independent dealership action report fall...

INSIGHTFUL GUIDE

An Independent dealer’s guide to insightful data on inventory, financing, marketing and technology utilization during periods of heightened competition

POWERFUL DATA

Powered by Independent specific data from 2,150 dealerships, survey results from 4,000 dealers, Experian (via NIADA’s 2015 Used Car Industry Report), NIADA proprietary industry analysis and J.D. Power’s Power Information Network (PIN)

INDEPENDENTDEALERSHIP ACTIONREPORT FALL 2015

INDEPENDENT DEALERSHIP ACTION REPORT FALL 2015

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Independent Landscape

Independent Landscape at a Glance

Who is the Independent Dealer? 8

Independent Dealership Outlook

Independent Dealership Pain Points, Initiatives & Goals in 2015 12

Growing Competition with Franchise

The Competitive Landscape 16

How to Compete 17

Independent Inventory & Capital Outlook

Independent Inventory Outlook 20

Sourcing Inventory & Capital 23

Financing Options 25

ROI / Revenue Growth

Used Car Sales 30

Leverage Technology 30

Trends by Lead Source 32

The Digital Landscape

The Online Shopper 36

Digital Marketing versus Traditional Marketing 36

Summary

Summary 42

CONTENTS

Competition for Cars

Find out why the used car market has become more enticing for Franchise dealers and learn how to be more resourceful to acquire new inventory and capital

Page 16

Leveraging Technology

Identify cost-effective technology to sell more cars and remain competitive within an ever-changing market and discover the steps top performing dealerships are taking to succeed

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Independent Landscape at a Glance

WHAT IS THE INDEPENDENT DEALERSHIP ACTION REPORT?POWERFUL, ACTIONABLE INSIGHT AND STRATEGIES TO ACQUIRE INVENTORY AND GROW REVENUE AS COMPETITION WITH FRANCHISE DEALERS INCREASES

The North American used car market is a powerful stimulus in today’s economy. An estimated 40 million used cars were sold last year alone, compared to 16 million new cars. There are approximately 45,000 Independent used car dealerships compared to nearly 18,000 Franchise dealerships. Yet, with the obvious demand from the marketplace and Independent dealers outnumbering Franchise almost 3 to 1, the average Independent or BHPH dealer still remains at a severe disadvantage from the average Franchise dealer when progressing their business. Lack of technology, staff, inventory and legal resources are the tip of the iceberg when discussing hurdles these dealers face. Independent dealers do not have the same access to financial backing and cash flow as their Franchise counterparts. Moreover, with Franchise dealers seeing the revenue potential on used cars, it is anticipated that these dealers will shift their focus to pre-owned inventory and sales. In an effort to help Independent dealers level the playing field, DealerSocket put together its first Independent Dealership Action Report (iDAR) specifically for the Independent and BHPH community. Comprised of key performance data (represented by our 2,150 Independent/BHPH dealers), survey results, data from J.D. Power’s Power Information Network (PIN), information from Experian via NIADA’s 2015 Used Car Industry Report and NIADA proprietary industry analysis, this report analyzes industry trends, performance benchmarks and metrics, and consumer online shopping behaviors. It is a resource designed for Independent and BHPH dealership professionals to identify areas of opportunity that will result in inventory acquisition and revenue growth.

For more information about DealerSocket, visit ID.DealerSocket.com

AT A GLANCE

Data Sources DealerSocket Independent Survey

DealerSocket Data

J.D. Power - Power Information Network [PIN]

Experian via NIADA’s 2015 Used Car Industry Report

NIADA proprietary industry analysis


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PAGE 6

The Independent Dealer Breakdown

INDEPENDENTLANDSCAPE AT A GLANCE

87% of Independent dealers sell 50 or fewer cars per month

DealerSocket Independent Survey

54.3% of Independent dealers sell vehicles priced less than or equal to $10K

NIADA Industry Analysis

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Who is the Independent Dealer?

Who is the Independent Dealer? Statistics at a glance

Annual Growth Year-over-year dealership trends

Nature of Business Breakdown of services offered

1

2

3

36.8% of Independent dealers boast $1M - $2.5M in annual sales


40% of Independent dealers offer BHPH financing


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131

5

4

3

54

VEHICLE SALES

Q: HOW MANY VEHICLES DO YOU SELL PER MONTH?

