CDK's purchase of Auto/Mate may create a major disruption in the dealer management system (DMS) industry. Here is our take. DOWNLOAD
Sports Utility Vehicles seem to be a dying breed. They will never die, of course, as many people still need the space and capabilities that are attached to them.
Still, the casual SUV buyer who simply liked the comfort, the way they look, the commanding view, the status, or a combination of these and other reasons are the ones who aren't buying them. Gas approached $5.00 per gallon for a while and it scared people. Sales dropped, then prices dropped, then sales continued to drop and the manufacturers started panicking.
For car dealers, now that gas has been on a steady price-drop trend for a little over a month, now is the perfect time to unload as much of your inventory as possible. Using math and the promise of prudence (and comfort) and you will be able to succeed.
This part is easy. Anyone who is shying away from SUVs is a perfect candidate. Ask them why they are avoiding the SUVs. The answer, of course, will be gasoline prices 9 times out of 10. Then, tell them that they are not alone, which is why the prudent shopper will consider now the perfect time to buy. The market is stagnant. While gas-economical vehicles are flying off the showroom floors at record rates for record prices, the once-hip SUV is an item of desperation for car dealers.
Pointing this out, then showing them the tremendous savings available both on new and pre-owned ones, and surely they'll see that there are benefits. Still, they may not be ready for a test drive.
It's simple. Assume a $4.50 price for gas, just to be conservative and above the national average to allow for increases. Then, pull out your calculator.
For a Honda, let's say we have someone considering a Civic:
15,000 annual miles / 32 MPG Average / 52 weeks * $4.50 = $40.56 per week in gas
Now, look at the Honda Pilot:
15,000 annual miles / 18 MPG Average / 52 weeks * $4.50 = $72.11 per week in gas
That seems like a lot - $31.55 per week extra in gas mileage.
Wait a second.
We as a society pay for luxuries. We pay for conveniences. Ask your customer this: "Would you pay $30 per week to be more comfortable and have more conveniences?"
Before they answer the question (since at this point, it is still probably a "no"), see if they would like to take a test drive in a Civic, then in a Pilot. Obviously, the Pilot is going to cost more both in monthly payments as well as gas. Still, at this point, if they're willing to drive it, they may be willing to consider it.
From there, it's just a matter of selling them on it. They will look so much better in a nice SUV versus an economy vehicle. They will be much more comfortable. Their passengers will be much more comfortable. Pound for pound, it may be the better deal overall.
This example uses the two extremes. What if they are considering a Honda Accord? Now the numbers become even more favorable.
Today, SUVs seem to be a dying breed. The question is, can you capitalize on it.
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