Best Practices

Barclays exec shares advice to combat cyber-crime


Finance companies are fighting a cyber-war against criminals who carry out millions of daily attacks in a bid to steal personal data and defraud businesses of millions of dollars.

That is the stark message from data security expert Royce Curtin, managing director of global intelligence at Barclays, who warns finance companies that they must constantly evolve their defenses or risk falling victims to new scams.

Gangs target companies to steal funds or increasingly to obtain customer data, which is then used to defraud consumers.

Curtin said, “Companies suffer an average 1.5-percent share price decline after cyber-attacks are made public, with some drops of up to 15 percent. Financial services experience the biggest declines and the highest regulatory fines.”

During a speech at the Auto Captives Summit in London, he provided auto finance executives with guidance on the current threats and how to combat them.

Details of his presentation are available in this video, courtesy of leading global automotive, consumer and equipment finance software business, White Clarke Group.

“Despite the increasing sophistication of the criminals, simple measures can still combat much of the threat,” Curtin said, “You have to have strong assurance programs to protect your intellectual property and personal identifiable information. You have to build defenses in depth with the customers and clients and the supply chain and vendors that you use.”

For more on the guidance, download the White Clarke Group 2018 Global Technology Report today.

The report showcases new business models and best practice from around the world in four key categories:

• Mobile and pay-as-you-go auto finance

• Artificial customer service

• Cryptocurrency, blockchain and mobility

• Cyber wars

Download your copy of the White Clarke Group report here.

8 potential problems arising from work-in-process accounting

TYSONS, Va. - 

Before dealer principals and store managers brush aside the issue by stating something like, “I’m a car guy, not an accountant,” NADA Academy instructor Eric Dreisbach shared eight potential pitfalls of a financial practice many dealerships might use — work-in-process (WIP) accounting.

In a blog post setting up his foundational concerns, Dreisbach explained that officially work-in-process (WIP) labor is considered an inventory of labor purchased from technicians. He said that inventories are considered assets and carry a normal debit balance.

Then Dreisbach went into the potential quandaries, especially if the dealership has a busy service drive stacked up with customers needing repairs along with reconditioning of units that managers are eager to get on the front line.

“The problem is that repair orders are typically posted before the technicians are paid,” Dreisbach said. “For example, when a technician completes his work and the RO is closed, it usually gets posted within a day or two.

“However, the technician does not get paid until the end of the pay period, a week or two later,” he continued. “This leaves a credit balance in the WIP account for that time period. Credit balances in inventory accounts are not usually accepted by the manufacturer or by generally accepted accounting principles.”

Whether or not a dealer has competent accountants either on staff or secured through another firm, Dreisbach used a separate blog post to explain eight common reasons errors can happen within WIP accounting. Those elements included:

—Tech pay raise is recorded in the payroll settings but is not updated in the service settings. This will typically result in a growing debit in the account.

—Tech bonus pay posted to WIP but not costed on the RO. Dreisbach recommended using a separate account for tech bonus pay. A store may use a cost of sale account or another payroll expense account. He said this makes it easier to track and will keep it out of WIP. “Use caution since this may impact the service manager bonus,” he added.

—Hourly technicians may be costed out on the RO but paid out of other salaries and wages. Check your DMS settings.

—Wrong technician flagged on the RO. Tech 23 versus Tech 32 for example.

—Miss-flagged/miss-posted pink tickets. Sometimes 0.3 can look like 0.8

—Unapplied labor posted as regular flat rate pay. You may flag a tech for work not costed on a RO, snow removal for example.

—Excessive open RO’s. Repair orders should be closed in a timely manner.

—Fraud. Sometimes only found if you are looking for it.

Along with some of the suggestions already mentioned, Dreisbach also offered this broad recommendation to help dealerships.

“I suggest posting the credit from the RO directly to a payroll payable account, bypassing the WIP account,” Dreisbach said. “The payroll process will then debit payroll payable and clear out the balance. Simple, accurate, and no need for extra posting and gyrations at month end.