87% of Independent dealers sell 50 or fewer cars per month

1

51 - 100 Vehicles Sold per month

9%

3


3%

2

NIADA INDUSTRY ANALYSIS: ANNUAL SALES VOLUME

$1M - $2.5M

2

36.8%

24.7%

Less than

$1M

200+ Vehicles Sold per month

1%

$5M - $10M

9.9%

$2.5M - $5M

17.8%

More than $10M

10.8%


55%


32%

Almost 37% have an annual sales volume of $1M - $2.5 M

6-10The vast majority of used vehicles sold are 6-10 years old, which accounts for 58.6% in 2014

< $10K54.3% of Independent dealers sell cars less than or equal to $10K

37%Almost 37% of Independent dealers have an annual sales volume of $1M - $2.5M

< 5087% of Independent dealers sell 50 or fewer cars per month

AT A GLANCE:WHO IS THE INDEPENDENT DEALER?

4

4

NIADA INDUSTRY ANALYSIS:AVERAGE RETAIL PRICE

Multiple

Locations

1

2

4%

96%

SingleLocation

VEHICLE SALES

1

$0 - $5K

12.2%

3

$15,001 - $20K

7.4%

2

NIADA INDUSTRY ANALYSIS:AGE OF VEHICLES SOLD

6 - 10 Years Old

2

58.6%

27.5%3 - 5 Years Old

4.5%1 - 2 Years Old

NIADA INDUSTRY ANALYSIS:ABOUT THE DEALERSHIP

11+ Years Old

9.4%

33.9%33.9% of Independent dealerships are BHPH

$5,001 - $10K

42.1%

$10,001 - $15K

32.3%

54.3% of Independent dealers sell cars less than or equal to $10K

The vast majority of used vehicles sold are 6-10 years old, which accounts for 58.6% in 2014 63%

Over 63% of Independent dealerships have four or fewer employees

20+Nearly 1 in 4 Independent dealerships have been in business 20+ years

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Independent Dealership Outlook

96%Single Location Dealerships

5

$20,001+

5.9%

DEALERSOCKET INDEPENDENT SURVEY: VEHICLES SOLD PER MONTH


PAGE 10

Dealership Pain Points, Initiatives & Goals in 2015

INDEPENDENTDEALERSHIPOUTLOOK

52% of Independent dealers cited Inventory Acquisition and Capital to Finance Inventory as the top problems facing their business


ROI / Revenue Growth is the top initiative for Independent dealers


Dealership Pain Points

Inventory acquisition, capital to finance inventory & growing competition with Franchise dealers

Dealership Initiatives ROI / Revenue Growth

Shift in Perception Heightened perceived threats from Franchise dealers

1

2

3

3.5% increase in NIADA members who feel competition from Franchise dealers is a top pain point


10% of Independent dealers rank improving efficiencies/software consolidation as a top priority


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Dealership Pain Points, Initiatives & GoalsPAGE 11


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8

7

54

NIADA INDUSTRY ANALYSIS: PAIN POINTS

Inventory Acquisition

1

Lack of Customer Prospect Traffic/Leads

20%

3

DEALERSOCKET INDEPENDENT SURVEY RESULTS:INDEPENDENT DEALERSHIP PAIN POINTS, INITIATIVES & GOALS

Government Regulations / Compliance

16%

Competition from Franchise Dealers

12%

Capital to Finance Inventory

2

31%

21%

PAIN POINT:

HEIGHTENED COMPETITION FROM FRANCHISE DEALERS

10%

20%

1 2

1 Q1 - 11.5%

2 Q2 - 15%

Q: WHAT IS THE MOST IMPORTANT PROBLEM FACING

YOUR DEALERSHIP TODAY?

Of the available choices, Independent dealers ranked Inventory Acquisition and Capital to Finance Inventory as top pain points. ROI / Revenue Growth was their top initiative for 2015. For the purpose of this report, these topics will be examined along with how growing competition with Franchise dealers impacts the Independent landscape.

We asked. You spoke. We listened.

A combined 52% of responding Independent dealers cited Inventory Acquisition & Capital to Finance Inventory as the top problems facing their business in 2015

52%

6

5

4

3

2


1

Increase Visibility/Digital Presence

14%

Improve Efficiencies/Software Consolidation

10%

Acquire Capital

8%

Become More Competitive with Franchise Dealers

8%

Compliance

7%Increase Inventory

10%

Customer Retention

25%

18%

Q: WHAT ARE YOUR DEALERSHIP’S TOP 2

INITIATIVES/GOALS FOR 2015?

