Wednesday, April 11, 2012

Dealing With The Cycle Of Change

Over the past few months, I have highlighted articles that were based on "change". I couldn't help myself when I was recently asked to write an article about the "state of the union" so to speak concerning not only the Parts side of our business, but our industry in general. 

This was an exciting task because when you think about it...the more our industry changes, the more it stays the same! This "Cycle of Change" is constant and we have to be ready to adapt to these changes just to keep up with the competition, especially in the aftermarket. 

The "state of the union" in our industry has always seemed to revolve around NADA (National Automobile Dealers Association) and they have been a staple on our industry's standards and guidelines. This is where "the more things change, the more they stay the same". The "change" part of this phrase is how NADA is constantly giving us new information to help us with "dealing with the cycle of change". 

The "same" part of the phrase is where their consistent wealth of information along with their many groups of dealers that provide these standards and guidelines. Even though NADA is not sponsoring this particular article, I could not help but pass this information on as a great resource for strategic business planning.

In preparing this article, I decided to go to NADA's most recent "State of the Industry Report" for 2011 and I was amazed how much information was available as I "drilled down" some specifics.

 I have used this information in the past, but I had to stop and think that "years ago" we were not privileged to this much data, graphs and comparisons unless the dealer was an NADA Member, which of course, many are today. Even the average consumer has the same access to this information which has always been a "secret" in the past. 

I started my research for this article and here are some of the facts I found not only about the Parts side of the business, but also some pretty interesting observations about the "dealership as a whole" in their many national comparison reports. The results are compiled from NADA's latest "State of the Industry" Report for 2011, which compiles information through 2010.

  • Overall Parts & Labor Sales: Up 5.2% (Due to Warranty & Internal Increases)
  • Customer Labor Down: 4.8%
  • Number of Dealerships Open with Weekend Hours: 46%
  • Average Number of Hours Open for Service:  56
  • Dealers with a Collision Center: Down 10% since 2000
  • Total Vehicles in Operation in United States: Up 16.4% since 2000
  • New Vehicle Registration in United States: Down 28% since 2000
  • Newspaper Advertising as a % of Total Dealer Advertising: 2010: 22%  2000: 52%
  • Internet Advertising as a % of Total Dealer Advertising: 2010: 23.7%  2000: 4.6%
  • T.V. and Direct Mail Advertising: 5% - 6% 2000 - 2010  
NADA also stated in this report...."The recovery from the recession continued at a modest pace in 2010. Dealers continue to compete with independent service outlets for far less frequent periodic service and repairs required on newer, more sophisticated vehicles..."

So what does all this information mean? I know many of you are probably thinking..."So what?....this isn't new information!!" The real question is what are we doing with all this information?

 I know one "bullet point" that sticks out to me is that the "Weekend Service" option is slowly becoming a new standard and if your Service Department is NOT open as many hours as possible on the weekend, you are probably losing business to the aftermarket. 

How about the fact that many dealers are eliminating their Collision Centers?...does the cost of operating the Collision Center outweigh the bottom line? These are all great questions and they are just a few items that are in this report which I could have spent hours researching and planning.

One last one to bring up...New Vehicle Registration is down, but the overall Vehicles in Operation are up! I know that we all know that the average vehicle life span is up, but why aren't we "targeting" more advertising for these "older vehicles" and not just the customers in the first, second and third tiers who may have missed their last service? 

I realize retention is one of the primary issues today, but we need to "enhance" that target and utilize the internet more in our advertising budgets. The internet is less expensive and one of the primary sources of communication and will be for years to come. 

So, based on the NADA information above, how much of your dealership advertising budget is dedicated to the internet? These are just a few "bullet points" on the information that is provided at no cost by NADA at your fingertips.

 I would even go as far as to say that most dealers and managers probably know about the availability of this information, but how many actually use it to build your business plan and most to "Deal With The Cycle of Change".

If you haven't visited the NADA website recently, you need to!...simply go to and go to the "Data" section to look for the "State of the Industry Report 2011" The latest industry standards and guidelines are also readily available at the NADA website. 

Dave Piecuch is the Vice President of Automotive Consultants Group Inc. and is the Head Coach for Smart PartsTM.  Dave can be reached at Cell 786-521-1720 or E-mail at Vist our Website at