Automotive Sales Trends: How To Grow During The Pandemic

Dealerships need to be on the forefront of the automotive sales trends to not only grow during good times, but to be prepared for periods of adversity.  The automotive inventory crisis, recruiting and staffing, customer service, and employee satisfaction have all been struggles for many dealerships across the country.  The biggest lesson that the COVID-19 pandemic has taught us is that we need to be prepared.  Since the way people consume information, communicate, research, shop, and buy products has changed, the automotive industry must be prepared for the future of auto sales.

This week on the Millionaire Car Salesman Podcast, host Sean V. Bradley, CSP dives into how automotive dealerships and auto groups can grow, especially during a pandemic.  There are several key areas that the retail automotive sales industry can focus on to set themselves up for success. 

Joining Sean today is Chuck Kramer, the Chief Operating Officer of Foundation Automotive Corp, a 22 rooftop auto group in the United States and Canada that will be adding another 23 dealerships by January 2022.  Not only is Chuck the COO at Foundation Automotive Corp, but he is also an investor.  He is an expert on growing dealerships and automotive groups.

About Chuck Kramer

Chuck Kramer started with Foundation Auto in September of 2018 and brings a multitude of operational turnaround and growth skills, team development knowledge, and intimate automotive experience in variable operations, fixed operations, and financial operations.  Chuck has had a passion for the automotive industry that spans over four decades. 

His career started in the trenches as a lube technician in the early 80’s. He was quickly recognized as capable of doing more and moved into sales where he quickly became the #1 salesman at his dealership. The promotions that followed quickly moved him up the ranks, being promoted to Finance, the New Car and Truck Manager, GSM, GM and ultimately Managing Partner. 

Chuck has managed franchises such as Acura, Subaru, Mitsubishi, Kia, Ford, Lincoln, Hyundai, Mazda, Dodge Chrysler Jeep RAM, and more.  During his career his stores were awarded multiple accolades.

Automotive Sales Trends: How To Grow During The Pandemic

How Did Foundation Automotive Corp Get Started?

Foundation Automotive Corp started out of Calgary not too long ago.  Formed in 2018, they made their first purchase in June of 2019.  Since then, they have grown to 22 stores.  But they didn’t stop there.  Currently, Foundation Auto has another 22 stores that should be closing by January 2022 and they are working on securing even more purchases to have 60 total locations by the end of 2022.

How Did Foundation Automotive Grow So Fast During A Pandemic?

When building Foundation Automotive, Chuck and Foundations President / CEO, Kevin Kutschinski, always spoke about how the automotive industry crashed in 2008 and 2009.  As such, they built their business model around those events and how the auto group would not only survive, but flourish in the event of another crisis.  This planning paid dividends, as it allowed them to be prepared and continue their growth during the COVID pandemic..

Automotive Sales Trends: It Starts With Structure

The Automotive Sales Team

Success does not come from one individual, it takes a team.  One person cannot do it all, so like Foundation, dealerships need to have lanes in their company.  There needs to be a structured team for the various different aspects of the organization, allowing each team to focus on their primary objective. 

Chuck Kramer’s Role As A COO

As the COO, Chuck Kramer Oversees all of the operators and, along with Kevin, hires all of the operators.  From there, he sets up all of the operators and dealer agreements for each one of their stores.  Their business model, being very different from most others, helps make this process easier.  

One of the things that Chuck has learned is that if you are going to have a partner, you need to have a true partner.  All of the partners at Foundation Automotive are true partners.  When they bring an operator in, not only are they a very talented individual, they are also a true partner, a managing partner and the face of the store.  Those are the people that Chuck manages.

Automotive Sales Trends: The 4 Core Principles

Chuck attributes much of Foundation Automotive Corps success to their four core principles they live by.