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Growing Competition with Franchise Dealers

3.5%In Q2, 15% of NIADA members polled cited heightened competition from Franchise dealers as their top pain point, a 3.5% increase from Q1

25% stated that ROI / Revenue Growth was their #1 initiative for 2015

25%

There is a direct correlation between Independent dealers’ top challenge—Inventory Acquisition and their number one initiative—ROI / Revenue Growth. In a circular fashion, acquiring more inventory will increase revenue and cash capital to finance more cars.


PAGE 14

The Uphill Climb of Competing with the Big Boys

GROWING COMPETITIONWITH FRANCHISE

Franchise dealers saw a 617% higher yield in gross profits selling used cars

J.D. Power - Power Information Network (PIN)

800K lease maturities will be coming back to market in 2016

J.D. Power - Power Information Network (PIN)

The Uphill Climb Increased competition with Franchise dealers

The Competitive Landscape How Independent dealers stack up against Franchise dealers

Checklist: How To Compete Quick tips on how to optimize opportunities

1

2

3

Independent dealers saw an average profit increase of $261 per vehicle when using CRM

DealerSocket Data

Independent dealers turn used cars 27 days faster than Franchise dealers

DealerSocket Data

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The Uphill ClimbPAGE 15


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DEALERSOCKET DATA:THE UPHILL CLIMB OF COMPETING WITH THE BIG BOYS

Independent dealerships face a tough challenge—competing against the often larger and better funded Franchise dealerships. In addition to big marketing budgets and referral bases, the substantial gross margins of used car sales have proven to be fruitful for Franchise dealers and they have stepped up their activity around this market. Increasing competition for used car inventory and customers will force Independent dealers to take a more innovative and preemptive approach to meet the challenge.

THE COMPETITIVE LANDSCAPE

Used car transactions tend to have shorter closing periods and higher gross profits which makes this an enticing market for Franchise dealers.

On average, Franchise dealers saw a 617% higher yield in gross profits selling used cars

400%

800%

1 2

1 NEW - 122%

2 USED - 617%

DEALERSOCKET DATA:

SOLD VEHICLE AVERAGE PROFIT COMPARISON

3

$2K

$4K

1 2

1 Franchise - $3,3252 Independent Dealers on CRM - $3,261K3 Independent Dealers - <$3K

$64Independent dealers using CRM saw an average profit increase per unit, narrowing the gap with Franchise dealers to a mere $64

617%Franchise dealers boast a

higher gross profit margin

on used cars than their

Independent counterparts.

However, Independent dealers

who leverage technology are

narrowing the gap. In addition,

Independent dealers prove

to be more agile in quickly

turning used inventory.

Implementing tactical

processes such as post-sale

follow-up and technology such

as CRM will further empower

Independent dealers to remain

competitive.

COMPETING WITH FRANCHISE

On average, Franchise dealers are selling used cars 16.5 days faster than new cars

DEALERSOCKET DATA:

DAYS TO TURN COMPARISON

27Independent dealers utilizing CRM technology are turning inventory 27 days faster than Franchise dealers

16.5

3

40

80

1 2

1 Franchise / New - 62.52 Franchise / Used - 463 Independent Dealers on CRM - 19

DEALERSOCKET DATA:

DAYS TO SOLD:FRANCHISE VS INDEPENDENT

Implementing some of the same processes Franchise dealers apply to their businesses can aid Independent dealers in competing for the same customers.

HOW TO COMPETE CHECKLIST

1. ONLINE ADVERTISING

Focus on showcasing high demand vehicles online to increase floor traffic in your store.

2. AUTOMATION

Automate follow-up through software solutions like CRM to ensure all opportunities are maximized.

3. MOBILE APPS

Use technology your consumers can relate to, like smartphones, during the sales process to create a shopping experience they prefer.

4. POST-SALE FOLLOW UP

Maintain a relationship with customers after the sale to promote referral programs or your service department.

5. EXPAND INVENTORY SEARCH

Utilize online resources and position yourself as a car buying entity.

