2009 a profitable year for dealers according to Deloitte reportDOWNLOAD
The 2010 Deloitte Motor Industry Overview has highlighted how some Australian motor dealerships have successfully weathered the economic storm in 2009 with Australian new vehicle sales of 937,328 units, down only 7.4% on the previous year sales, in stark contrast to the USA which plunged over 20% compared with the previous year.
The report attributes a range of factors including the government stimulus package, low interest rates, tax incentives, short vehicle supply and good business practices to the doubling of bottom lines for many dealerships.
According to Mr Danny Rezek, Partner Deloitte Motor Industry Services, 2009 was a remarkable year. Normally the average dealer makes between 1-1.4% net profit on sales, the benchmark dealers make 2 to 2.5% but in 2009 the average dealer finished the year around 2% whilst the benchmark group moved to 3%.
“We now need to ask ourselves if the party can continue in 2010. The key to success will be measured in product, price and process. The growing Australian economy backed by new products at great prices will be the call to action in 2010. Buyers will have a plethora of choices so the dealerships which continue to focus on processes will be the winners this year,” said Mr Rezek.
“Our industry analysis shows that the Australian automotive industry is now a very open and competitive market. The ultimate winners will be the consumers who are now enjoying a smorgasbord of choice and great value,” said Mr Rezek.
“Also the better performing dealers will return to basics like maximising test drives, converting enquiries to appointments, setting benchmarks, measuring performance, incentivising actions, tightening expenses and creating accountability. A large challenge for dealers will be to avoid reverting back to complacent bad habits as the economy improves,” added Mr Rezek.
Key highlights of the report were:
The report also detailed dealers, who had developed strong parts and service operations, managing to buffer the economic storm. This was due to parts and service revenue tending to be relatively stable in the short to medium term.
“We have found that many dealership brands have recently embarked in implementing fixed price service programs in order to improve customer service retention. This combats the aggressive marketing by non-new vehicle franchise and independent service operators who, in the past, have created the perception that dealer servicing is expensive,” concluded Mr Rezek.
Dealers are now placing greater focus on better asset management across most dealerships. The report found that the better operators have become far more selective with external trade customers and assessing their true net contribution by taking into account all the resources devoted to servicing each customer and cash flow.
Please download the report below.