I attended an AED Industry Forum in September, but can’t say I have good news for you regarding 2012. It appears GDP for the balance of 2011 will be a push, with 3 to 5 percent increases estimated for 2012. But with the way the markets have been changing, who knows what 2012 brings.
What I heard at the meeting is:
* Manufacturers are doing better, but material costs are rising.
* Employee costs are also increasing faster then price increases.
* To keep margins in place, companies are cutting back on payroll.
* Banks still are not lending.
* Consumers are not spending.
We also heard:
* That the federal government has hired thousands of auditors and agents to make your life miserable.
* New IRS agents.
* New National Labor Relation Bd agents.
* EPA field personnel
* There is a lack of tort reform.
The speakers made it clear that the current administration in D.C. has turned the dogs loose, even though many of these new “causes” were turned down by Congress. In short, they are making it very tough to do business in the U.S. and be competitive in the world market. Specifically, a few attendees stated they plan to move their companies out of the country because they could not be competitive any longer under these conditions.
After all is said and done, it looks like 2012 will be another tough year that will require your best management skills. We all know that in this market your management skills will focus on managing the pricing issues in the marketplace. Sometimes you just can’t win.
It appears manufacturers have a pretty good handle on how to manage in this environment. They seem to have plenty of cash, have learned how to drastically cut costs and have sold the bulk of their production. It’s working for them, so why go back to their old tricks if the don’t need them.
Dealers have acted in a similar fashion, by cutting costs to the bone. But dealers still need to find ways to deal with the price cutting atmosphere in their territory. One theory to deal with price cutting is to stick to what you do best, eliminate the costs associated with what you are not good at, and as a result be in a position to make more with less (putting you in a position to be more price competitive). In other words, sales go down but margins stay the same because you are concentrating on the profitable services and products you sell.
Using technology to help with this process works. After researching how companies are using dealer systems, Internet services and social media applications, there is no doubt having the best you can buy in these areas, along with the help to use the application properly, gets you more shots at the business in your territory. Not only do these applications provide more leads, they can help with product demos and even help secure financing through a virtual F&I department.
If you have the opportunity, now is the time to participate in 20 groups to help you fine-tune your operation in this “New Normal” of business activity. Management needs to face up to the fact we are not returning to the 2006-2008 era for quite some time, if ever. If you could get in the top 20 percent in your 20 group in terms of all aftermarket services, you may find you have that ability now to be more price competitive.
One thing that came out of one of the forum sessions is customers today want you to be price competitive, but also a consultant who can help them save money. Going back to the technology discussion, is it possible to reach this goal without training a lot of your field staff and spending a lot of money.
Do you remember a time not to long ago when car dealers had very few people working the Internet leads? What do you see now? They have 20 people in a large room selling product over the Internet. Heck, do half of what they do and your participation in deals will at least double.
Sure, it still takes a personal touch to close a big deal. But to get to that point should require less people work and more technology work. The secret for 2012 will be: Do more with less people. Get more leads using technology. Focus on what you do best.
Garry Bartecki is a CPA MBA with GB Financial Services LLC. You may contact him by e-mailing email@example.com.