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Independent Inventory Outlook

J.D. POWER - POWERINFORMATION NETWORK (PIN):

FRANCHISE ROI AVERAGES - NEW VS USED


PAGE 18

Competition for Cars: Leveling the Playing Field

INDEPENDENT INVENTORY & CAPITALOUTLOOK

58% of used car sales, by source, come from the floor

DealerSocket Data

7% increase in vehicles priced between the $10K - $15K range


Sourcing Inventory & Capital Reduce time searching for inventory and increase efficiency with staff

Implementation of New Technology Inventory management and data mining

Inventory & Financing Options for Customers Understand the used car buyer

1

2

3

Consumers at Independent dealerships have an average credit score of 570

DealerSocket Data

1000+ potential lenders available when utilizing a lender portal

DealerSocket Data

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Independent Inventory OutlookPAGE 19


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With Franchise dealers moving aggressively into the used car market, Independent dealers must compete for cars as well as customers. When it comes to inventory acquisition, the Independent dealer can be at a significant disadvantage compared to their Franchise counterparts who enjoy closed auctions, access to off-lease cars and sophisticated technology like a data mining solution that has historically neglected the Independent market. Due to these inherent disadvantages, Independent dealers need to be more proactive and resourceful in their efforts to acquire new inventory and capital.

35%Independent dealers who do not use a DMS

DEALERSOCKET DATA: INDEPENDENT INVENTORY OUTLOOK

SOLD VEHICLES BY LEAD SOURCE

58% of used car sales, by source, come from the floor

1

Phone

14%

3

2

Floor

58%

Internet

28%

According to DealerSocket data, 58% of used car sales, by source, come from the floor, highlighting the importance of having the right mix of inventory.

58%Q: HOW MANY VEHICLES IN INVENTORY, ON AVERAGE?

DEALERSOCKET INDEPENDENT SURVEY:VEHICLES IN INVENTORY

1

2

21 - 50 Vehicles

36%

51 - 100 Vehicles

21%

Of over 4K Independent dealers polled, 36% reported having 21-50 vehicles in inventory, on average

J.D. POWER - POWER INFORMATIONNETWORK [PIN]:INDUSTRY DATA

J.D. Power states an extra 800K lease maturities will be coming back to market in 2016. With more redesigns of 2015 models than ever before (103 new/redesigned products), product anticipation will diminish in 2016.

800,000

5 64

0 - 10 Vehicles

16%

201+ Vehicles

3%

101 - 200 Vehicles

8%

3

11 - 20 Vehicles

16%

21 - 50

A surprising 35% of Independent dealers reported in DealerSocket’s Independent Survey that they do not utilize a DMS. Only 25% leverage a loan servicing platform and a mere 11% are taking advantage of a data mining solution. Improving dealership efficiencies with technology is an area of opportunity for Independent dealers to level the playing field.

DEALERSOCKET INDEPENDENT SURVEY: COMPETITION FOR CARS -LEVELING THE PLAYING FIELD

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Retail Price


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50%

100%

Auctions WholesalersOther Dealers OtherOnline

87.7% 43.7% 31.7% 24.8% 4.1%

25%

50%

0 - 5K 10,001 - 15K5,001 - 10K

2013

2014

RETAIL PRICE

NIADA INDUSTRY ANALYSIS:AVERAGE RETAIL PRICE

54.3% of Independent dealers have an average retail price under $10K

Average retail price grew in two optional price ranges between 2013 and 2014. This may suggest growing consumer demand and opportunity for Independent dealers to sell more used cars in this price range as used car buyers extend their searches outside of Franchise dealerships.

< $10K 6.9%Cars retailing at $10,001 - $15K showed a 6.9% increase from 2013 to 2014

20,001+15,001 - 20K

AGE OF VEHICLES SOLD

There is a correlation between the 11.8% increase in sold vehicles aged 6 years or more and the corresponding decrease in sold vehicles aged 5 years or less. As Franchise dealers vie for more used cars, it is increasingly difficult for the Independent dealer to acquire newer used vehicles. To combat this challenge, Independent dealers need to position themselves as a buying power and identify new opportunities to source and finance inventory.

NIADA INDUSTRY ANALYSIS:AGE OF VEHICLES SOLD

68% of Independent dealers sell vehicles aged six years or older

6+

50%

100%

1 - 5 Years 6+ Years

SOURCING INVENTORY & CAPITAL

87.7% of dealers purchase vehicles at auctions

Closed auctions make it increasingly difficult for Independent dealers to compete with Franchise dealers. Online auctions are a good alternative as they provide the ability to attend multiple auction lanes remotely, thus increasing efficiency and giving dealers more time on the floor to train staff and turn cars.