1. Employee satisfaction.  In today’s day and age, employee satisfaction is very important.  They want very extremely happy employees and understand that this will lead to their customers being fully taken care of.
2.  Community.  The community are their customers and the reason they are in business.  As such, Foundation and all of their stores need to have a solid foundation within it.  Investing in their community, Foundation Auto Group gives cars away to the teachers of the year, buy football fields, and other community events and charities to become a true partner in the community.
3. Manufacturer Relationships.  Like having true partnerships with their operators, Foundation Auto Group strongly believes in building partnerships with their manufacturers.  Strong relationships with the OEM will help drive both organization to success.
4. Customer Service.  The customer service and their experience at the dealership is critical.  If you want your unfair share of business in your market, you have to provide the highest level of service with the best possible experience.  If you can’t take care of the customer, then it may be time to get out of the business because the business has changed so much.

Automotive Sales Trends: Scalability

Standard Operating Procedures

When Foundation Automotive first started, they started backwards.  This backwards process revolved around building a foundation.  They hired analysts, crunched data, and looked at different scenarios.  Chuck understands that you need to have a plan.  Once they had their business plan, each member of the team built a business model based on their role.  

Their Vice President of Marketing, Cole Kutschinski, built a business model based on marketing and the current trends.  Susan Roye, VP of Special Finance, built a business model based on the subprime market.  Chris Shearer, VP of Pre-Owned, build a business model based on the used car market.  This happened for each part of the business.  From there, they has a blueprint that they installed into each store, with every individual location have the same SOPs.

The Importance of SOPs In An Automotive Dealership

Standard operating procedures are very important in an automotive dealership and an auto group.  Chuck explains that Foundation Automotive doesn’t buy broken stores, they buy bent stores.  Chuck takes dealerships with good culture and makes them better.  He also takes dealerships with bad cultures and puts good cultures in.  This has been the blueprint so far, and a very successful blueprint.  With every store operating the same, it allows them to get together as a group and discuss how they can get better as a whole.  This collaboration would be extremely difficult if every dealership operated differently. 

Automotive Sales Trends: How To Grow During The Pandemic

Inventory Crisis & Your Sales Associates

Selling less cars due to the inventory crisis means you may lose some really good sales reps due to the lack of business.  To prevent this from happening, Foundation Automotive Corp looked at their employees’ pay plans before they addressed the inventory issue.  First they explored salary options along with pre-order commissions.  Next, they investigated how they can motivate their sales team.  With volume down about 45% – 50%, they knew there would be little motivation for a sales rep to work a lead, especially when they don’t have a car to sell them.  If you don’t take care of your people then you don’t have a business.

Inventory Crisis & Addendums

With the new vehicle inventory crisis, many dealerships are placing addendums on their inventory.  Chuck has a hard time placing huge markups on their vehicles, with the exception of a few rare vehicles.  Chuck believes that when you start gauging your customers, they will remember that and you may lose their business the next time they are in the market.  

For example, if a customer bought from his local dealer for many years, they will remember the one time they had to pay a huge mark up on a vehicle.  As time goes on, and the market comes back, that customer is less likely to give you their business.  They can always go to the Internet and have the vehicle delivered to him from a different dealership.

Used Cars To Supplement The New Car Inventory Crisis

With new vehicle availability being scarce, the pre-owned department is helping to pick up the slack.  While this is helping, it poses many risks.  The biggest problem is you don’t know what the vehicle is worth today versus tomorrow.  It is a daily game.  One day a vehicle could be worth over book value and significantly less the next.

To curb this, Foundation just partnered with buyyourcar.  Buyyourcar is buying cars from the general public and Foundation is then able to purchase them without going to the auction.  This is leading to a steady volume of vehicles while also lowering their day’s supply.

The Future Of The Car Business

Manufacturers are trying to go to more of a factory order model.  Varying by the OEM, some manufacturers are trying to get up to 40% of sold vehicles to be done by special order.  This could have many benefits for both dealerships and the OEMs, but it does come with many drawbacks.  While this is great in theory, it doesn’t match what the customer wants.  Customers want vehicles now.  Also, when manufacturers are pushing for market share at the end of a month, quarter, or year, how are dealerships going to do so without inventory on the ground.  

Automotive Sales Trends: Your People Are Your Biggest Asset

Automotive dealerships have the highest turnover than any other business, averaging around a 70 – 80% attrition rate.   There are four keys to retaining employees and they are training, appreciation, compensation, and change.