“But whether you see work in process as an inventory asset or a liability, you must have this account on a schedule and control it by the repair order number,” he continued. “Setting up a schedule will require a bit of reconciliation but errors and omissions will show up quickly and will help keep your books tidy.”

Dreisbach’s discussions arrived as the National Automobile Dealers Association is gearing up to host a financial management seminar.

In this week-long seminar, NADA instructors Heather Westman, Jeff Breeland and Thomas Shaughness will introduce key dealership accounting principles and how to navigate both the balance sheet and income statement at the dealership and department levels.

“You’ll learn how to interpret and analyze financial statements to identify performance improvement opportunities,” NADA said while adding that some of the other key areas to be covered include:

—Maximizing cash flow and profit
—Identifying frozen and working capital
—Evaluating inventory performance
—Calculating total absorption
—Analyzing sales and gross profit
—Controlling and minimizing expenses

The training event begins on April 23. Registration can be completed at this website.

LexisNexis pinpoints how much each dollar of fraud costs finance companies


Fraud is very much on the minds of finance companies nowadays. And for good reason, as LexisNexis Risk Solutions put a figure on how much fraud added to finance companies’ operational costs.

According to the study titled, “2017 True Cost of Fraud for Financial Services," LexisNexis Risk Solutions found that for every dollar of fraud, financial services companies incur $2.67 in costs, which includes chargebacks, fees, interest and labor, according to the LexisNexis Fraud Multiplier.

Based on a comprehensive survey of 185 risk and fraud executives in financial services companies, including retail and commercial banks, credit unions, investments, trusts and wealth management, the study evaluates how to navigate the growing risks of fraud, while strengthening customer trust and loyalty.

A key finding from the study shows that digital channels increase the cost of fraud for financial services companies, if they are not managed effectively.

Analysts determined that mid-to-large digital financial services companies, which earn a minimum of $10 million in annual revenues, 50 percent of which is through online and/or mobile channels, pay $3.04 for every dollar of fraud. This is compared to mid-to-large non-digital financial services companies with less than 50 percent of revenue from online or mobile channels, which pay $2.35 for every dollar of fraud.

Fraud costs as a percentage of revenues is also higher among mid-to-large digital financial services companies.

“As digital channels become more prevalent, particularly with consumer demand for mobile banking, fraud is a significant drain on financial services companies' revenues — more than just the value of the fraud itself,” said Paul Bjerke, vice president of fraud and identity management strategy at LexisNexis Risk Solutions.

“These companies need to track and combat fraud effectively to reduce the cost on their business and protect their customers in the new digital age,” Bjerke continued.

Other key findings from the study include:

— Identity fraud, including synthetic identity fraud, is a significant issue for financial services firms, particularly in larger banks with more than $50 million in revenue. The study showed 62 percent of fraud losses for these banks are due to identity fraud. Furthermore, three-fourths of mid-large digital firms indicate identity verification as a top online challenge; they are also more likely than other financial services companies to cite device verification and excessive manual reviews as a challenge.

— Financial services firms that track fraud costs by both channel and payment method experience lower fraud costs: $2.49 per dollar of fraud, versus $3.04 per dollar of fraud. Large digital firms are most likely to track fraud costs by both channel and payment method, while mid-sized firms with revenues of $10 million to $50 million still lag behind.

— Financial services firms that layer fraud prevention solutions to counteract both identity and transaction fraud experience fewer false-positives, manual reviews and a lower overall cost of fraud.

"As the risk of identity and transaction fraud grows, particularly among digital channels, financial services companies must implement a multi-layered approach to fraud prevention. This approach helps accelerate the good transactions, and reduces the costs associated with manual reviews, successful fraud attempts and generates fewer false-positives," said Kimberly Sutherland, senior director of fraud and identity management strategy, LexisNexis Risk Solutions.

This project is the eighth annual comprehensive research study on U.S. merchant fraud conducted by LexisNexis Risk Solutions. The methodology of the results contained in this news release targeted U.S. financial services companies with a comprehensive survey of 185 risk and fraud executives conducted during March and April 2017. Respondents represented all channels, company sizes, industry segments, and payment methods.

