New Car News – Margins UP!

70% of Dealers Report Jump in New Car Margins

According to the latest study conducted by AutoUSA , 94.2% of dealers increased market share in 2010, and more than 70% reported an increase in new car margins. The study found out dealerships that gained market share this year attributed the growth to:

-Improved customer service (69%)

-Friendly process (65%).

-Best reputation (52%).

-Quick process (45%)

-Lowest price (29%)

-Best selection (28%)

“Although 2010 has been a challenging year for auto sales, it appears the economy has inspired dealers to provide customers with better all around service, which has proven to be more effective for closing new business than just price alone,” said Phil DuPree, President of AutoUSA. “In addition, the survey indicates that dealers spent the majority of their ad budgets on Internet marketing strategies in order to draw more customers into their stores.”

The survey found that 94.2% of dealers distribute their new car inventory to Internet sites, and 54.7% of respondents say they plan to increase their purchase of third party leads in 2011. AutoUSA said by having a presence on third party sites, dealerships increase their chances of drawing in customers from outside their typical geographical areas, as well as customers who submit leads on specific inventory items as opposed to using search engines to look for dealerships near them.

When those surveyed were asked which part of their business did best in 2010, 41.8% of dealers reported new car sales, while 28.4% said used car sales and 28.4% said service.

In addition to inventory exposure and purchasing third party leads, the survey found that many dealers are actively involved in online reputation management. More than 85% of survey respondents say their dealerships manage online reputations by following up on consumer opinions posted online, with 62.3% saying they have a well managed program and 23.2% saying their program is not well managed and they only follow up on a limited basis. Using sites like DealerRater, Edmunds.com and Yelp for online reputation management is an effective way to leverage third party leads by increasing chances that a prospective customer will submit a lead to a particular dealership based on positive user reviews.

The online survey, which was conducted in November, generated 71 responses from dealership employees around the country, including store owners, general managers, BDC managers, marketing managers, Internet managers and sales managers. To view full survey results, visit: http://budurl.com/pfp7

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