In mid-March, I attended the 2022 National Automobile Dealers Association (NADA) Convention in Las Vegas. I participated in educational workshops and interactive panel discussions led by industry-leading experts and networked with hundreds of other vendors while representing the AutoCPAGroup. As a firm, ARB makes it a priority to provide actionable insights to our dealership clients. Sometimes, what happens in Vegas doesn’t stay in Vegas! So I’m sharing some top takeaways for dealerships from the 2022 NADA Convention.
Dealerships need to adopt digital solutions for internal use and client-facing applications.
Often, auto dealerships are family-owned businesses, which is indeed part of their charm. But when a business is passed down across multiple generations, it’s easy for the owner to adopt an old-school mentality. One thing the pandemic has taught us is the importance of adaptability. Dealership owners who are willing and able to embrace the digital transformation, and do so quickly, are faring better than those who are reluctant to change.
Part of the transformation involves hybridizing your in-person and online car-buying experience. Even though businesses and consumers have returned to several public-facing activities, we have become accustomed to digital tools and platforms. At the same time, personal interaction can be essential in building the trust you need to make the sale. Dealerships should anticipate more in-person shoppers, establish and maintain convenient, easy-to-use online buying options, and consider home-delivery options to stay competitive with online used-vehicle retailers and third-party sites in 2022.
Today’s consumers place convenience above all else, including pricing. So it’s vital to ensure your website user experience is positive. And since websites are today’s most-often consumer-chosen method for initial contact, dealerships should prioritize search engine optimization (SEO).
Inventory shortages will likely continue to affect profitability and drive consolidation.
Amid the inventory shortage, the opportunity to increase new-vehicle pricing and boost profits has provided a silver lining for many dealerships. However, dealerships should dedicate more marketing dollars and promotion efforts to their service department to secure profitability. Promoting your service department can help you bolster yearly gross profits and avoid a significant financial risk once inventories and vehicle pricing return to normal levels.
While 2021 profit margins were at an all-time high, access to vehicles was at an all-time low, especially for smaller dealerships. Some of the hardest-hit dealerships are selling out to larger groups. And since the inventory shortages are expected to continue for another 6-9 months, more consolidation is likely in the pipeline.
Leadership development is essential for dealership success and can affect positive change in the industry and our communities.
Throughout the 2022 NADA Convention, leadership development was an overarching theme. Dealership leaders are facing ongoing operational, financial, and team-building challenges that require transparent, efficient, and even compassionate solutions. But it’s bigger than that; the need for positive leadership efforts extends to the industry, its organizations, and our communities.
During his chairmanship farewell address to the convention, outgoing NADA Chairman Paul Walser inspired the audience when he stated, “Rather than letting seismic shifts rock us to the core, let’s make this a defining moment and create our own destiny.” Walser went on to say, “Imagine a workforce where diversity and inclusion are the standard, where we are the industry that encompasses everyone – so much so, that our efforts are respected and celebrated by other industries, government agencies, legislators, and everyday people looking for an opportunity or a career and where there is no shortage of people wanting to be part of it.”
At the close of the convention, Ally Financial and the NADA awarded the TIME Dealer of the Year award, which honors a new-car dealer in America who exhibits exceptional dealership performance and performs distinguished community service. When he accepted the 2022 Time Dealer of the Year award, Bob Giles, owner of Giles Automotive in Louisiana, reminded everyone in the industry how important and impactful it is to do their part in their community.
Thank you to everyone that stopped by the AutoCPA Group booth to say hello and discuss their business. We are inspired by you and work hard to stay abreast of everything happening in your industry to better serve you.
Contact Albin, Randall & Bennett
ARB is dedicated to serving the auto industry, its dealerships and related businesses, and the individuals and families that own and operate them. My team provides specialized financial accounting, income tax planning, and business advisory services for clients in the automotive industry.
As the Practice Leader of ARB’s Auto Dealership Services Team, I understand the tax, accounting, financial, and operational challenges and needs unique to automotive and motorcycle dealerships. Whether it’s on the buy-side or sell-side of an M&A transaction, I provide due diligence, tax planning, and post-deal accounting services to dealerships. I also work with closely-held businesses, many of which are family-owned, and provide individual tax planning and compliance services for dealership owners, their families, and key employees. If you’d like to discuss your tax, accounting, and business advisory needs, contact me today.
Barton Haag joined ARB in 1996 and has been a principal with the firm since 2005. As the Practice Leader for ARB’s Auto Dealership Team, he provides financial accounting, income tax planning, and business advisory services for clients in the automotive and motorcycle dealership industries. Barton also works with family-owned and closely-held businesses. He is a member of the AutoCPA Group, the Automobile Dealers Associations of Maine, Massachusetts, and New Hampshire, the Automobile Retailers Association of Connecticut, and the Vermont Vehicle and Automotive Distributors Association.