Analysts pointed out the overall margin of sampling error is plus/minus 7.2 percent at the 95 percent confidence level. Data reflects the U.S. population of financial services firms based on weighting to U.S. Economic Census.

For more information, visit

Fiserv consumer survey highlights how digital experiences factor in financing decisions


The connection of finance and technology is getting even stronger, especially for younger consumers.

The latest "Expectations & Experiences" consumer trends survey from Fiserv finds that digital experiences are influencing how people manage and make decisions about borrowing and investing. The survey indicated four of the top five loan payment methods are now electronic, and 21 percent of millennial investors use a robo-adviser service to make investments.

The survey also highlighted that smartphones are making a significant impact on lending and investment-related financial decisions, especially among millennials. Nearly half of millennials (48 percent) report they would be comfortable using their smartphone to research loan options, compared to 19 percent of older generations.

“For most people, borrowing and investing money are careful decisions that require research, advice and trust in the provider,” said Byron Vielehr, president of depository institution services at Fiserv.

“Digital experiences are now an integral, and maturing, part of their consideration and management process,” Vielehr continued. “Importantly, these results underscore the need for providers to continually evolve and develop engaging experiences that help people make informed decisions to reach their goals, whether it’s borrowing for the perfect home or investing for retirement.”

And perhaps a vehicle purchase, too.

While most consumers are comfortable researching and completing loan activities online, the study showed the key factors for choice of a lender relate to cost and consumer experience.

Topping the list of selection factors among those with at least one loan are interest rates (83 percent) and low fees/service charges (83 percent), followed by customer service (75 percent), company reputation (70 percent) and knowledge of staff (65 percent).

Fiserv mentioned 65 percent of consumers say prior experience with a lender is important.

The study went on to say many consumers expressed willingness to try new ways of interacting with their lender, if there’s a benefit.

For instance, if it makes the loan process faster, more than half of consumers would be willing to use a mobile device to e-sign loan documents (56 percent), take and upload photos of loan documents (54 percent) and verify their identity with a photo (51 percent).

Another 42 percent of consumers indicate they would be willing to provide access to their financial information by providing their credentials to other online banking applications, up from 32 percent in 2016.

Digital channels, especially mobile, are now leading ways of communicating with a lender, although context matters based on the interaction.

Fiserv’s study showed a lender’s mobile app is the preferred way to check when a next loan payment is due (21 percent), check the balance term (20 percent) and request a payoff (17 percent), among consumers who have conducted each of these activities in the past six months.

For account questions, consumers significantly favor speaking live with a representative via phone (21 percent) over using an automated voice response system (12 percent), e-chat (11 percent) or the mobile app (11 percent).

The Fiserv endeavor noted that human interactions remain an important part of financial advice, especially for the 34 percent of consumers with at least $100,000 in household investable assets.

Study orchestrators noted that 58 percent of these affluent consumers work with a financial adviser. Among those without an adviser, only 11 percent report high interest (8-10 on a scale of 0-10) in using one.

At the same time, 32 percent of affluent consumers who invest their own money grade their knowledge and expertise as a “C” or lower, suggesting an opportunity to bridge the gap with a hybrid of human and digital advice.

Among all consumers who invest on their own, only 8 percent use a robo-adviser service. However, use of such a service is much more likely among millennials (21 percent) and urban consumers (18 percent).

The survey was conducted online within the United States by The Harris Poll June 13-29, 2017. A total of 3,095 interviews were conducted among U.S. adults ages 18 and older who met the following criteria: Someone in the household currently has a checking account with a bank, credit union, brokerage firm or other financial organization and has used their checking account to pay a bill or make a purchase in the past 30 days.

One of the longest running surveys of its kind, Fiserv insisted its Expectations & Experiences project builds on years of consumer survey data to provide insight into consumer financial behaviors and attitudes.

A paper with details from "Expectations & Experiences: Borrowing & Wealth Management" can be downloaded here.