87.7% 1 - 4Nearly half of Independent dealers attend, on average, 1 - 4 auctions per month

NIADA INDUSTRY ANALYSIS:

Q: WHERE DO YOU BUY YOUR VEHICLES?

NIADA INDUSTRY ANALYSIS:SOURCING INVENTORY

43.7% of Independent dealers get inventory from other dealers, namely Franchise. This trend is going to decline. As Franchise dealers shift their focus to used cars, they will likely retain more of their used car inventory rather than sell to Independent dealers.

12.4%

12.2%

44.1%

42.1%

25.4%

32.3%

13.6%

7.4%

4.5%

5.9%

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Implement New Technology


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DEALERSOCKET INDEPENDENT SURVEY:IMPLEMENT NEW TECHNOLOGY TO TAP INTO NEW SOURCES OF CAPITAL

TACKLE INVENTORY MANAGEMENT WITH INTELLIGENT SOFTWARE

Inventory management software gives dealers the ability to monitor inventory trends, reactively adjust buying patterns and adjust pricing on aging vehicles based on market trends in the dealership’s geographical area. This powerful technology allows dealers to make better purchasing decisions and acquire the right inventory for their dealership. Better inventory leads to increased sales and more cash to take to auction.

USE A DATA MINING SOLUTION TO HELP POSITION YOUR DEALERSHIP AS A

BUYING POWER

Buying cars from customers is an opportunity for Independent dealers to increase inventory and potentially acquire capital as the seller will likely be ready to purchase another car. However, many used car shoppers may not be aware that smaller Independent dealers are in the market to buy used vehicles. It is important to advertise that you buy used cars to the general public both traditionally and digitally to increase reach. Additionally, leveraging a data mining solution can enable you to identify and target your customer base for vehicle buy back programs.

75% of deals generated from a data mining solution result in a trade-in for Franchise dealers

75% VS. 19.3%19.3% of Independent deals sold include a trade-in

NIADA INDUSTRY ANALYSIS:INVENTORY FINANCE/FLOORPLAN

With the vast majority of dealers using cash to finance inventory, there is a growing need to find new sources of capital. Leveraging technology to identify buying opportunities and yield quicker turn rates will help generate cash for dealers to buy more cars and provide better buying choices for the customer.

65.1% of Independent dealers finance inventory with cash

65.1%

40%

80%

1 Banks - 30.1%

2 Auction - 24.1%

3 Cash - 65.1%

4 Other - 6.6%

31 2 4

Only 1 in 9 Independent

dealers report utilizing

data mining software

INVENTORY & FINANCING OPTIONS FOR CUSTOMERS

A growing reliance on financing for used car shoppers emphasizes the importance of providing better options for your customers. With lower credit scores and loan amounts at an all-time high, there is an increased risk of default. Understanding who your used car buyer is—their buying habits, credit scores and what they can afford—will equip Independent dealers with insights to purchase better inventory. A good mix of inventory with low loss ratios will increase lender confidence and financing opportunities.

Used vehicles with financing rose 1.7% from 2013 to 2014

EXPERIAN DATA: GROWING RELIANCE ON FINANCING

1.7%

1 Q4 2013 - 53.5%

2 Q4 2014 - 55.2%

30%

60%

1 2

Based on industry averages spanning eight years, credit scores for financing used cars are, on average, 73 points lower than for new cars

EXPERIAN DATA:

AVERAGE CREDIT SCORES

400

800

1 2

1 NEW - 723

2 USED - 650

73

DEALERSOCKET DATA:

AVERAGE CREDIT SCORES

Average credit score for borrowers on DealerSocket DMS

570

1 in 9

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Used Automotive Financing by Lender Type


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EXPERIAN DATA:USED AUTOMOTIVE FINANCING BY LENDER TYPE

54

Bank

1

Finance

20.7%

3

BHPH

12.5%

Captive

7.7%

Credit Union

2

35.6%

23.5%

EXPERIAN DATA:

FINANCING BY LENDER TYPE

BHPH accounts for 12.5% of used automotive financing by lender type

12.5%Average used car financing amounts have increased $437 per vehicle from 2013 to 2014

EXPERIAN DATA: AVERAGE AMOUNT FINANCED

$437

1 Q4 2013 - $17,974

2 Q4 2014 - $18,411

$10K

$20K

1 2

USED AUTOMOTIVE FINANCING

DEALERSOCKET DATA:

LENDER PORTAL

Lender portals offer access to 1,000+ potential lenders

1,000+

BHPH accounts for 12.5% of used automotive financing and average amounts financed are increasing. These facts further attest to the opportunity Independent dealers have to service these customers—coupling the right vehicle with more lender choices.

