Dealer Insights - July/August 2011 - Dealer Digest

July 18, 2011

Why do potential customers leave?

When a customer walks out of your store without buying a vehicle, do you think it’s because the person is pressed for time or wants to check in with another decision maker? According to recent study results, these are common excuses that customers give but usually not the real reasons they leave.

Consultants CAR-Research XRM pulled a sampling from 250,000 customer interviews at more than 250 dealerships and found that a problem in the “road to sale” processis the real reason many customers leave the store empty-handed. In fact, almost three-quarters of customers abandoned the sales process for one of the following reasons:

Sales and management staff issues (27%). Reported issues included rudeness, disrespect, condescending attitude, pushiness, lack of empathy, lack of knowledge about the product or financing, and broken appointments.

Shopping (21%), price (12%) or financial (12%). The study found that, for 71% of customers who left the store citing one of these three reasons, certain steps in the road to sale process weren’t performed. Such steps include product presentation, demo drive, service introduction and walkthrough, and same-manager availability.

Other reasons why customers said they left were inventory (9%), style (5%), payments (4%) and trade (3%). Time (2%) and decision maker (1%) came in last, so you may want to examine the sales scenario more closely the next time a customer offers up one of these excuses.

Sales so far so good

New vehicle sales jumped 18% in April on a year-over-year basis, according to NADA. This was the third time this year that new vehicle sales topped 13,000, NADA reported in May.

This jump in sales adds fuel to the upbeat predictions of analysts earlier this year. Bloomberg, for example, forecast that car and light truck sales would rise to 13 million in 2011 — despite higher fuel costs and production interruptions in Japan.

And U.S. Bureau of Labor statistics indicated another apparent sign of industry recovery: In April, auto dealerships added 5,000 new employees to their rosters.

IRS relaxes lien-filing practices

New IRS lien-filing practices may help some dealerships struggling with back taxes get their feet back on the ground. The changes significantly increase the dollar amount that prompts an IRS lien on property. They also make it easier for taxpayers to get a lien withdrawal after paying a tax bill and to enter an installment agreement for repayment. Consult your tax advisor for more information.


Dealer Insights – July/August 2011


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