Podcast: Brett Collett of Equifax

CARY N.C. - 

For this episode, we get back to basics — as in the fundamentals of auto-finance underwriting that include credit, character, capacity and collateral.

In light of a changing market impacted by sales trends and technology, Brett Collett, who is strategic automotive consultant for Equifax, shared a conversation with Nick about how these four basics remain vital to keeping metal turning and portfolios growing.

Check out the conversation below.

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6 suggestions to help dealers in Italy build confidence with female customers

PADUA, Italy - 

Looks like dealers in Italy are struggling to gain the confidence of their female customers, just like some dealers in the United States.

And the potential remedies could help stores on both continents.

According to a study conducted by CDK Global in North America, 43 percent of women in Italy do not trust dealerships.

The research carried out by CDK Global revealed that many women feel uncomfortable when they are looking for a vehicle to buy, precisely because they are women. Analysts at CDK Global scrubbed 64,000 reviews, finding that 43 percent of women do not trust the automotive industry and often describe their buying experience at dealerships in a completely different way than men.

The study found that the reviews and the language used by the customers contain valuable information to understand what is appreciated or not in their experience within the dealerships. The words “stressed,” “confused,” “disregarded,” and “intimidated” were among the top ten most used by women, and many of them, especially in sales and service reviews, said they felt “insecure” or “stupid.”

“It is already known that women are generally not comfortable at dealerships, but research highlights the real extent of the problem,” said Renato Dagostino, general manager of CDK Global Italia.

“In fact, women are increasingly influencing the purchase decisions of the car, which is why it is very important for dealers to make sure they offer women the right shopping experience,” Dagostino continued.

The reviews were divided by department (sales and service) and then further distinguished on the basis of the final judgment. The words most widely used by men and women indistinctly highlight that the most felt need in general is to receive a “fair” treatment from the dealership staff, who is “available” and able to make the customer “happy” at the end of the experience.

However, the results showed significant differences regarding the elements that influence the experience of men and women.

Men, in the reviews, focus much more on the product, while women focus in particular on the interaction with the dealership staff, which highlights the importance of rethinking the “customer experience” reserved for female customers.

For women, “understanding” was the most used in positive sales reviews, often along with other adjectives such as “kind” and “considerate.”

In both sales and service, women have noticed that the “smile” of staff (even those with whom they did not interact directly) contributed to creating a positive experience.

The experts of CDK Global were based on the evidence that emerged from this analysis to suggest the following advice to dealers, aimed at improving the experience of women in dealerships:

—Keep eye contact and smile: Help build a positive climate of trust and a lasting relationship.

—Find out what is important in a vehicle they are looking for: Positive reviews underline the ability to listen and the willingness to understand their specific needs.

—Give clear information: Explaining the various issues in a comprehensive way can eliminate any concerns or doubts of the customer, putting her at ease.

—Giving continuous and constant updates: Many positive reviews include the word “continuously” in relation to communications and interactions with the dealership.

—Offer a welcoming environment at the dealership because the details are important: Provide amenities such as clean bathrooms, WiFi in the waiting area, a children’s area, free drinks and a variety of reading materials.

—Create targeted advertising campaigns: Differentiate messages for women.

Researchers at CDK Global have found that many dealers are already on the right track and that this often positively surprises women who go to the dealership. The results show that dealers can seize the opportunity to stand out as companies that are particularly attentive and sensitive to female customers.

For more information on CDK Global in Italy, visit

Dealertrack rolls out 2018 Compliance Guide


A free resource to help dealerships manage their compliance responsibilities is now available.

Dealertrack recently released its 2018 Compliance Guide, which outlines the changes and updates in compliance that will affect dealers in 2018.

Now in its 13th year, the Compliance Guide is a leading resource on current trends and best practices in F&I compliance.

“Dealers understand that compliance can be critical to their bottom line, but many do not know how to balance staying current in today’s ever-changing regulatory environment with the day-to-day needs of running and growing their business,” said Jay Seirmarco, assistant general counsel at Cox Automotive. “For the last 13 years, Dealertrack has offered the Compliance Guide, free of charge, because we know how valuable such a resource can be for dealers seeking to improve their dealership’s operational efficiency.”

