In light of last year's record 17.5 million light-vehicle sales in the U.S., it's distressing to see how many brands' dealer council leaders are concerned about their dealers' weak profitability. In interview after interview, which will be published in the NADA Daily during the National Automobile Dealers Association convention Jan. 27-29, the council chiefs bemoan profitability levels that fell in 2016 or that haven't recovered from recent declines.
New-vehicle margins have been under pressure for years from Internet-fueled price transparency. In addition, some dealers last year slashed prices on bulging inventories of sedans in response to consumers' rush to crossovers and SUVs.
Too many of those dealer council leaders, however, seem to want the automakers to do something about it. That's not the way this industry works.
Dealers are a resilient bunch. This is their problem, and they can solve it -- without inviting automakers to get more involved in the retail business. To be blunt, automakers don't do retailing well, and dealers shouldn't encourage them to try.
Dealers need to remember some of the hard-earned lessons of the past eight years. The surge in U.S. sales from the low point of 10.4 million in 2009 has allowed too many to lose sight of the disciplines and practices that allowed them to survive the Great Recession.
Watch inventory closely, and don't let it balloon. Demand more accountability from your marketing partners. Push back if the factory sets unrealistic sales goals or demands that you build a Taj Mahal store.
Lavish attention on your service and parts and used-vehicle business. Be wise about which incentive programs you chase, especially the tempting stair-step ones that can help some months but hurt other months.
Hire smart and do all you can to retain your best people. High staff turnover carries many costs -- some obvious, some hidden.
Above all, get involved again. Some dealers have let their operations run on autopilot the past three years. It's time to get back in the saddle.