PROFIT IS NOT A DIRTY WORD!
HOW TO STEER CLEAR OF TROUBLE
Late last month FTC announced the results of a “crackdown” on auto retailers and their finance practices called “Operation Ruse Control” in an effort to protect consumers when purchasing or leasing a car. There were 187 enforcement actions brought against the dealers, their employees, service providers and auto lenders which involved civil and criminal charges.
In some of our previous communications we have emphasized the importance of people and process development in auto retailing going forward. For the past few years, it has become more and more predominant that manufacturers now have new and creative strategies to control margins in retail environments. They have reduced the eminent margins on the actual invoices; and replaced them with “if come” rewards that are significantly tied to sales efficiencies, CSI, service retention and so on. While these are necessary prerequisites for an auto retailer to survive in this time and age, it forced dealers to look in their F&I departments to find money and have enough gross profit to sustain a healthy business.