customers. As I survey the operators who are maintaining or growing market share, I note one common trait – they are proactive.
What BHPH Dealer Managers Should Do Today:
- Place a ‘welcome’ telephone call shortly after each sale, and ask for referrals.
- Hold customer appreciation events.
- Strengthen warranty or extended service-contract programs.
- Offer free maintenance services to good paying customers.
- Maintain more-positive contact with customers during the entire term of their contracts.