DEALERSOCKET INDEPENDENT SURVEY:

LOAN SERVICING

Only 13.5% of Independent dealers polled are utilizing a loan servicing portal

13.5%

Lender portals can give you access to a pool of lenders willing to offer loans to customers with low credit scores.

European vehicles have the highest loss ratio

NIADA USED CAR INDUSTRY REPORT: INVENTORY CAUTION FOR INDEPENDENT DEALERSHIPS

149.2%

3

75%

150%

1 2

1 Asian - 85.2%2 Domestic - 133.5%3 European - 149.2%

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EXPERIAN DATA:

AVERAGE AMOUNT FINANCED

It’s no secret used car buyers tend to have lower credit scores. However, data shows that customers purchasing used cars from Independent dealers are at a unique credit disadvantage, underlining the need to provide them with more financing options.

Average loss ratios of borrowers defaulting on loans are highest with European cars. This is important to consider when sourcing new inventory as lenders may take this into account.


PAGE 28

Used Car Sales Outlook

ROI / REVENUE GROWTH

63% of Independent dealers are not using a CRM


Top performing Independent dealerships make an additional $45,645 per month in revenue

DealerSocket Data

CRM Implementation Increase in revenue and efficiency

Leveraging Technology Identify cost-effective technology to sell more cars

Trends by Lead Source Pinpoint highest grossing lead types and areas of improvement

1

2

3

$307 decrease in average profit per unit on phone leads

DealerSocket Data

Dealerships see a $120 savings per unit on flooring costs when utilizing a CRM

DealerSocket Data

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CRM ImplementationPAGE 29


PAGE 30 PAGE 31

37%

USED CAR SALES

LEVERAGE TECHNOLOGY

Although competition is getting fiercer, the Independent outlook is ripe with opportunity. Technological advances in the automotive space over the past several years have brought to market cost-effective solutions that empower the Independent dealer. As new technology becomes more readily available, Independent dealerships will be better equipped to implement efficient processes and compete more effectively.

DEALERSOCKET DATA:

CARS SOLD PER MONTH - CRM

DealerSocket Independent CRM customers sell, on average, 74 cars per month

74


CARS SOLD PER MONTH

87% of Independent dealers surveyed sell less than 50 cars per month

< 50 VS.


AVERAGE PROFIT PER UNIT

40% of Independent dealers surveyed make less than $3,000 average profit per unit

< $3K VS.


AVERAGE PROFIT PER UNIT - CRM

Average profit per unit sold across all sources for Independent dealers on CRM

$3,261

Across the board, dealers leveraging CRM are outperforming

their peers who are slower to adapt to new technology.

DEALERSOCKET INDEPENDENT SURVEY: CRM USAGE

In the first year after implementing CRM software at their dealership, Classic Chariots saw a 20% increase in sales and, on average, turned an additional 10-20 cars per month.

DEALERSOCKET DATA:

INCREASED PROFIT WITH INDEPENDENT CRM

An increased profit of $261+ per vehicle when using a CRM, compared to most Independent dealers

$261+

An average investment of $6K annually in technology can yield

a return of over 660% on initial investment. This revenue can be

used to purchase more inventory and entice new customers.

DEALERSOCKET DATA:

INCREASED CARS SOLD PER MONTH - CRM

In the first year of utilizing CRM, DealerSocket Independent dealers saw an average increase of 14 more sold cars per month

+14

DEALERSOCKET DATA:

AVERAGE INDEPENDENT

CRM COST

Average CRM cost is $6K annually

$6K

DEALERSOCKET DATA:

INDEPENDENT CRM ROI

Independent dealers saw an ROI of 660% when using an Independent CRM software

660%

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Profits by Source, Trends by Source, Industry Comparative

Only 37% of Independent dealers surveyed utilize a CRM


PAGE 32 PAGE 33

DEALERSOCKET DATA:TRENDS BY SOURCE

With lower close rates, longer sales cycles and lower profit margins, phone sourced leads are opportunities of growth for Independent dealers. Focusing on phone training and call management efficiencies will be areas of improvement for Independent dealers to become more competitive and sell more cars.

