FOMO or not?

Anyone can appreciate a good front-end gross profit. If most of us stated otherwise, we’d be lying. Things have changed over the past three years, right? We regularly maintained a healthy front-end gross profit on new cars for the first time in years. something that appeared to be from a previous time. In the past, we would concentrate on how much we were willing to give up in order to complete the OEM’s stair-step program. It’s been a welcome change, but there has to be another discussion about the dealers that outrageously raised their prices above MSRP (I’ve never sold a car for more than MSRP in my life). So now that we are in the present, it appears that the days of losing front-end gross are over. Doesn’t this sound too wonderful to be true? We must get ready for the future as inventory supplies ease.


The days-to-market supply has been continuously rising, according to a number of recent papers. It is obvious that giving clients additional options would result in higher inventory levels. They now have options they didn’t have three years ago. Whereas before, the customer had a choice, now there is only one option: buy what is on the lot. Heck, even before they arrived on dealer lots, cars were selling! But in the upcoming months, there’s a high chance that’s going to change.



What will change about that? It really depends. Some predict a disorganized dance between the OEM, the Dealer, and the customer. Noting that the pricing strategy will be determined by whoever “blinks” first. Will the OEMs begin offering incentives to customers? Will the Dealers resume offering rebates off the front-end gross selling price that is below the MSRP or, worse yet, the invoice? Or will customers object to paying MSRP or more? Who is going to blink first?



There are a few things to keep in mind with these inquiries:



1. If there is a greater selection of vehicles available on the dealer lots, customers will have more options, which may reduce their sense of urgency.


2. In contrast, it might be argued that the past three years have intensified customers’ FOMO because they would really be missing out if they didn’t buy the automobile.


3. However, the buyer might be less motivated to buy a car if there is more inventory and the APRs are higher.


When you combine that with dealers who are slow to respond to consumer inquiries or sales consultants who are unable to follow a sales procedure at the dealer level, we could be in trouble.



a difficult situation that can make it more difficult to sell the consumer on a vehicle. Consider this: Will a buyer be as eager to spend at or above MSRP with higher financing charges if they no longer experience FOMO since there are more options available? Not to add, we need to consider the OEM’s position in this scenario. Let’s say the OEM decides to provide customers with greater incentives along with greater inventory and perhaps lower demand. In such a situation, it may result in a trifecta of insanity that could end the practice of selling anything at or above MSRP.



Not to add, are we offering the consumer a reason to do business with us if we as dealers fail to deliver the experience they anticipate, i.e., a smooth transaction as opposed to one fraught with breakpoints and frustrations? Even yet, this isn’t a “run for the hills” warning from doomsayers. But make no mistake, it’s about ensuring that our dealers have strong, solid sales processes to provide customers with a great experience as price eases, inventory rises, and OEMs rethink incentives. giving them the motivation to buy their upcoming car from us.



So how can you ensure that you are ready? It’s really quite easy. Take a free stealth test first. You can address the issues if you are aware of the potential weak spots in your store. Taking care of those issues is what will set your dealership apart from the competition.

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