Tuesday, December 12, 2017

December 2017: "The Year In Review"

It's that time of year again when we take a look back over the past year here at ACG "Smart Parts" and evaluate the events, the changes, the "wins" and the "losses", and most important...the learning experiences and opportunities.

Along with looking back at our personal experiences in our dealerships, we will also take a look back at what our industry has experienced throughout the year with some pretty interesting facts and trends reported by our friends over at the National Automobile Dealers Association, (NADA)

I also mentioned in the introduction that we have a few of our own "headliners" that seemed to be a commonality in many dealerships that I have visited over the past year. All of which indicate to me that dealers in general are getting even sharper with expense management, but ironically, even more willing to spend in the right areas that will bring the highest return on investment.

We will go more in depth on what I'm referring to later in this blog as I want to start with some interesting facts, trends and overall information reported thus far this year by NADA. Some of the data and information that I will bring to the forefront are mid-year 2017 composites and trends, while other information will be right up to date through November 2017.

2017 was another great year for up front sales, in both passenger car and light trucks, but what surprised me the most was U.S. Commercial Truck Dealers sales were and are up substantially over previous years. A side of the industry that has just seemed to creep right up there into the limelight.

According to NADA's ATD Division, (American Truck Dealers), "employment at U.S. commercial truck dealerships has reached it's highest point in five years....up 5.6 percent in 2016 over the previous year". These trends will obviously increase the career opportunities for many, especially those just getting into our industry as far as Fixed Operations positions.

As a matter of fact, according to ATD/NADA Economist Patrick Manzi,

"Commercial truck dealerships contribute to their communities with jobs that pay well and offer opportunity for advancement. In the Service Department, demand for technical positions remains high, as dealerships help maintain the commercial vehicles that are a vital part of the U.S. transportation infrastructure".

Commercial truck dealership's repair order counts went up drastically to nearly 8% over the past year os so, while sales and profits rose to nearly 6%. These drastic increases has led to a growth in U.S. commercial truck technician staffing to over 15%!

More repair orders and more technicians definitely leads to more demand for parts and the right parts staffing to meet the demands of the U.S. commercial truck fleet. The cost of one "downed" commercial vehicle for just one day could cost the consumer thousands and thousands of incoming dollars to their business.

Increased dealership employment didn't just affect the U.S. commercial truck dealerships, as new car and light truck dealership employment has also risen over the last couple of years. The numbers aren't in yet for 2017, but the trends we see from 2016 indicate that the average dealer employment went from 66 to 69 employees with average payroll increases up nearly 5% annually.

Much like the U.S commercial truck dealers, new car and light truck dealerships also showed increases in new dealership openings over the past couple years, approaching 17,000 in total dealerships in the U.S.

Even with the decrease in overall truck sales and minor increases in new car sales, overall dealer sales and profits continue to rise as the dealers' fixed operations continue to increase service absorption numbers to support the "front end" of the dealership.

NADA's forecast for new vehicle sales remained strong in 2017 as demand for new vehicles remains healthy and overall economic growth continues in a positive direction. Even though there has been some deterioration in consumers' credit scores for new vehicle sales, strong employment growth still makes credit less risky for lenders.

The used vehicle market still remains strong and is expected to continue growing as more and more vehicles come off lease going forward into 2018. All of which suggests that 2018 will continue to be a progressive year in all vehicle sales markets, including commercial vehicle sales.

All that said, it is quite obvious that the dealerships' fixed operations will be very strong going forward into the new year. Signs of a stronger economy and increased overall employment will definitely impact our share of the gross domestic product, (GDP) in 2018.

Lastly, as I mentioned earlier, I want to drift back over this past year from my own perspective and share what I believe are the three most prioritized areas that dealers focused on in 2017. All of which, made it a very busy year for us here at ACG "Smart Parts".

Number one was the overwhelming drive for dealers to "jump ship" and change Dealer Management System, (D.M.S.) Vendors. I can say honestly that I have been more active this year, compared any other year, working with dealers and parts managers, installing, modifying, or even changing basic parts set ups and controls.

Along with these transitions, I have experienced several new D.M.S. systems, some very good and some not so good, but overall, most of these new D.M.S. systems provide the features and functions needed to perform basic, daily parts operations. Some even going above and beyond what we have been exposed to for many years with previous systems.

Number two is the increased awareness and need for more training, particularly in the area of parts management. Dealers in 2017 have seemed to become more aware of the parts department role in the fixed operations and especially when it comes down to overall Service Absorption.

Parts Management training has also become more affordable, or at least here at ACG "Smart Parts" with newer technology allowing remote training without even entering the dealership. Remote access into many Dealer Management Systems, (D.M.S.) has allowed interactive training from thousands of miles away!

This innovative, ACG "Smart Parts" Training Model has allowed dealers who may have not even considered parts manager training due to the high training costs, to providing many new parts managers an opportunity to receive the best "one-on-one" parts training available at a reasonable cost.

Lastly, 2017 also peaked training up in all fixed operation levels, especially in the U.S. Commercial Truck Service Market. As I mentioned earlier, the U.S. Commercial Truck Sales & Service markets have skyrocketed over the past few years.

Increases in front end sales, back end service and parts sales, technician staffing, and more and more new facilities opening their doors is creating a "vacuum" of demand that will feed our industry even more in the coming years.

I don't know about you, but if you aren't excited about where we are and where we are going in the years to come, you may want to stop and take a breath. Take a look at what's happening right now because if you are not prepared and well trained for what's ahead....you just may be leading from behind in 2018....

Dave Piecuch is the Vice President of Automotive Consultants Group Inc. and is the Head Coach for Smart PartsTMThe only "Results Based" High Return Training, Coaching, and Consulting company in the world!  Dave can be reached at Cell 786-521-1720 or E-mail at dave@smartservicetraining.com Vist our Website at www.smartpartstraining.com