Reduce Attrition In The Automotive Industry With Training

This issue falls on the dealerships and their management teams.  Per NADA, the average dealership spends an average of $640 per car in advertising.  However, they spend less than $1,000 per month in training for their entire staff.  You need to have the proper onboarding and training strategy.  Dealerships need to hire trainers and invest in training platforms, such as Bradley On Demand, to properly train and develop their team.

Reduce Attrition In The Automotive Industry Through Appreciation

Never take away from your employees but always look for ways to increase.  Allow people to tell you when you are doing a bad job as long as they have a solution. This gives a different perspective and challenges the management team in the right way.

Reduce Attrition In The Automotive Industry With Proper Compensation Packages

Chuck remembers a story from the late 90’s where an employee was leaving because they were making $10 per hour but got a job making $15.  Chuck offered to give him $15 per hour and the employee responded “If I was worth 15 leaving, why was I not worth $15 when I was out there busting my butt.”

Reduce Attrition In The Automotive Industry Through Change

Dealerships need to build a better environment.  The car dealership has always been deemed as the most dysfunctional thing for a family relationship, and it has been.  The hours are not conducive to those with kids and family, and it adds to the attrition in the automotive industry.  This can also lead to a less diverse workforce and a lack of females in the car business.  

Imagine being a single mom and it’s the last week of the month.  At many dealerships, the sales team has to work bell to bell on the last week.  This environment is not set up for females or employees that have family.  When building a better environment you need to ask yourself what is your culture and what is the diversity of the dealership.

Automotive Sales Trends: Advice For Automotive Sales Professionals

Automotive Sales Associate Advice

Chuck’s number one piece of advice to sales associates is to use the tools around you.  You are an influencer and you are a leader, even if you are not in a management position.  You can lead and influence positively or negatively, but you must always be positive.  Don’t get caught up in controversial topics in conversations, and instead, focus on the positives.  Also, you need to listen twice as much as you speak.  Lastly, be a good person.  Be genuine and work hard.  You don’t have to work long hours to work hard, you can work hard in 3 hours and still get a lot accomplished.

Automotive Sales Manager Advice

Don’t be a dictator.  Managers in the automotive industry tend to lead with their egos.  They need to talk with their people, not to their people.  Just because someone may be nodding their head yes, it doesn’t mean that they computed it.  

Chuck also feels that sales managers need to check your mood, make sure it is positive, and check your attitude at the door.  Sales managers are leading, and leaders lead with their body language, tone, and inflection.

Advice For Automotive Dealers & Executive Managers

The most common mistake Chuck finds that executive managers and dealer principals make is that they get so fixated on what they think is right.  This leads to them not understanding what is really right.  It’s ok to say that you don’t know.  Executives and dealer principals need to keep their minds open to new information and ideas.  They can’t be afraid to listen to their employees and try different things.  Lastly, they have to look in the mirror and be their biggest critic.

Resources On Automotive Sales Trends

Dealer Synergy & Bradley On Demand: The Automotive Industry’s #1 Training, Tracking, Testing, and Certification Platform and Consulting & Accountability Firm

The Millionaire Car Salesman Podcast: is the #1 Resource for Automotive Sales Professionals, Managers, and Owners.  Also, join The Millionaire Car Salesman Facebook Group today!

The Against All Odds Radio Show: Hosting guests that have started from the bottom and rose to the top.  Also, join The Against All Odds Radio Show Guests & Listeners Facebook Group for the podcasted episodes.

Join The Millionaire Car Salesman Club: on Clubhouse

Win the Game of Googleopoly: Unlocking the Secret Strategy of Search Engines

AutoWeb: Visit AutoWeb.com/dealers for help in revolutionizing your business to help you sell more cars.

CallRevu & Callsource: The industry leader for call tracking, lead management, and business analytic solutions.

VinCue: In addition to being built by dealers for dealers, VinCue is an All-In-One Digital Platform.  At the end of the day, it can help your Dealership!

CarNow: Sell more cars now!  Not only is CarNow.com. the market leader in tailored digital solutions, but they are built to help dealers sell more cars.