DEALERSOCKET DATA: PROFITS BY SOURCE

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The Digital Landscape

PROFITS BY LEAD SOURCE

3

$2K

$4K

1 2

1 Phone - $2,817

2 Floor - $3,185

3 Internet - $3,148

10%Top performers on CRM are averaging 10% higher profits on phone sourced leads than the average dealer. Larger Independent dealerships tend to operate more on par with their Franchise counterparts. Therefore, understanding where top performing dealers are doing well can better equip smaller Independent dealers with valuable insights.

On average, Independent dealers are making $307 less on phone leads than other sources, underscoring the opportunity for improvement in this area.

CLOSE RATES BY LEAD SOURCE

3

10%

20%

1 2

1 Phone - 5%

2 Floor - 16%

3 Internet - 5%

SALES PER MONTH BY LEAD SOURCE

3

50%

100%

1 2

1 Phone - 14%

2 Floor - 58%

3 Internet - 28%

In general, phone sourced leads take longer to turn than other lead types for both Franchise and Independent dealers. However, Independent dealers take 37% longer to close phone leads whereas Franchise dealers only take 18% longer to close. Focusing on phone training will help Independent dealers narrow this gap.

$120

19Average number of days to turn on CRM

28Average number of days to turn on DMS

60Industry average number of days to turn

DEALERSOCKET DATA:INDUSTRY COMPARATIVE ANALYSIS

Dealers with an integrated DMS and CRM turn used cars 40 days faster than industry averages, saving an average of $120 on flooring costs.

Average close rates on phone sourced leads

5%14% of monthly sales come from phone sourced leads

14%

LEAD SOURCE

On average, 31% fewer calls were made on phone leads versus floor leads per prospect. However, floor leads have higher closing rates and gross profit margins. Thus, the same phone follow-up process should be applied to all leads, regardless of source.

OUTBOUND CALLS PER PROSPECT

3

2.5

5

1 2

1 Average - 3.7

2 Floor - 4.13

3 Internet - 3.82

4 Phone - 2.86

4

AVERAGE DAYS TO TURN

3

15

30

1 2

1 Floor - 17

2 Internet - 19

3 Phone - 26

Longer to turn phone sourced leads than other lead sources

37% VS. 18%

DAYS TO TURN

INDEPENDENT FRANCHISE


PAGE 34

New Digital Channels Reshape the Way Consumers Research, Browse and Shop for a Vehicle

THE DIGITAL LANDSCAPE

Traditional marketing sources cost 10 times more than digital sources

DealerSocket Data

37% of online shoppers are between the ages of 18-34

DealerSocket Data

Web-Based & Device Driven Digital marketing versus traditional marketing

Online Shopper Online consumer demographics

Highest Performing Web Pages Top 4 page views on dealership websites

1

2

3

35% of digital leads are generated from a dealership’s website

DealerSocket Data

Inventory pages rank #1 in most viewed pages on a dealership’s website

DealerSocket Data

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The Online Shopper, Web-Based & Device DrivenPAGE 35


PAGE 36 PAGE 37

1 3

DEALERSOCKET DATA:WEB-BASED & DEVICE DRIVEN

$1.5K

$3K

1 2

1 Digital - $2,514

2 Traditional - $1,702

AVERAGE TOTAL PROFIT

AVERAGE COST PER SOLD

$1.5K

$3K

1 2

1 Digital - $150

2 Traditional - $1,581

49.5% of Independent dealer web page sessions are on mobile devices. With the majority of inbound leads being attributed to mobile sources, it is important to examine who the online shopper is, where they are doing their research and ultimately, how they got to your site and submitted a lead.

ONLINE CONSUMER DEMOGRAPHICS

Male

1

2

64.8%

35.2%Female

DEALERSOCKET DATA:THE ONLINE SHOPPER

When comparing traditional and digital marketing, the difference in cost per sold to average total profit per vehicle purchased is astounding.

Dealers continue to put their marketing dollars towards radio spots, TV ads, billboards, tent sales, etc., but the return on investment is minimal.

INDEPENDENT DEALERSHIPS WITH A WEBSITE

37%

Leads from dealer websites have the 2nd highest closing rate

Only 37% of Independent dealers have a website

The digital landscape refers to the different digital channels and interactive media consumers have available to them. These include websites, social networks, email and even smartphones, tablets and kiosks. Most consumers prefer to shop digitally and thus, car dealers must enable their customers to shop in the environment they prefer.


