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AutomotiveWorkshop

What Every Media Rep Needs To Know Before Calling On a

Dealer

Automotive Workshop

John PotterVP/Director

RAB Radio Training Academyjpotter@rab.com

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Automotive Drives America

The Stats

Automotive WorkshopSources: Advertising Age, June, 2007

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Automotive Drives America

Automotive Workshop

2006 2007 2008P

1011121314151617

Total US Units SoldIn Millions

A Sales Slowdown

16.516.1

15.7

Sources: JD Power & Associates, January, 2008

Automotive Drives America

Top 10 Brands2007 Sales (000)

Automotive Marketing

Chevro

let

Toyota Ford

Honda

Dodge

Nissan

Chrysle

rGMC

Jeep

Hyund

ai0

500

1000

1500

2000

2500

Top 10 of 38 represent 73% of units sold

2,2502,161

2,062

1,371

1,058941

543 485 475467

Sources: JD Power & Associates, January, 2008

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The Average Auto Dealer

• Average annual sales: $31.9 million

• Dealership sales are 20.3% of all retail

• Average number of employees: 53

• Average annual earnings of employees: $47,191

• Average annual dealership payroll: $2.49 million

Automotive WorkshopSource: NADA, 2006

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Owning a Dealership

• Reduced profit margins by factories

• Reduced sales• High cost of inventory• Hard to find and pay for talent

– Sales people– Skilled mechanics– Skilled parts

• Advertising media choices• Cost of advertising

Not For the Faint of Heart 2%

Automotive Workshop

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Internet Is Changing Everything

• Customer research• Customer convenience• Customer power• Full disclosure – sticker &

invoice online• Distant shopping• New Internet departments

Automotive Workshop

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Dealers Profit Centers• New (lower profit, higher

dollar)– Retail

• Compact (lower %)• Mid-sized (average % - around

7%)• Large (higher %)

– Fleet• Used (higher profit, lower

dollar)• Service• Parts• Body shop• F & I New• F & I Used Automotive Workshop

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Three Buckets• Factory

– Branding– Factory money

• Dealer groups– Event– Co-operative

• Dealers– Event and branding– Dealer money $350

Automotive Workshop

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Buying Cycles• Generally 2-3 months• Some cases 5 months• Varies

– Purchase vs. lease– Domestic vs. import– Model

Automotive Workshop

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Dealer/Manager Motivation

• Dealer (owner) – profit• GM – salary plus 1 ½ -2% of

gross or net profit• New Sales Manager – salary

plus bonus on gross or net profit

• Used Sales Manager – salary plus bonus on gross or net profit

• Salespeople – commission (generally 20-30% of gross profit less pack)

Automotive Workshop