45 - 54

3

18.5%

55 - 64

2

14.7%

ONLINE CONSUMER DEMOGRAPHICS

25 - 34

5

24.0%35 - 44

6

21.7%

65+

4

7.9% 18 - 24

1

13.2%

PAGES PER SESSION

3

6

1 2

1 Desktop - 5.76

2 Tablet - 5.31

3 Mobile - 5.02

AVERAGE SESSION DURATION IN MINUTES

3

6

1 2

1 Desktop - 5:50

2 Tablet - 4:58

3 Mobile - 4:13

SESSIONS PER DEVICE

Mobile

2

49.5%

40.1%Desktop

10.4%Tablet

3 3

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The Online Shopper, Web Pages by View


PAGE 38 PAGE 39

5


Dealer Websites

1

Lead Generator

17%

3

Research Portal

7%

4

Price Confidence Service

16%

6

Search Engine Sites

2%

6

Marketplace

2

35%

23%A dealership’s website includes many different pages that are all necessary. Every site must advertise products, services, the company itself and contact information at a minimum. However, knowing where the majority of web traffic is visiting will allow dealers to put their strongest calls to action in the right places.

PERCENTAGE OF LEADS BY MARKETING CHANNEL

There are many resources available to both dealers and consumers from third party providers, but the majority of consumer research and inquiries actually take place on the dealer’s own website.

Organic Search

1

42%

Direct to Dealer Website

2

31.5%

Direct traffic is 12.3% higher for Independent dealers than Franchise dealers which indicates that more customers are searching for Independent dealerships directly by name or website URL. This emphasizes the power of brand recognition and digital presence.

DEALER WEBSITE TRAFFIC OVERVIEW

Ensuring top ranking on Google and other search engines is key to online exposure. Including appropriate keywords, offering relevant and desirable content, properly optimizing the website and putting dollars toward search engine marketing are some of the criteria necessary to garner the attention of future customers.

DEALERSOCKET DATA:HIGHEST PERFORMING WEB PAGES

After reviewing 4,850 of the most visited web pages, results indicate that inventory pages were the most viewed.

TOP 4 WEB PAGES BY VIEWS

1 Car Inventory: 61%

2 Home Page: 14%

3 Custom Content: 8%

4 Coupons and Specials: 7%

Used car inventory is unique to each particular dealer and it is no wonder inventory pages are the most visited. Offering consumers an exceptional online shopping experience with messaging tailored to the used car buyer and providing the right tools to estimate financing and payment options can help guide them in the decision-making process and encourage them to submit a form online.

Car

Inventory

1

61%

Paid Search

12.7%

3

Referral

11.5%

4

Other

2.3%

5

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Summary


PAGE 40

Independent Dealership Action Report Key Takeaways

SUMMARY

ROI / Revenue Growth is the top initiative for dealers


58% of sales come from the floor

DealerSocket Data

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Key Takeaways

Summary Key takeaways

1

Dealers utilizing CRM sell, on average, 74 cars per month

DealerSocket Data

Inventory pages rank #1 in most viewed pages on a dealership’s website

DealerSocket Data

PAGE 41

INDEPENDENT DEALERSHIP ACTION REPORT:SUMMARY

The used car sales business is becoming more enticing for Franchise dealers. With shorter selling cycles and larger profit, Franchise dealers will likely hone their focus on their pre-owned lots as new car sales begin to slow. This will result in increased competition for cars and customers for Independent dealers. By concentrating on new ways to acquire inventory, capital and grow revenue, the Independent outlook is bright.

ACQUIRE INVENTORY AND CAPITAL BY:

· Expanding inventory search online and attracting

individual sellers

· Understanding car buyers and purchasing inventory

based on their needs

· Utilizing tools like a lender portal to offer more

financing options to your customers

GROW REVENUE BY:

· Leveraging technology, like CRM, that is cost-effective

and yields high returns

· Improving selling skills, like phone handling, to raise

closing rates by source

· Decreasing spend on traditional advertising

· Creating a digital shopping experience that drives

consumer engagement


PAGE 42 PAGE 43

Special Thanks to J.D. Power

100 Avenida La PataSan Clemente, CA 92673

855.495.1714DealerSocket on Social Media

Facebook: Facebook.com/DealerSocket

Twitter: Twitter.com/DealerSocket

LinkedIn: LinkedIn.com/company/DealerSocket

YouTube: YouTube.com/DealerSocket

DealerSocket Website

ID.DealerSocket.com

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