With “Confidence in Every Deal” as this year’s theme, Dealertrack highlighted the guide focuses on the Consumer Financial Protection Bureau’s examination of automotive dealer transactions under the Larger Participant Rule.

Furthermore, Dealertrack noted that it is anticipated that the CFPB will also be seeking to enforce compliance with federal consumer credit protection laws in auto financing.

Additionally, Dealertrack added that it is expected that the Federal Trade Commission will continue to examine claims of so-called “yo-yo” financing and perhaps initiate claims related to lack of disclosure of applicable safety recalls for vehicles at dealerships.

The Compliance Guide is designed to highlight what is ahead for dealers in 2018 and provide tips for managing compliance with confidence, geared towards establishing a culture of compliance, enhancing data security and maintaining customer transparency.

Given the emphasis that the CFPB and FTC appear to be placing on examining auto finance practices and, in the wake of widely publicized 2017 security breaches, creating a culture of compliance should remain a priority for dealers, according to Dealertrack.

To register to receive a complimentary copy of Dealertrack’s 2018 Compliance Guide, go to this website.

Dealers targeting high-value customers see more return with less ad spend

CARY, N.C. - 

After using over 700 different characteristics to target high-value customers via Semcasting's new patented IP targeting solution, dealers of Luther Automotive Group have seen impressive results over the course of six months.

“It’s one thing to attract your own customers to purchase another vehicle, it's a totally different thing to go into the marketplace and look for households and customers that have never interacted with your dealership in the past,” says Michael Murphey, general manager of automotive solutions at Semcasting, creator of the solution SmartTarget Conquest, which is designed to bring dealers buyers who will transact with them for years to come.

Using transactional data to create a custom predictive model built from dealers existing high lifetime value customer base, Semcasting’s SmartTarget Conquest identifies and scores households in their trade area who have the appropriate affluence and lifestyle to meet its own high lifetime value criteria.

Households who have previously done business with the participating dealers are excluded.

“So we’re serving display adds only to households that have never transacted with the dealership in the past,” Murphey said.

Luther Automotive reported that 45 percent of the customers targeted had at least one service at the dealership, profit per vehicle increased by 17 percent and cost per conversion was as low as $139.39.

When asked about the over 700 characteristics that Smart Target Conquest evaluates, Murphey said each dealership he’s ever built a model for has a unique model.

“If I take a Honda dealership in Minneapolis and compare their high lifetime model to a Honda dealership in Miami, their models are incredibly different. That’s why we take the time to onboard every dealership’s DMS data and look at the slight nuances of all of their different customer bases instead of putting together some vanilla model, and say this is the type of model that will work for your dealership,” he said.

Though most high-value customers might buy new, the model does not exclude customers who may be looking for used options.

“The model is built on the premise of those customers that not only purchase a vehicle but have multiple services with the dealership as well and does not discriminate against new- or used-car buyers,” Murphey explained.

“With the success of SmartTarget Conquest we've worked with Luther stores to create specific used-car modeled audiences that have shown incredible success.” 

In a recent case study, after evaluating that campaign model's results against a control group of households who met high lifetime value criteria but were not served display advertising, Semcasting found that after six months, in addition to the campaign audience conversion being 3 times better, the average profit generated by the campaign audience was 17 percent higher than the control audience.

Profit generated from the campaign totaled $78,600 from 15,233 households, while the control group only generated only $61,700 with 42,039 households — more than double that of the campaign.

Additionally, for a 60-day period, all devices associated with the campaign audience were reached at an average frequency of three impressions per day, per household, according to Semcasting.

“Dealerships need to be thinking more about the life cycle of that customer, and by focusing on the customers that not only will purchase a vehicle, but have the propensity to service that vehicle in the future, that’s really the roots of where this product came from,” added Murphey.

For independent dealers, PPMs keep buyers coming back


As independent auto dealers look to bolster their competitiveness and strengthen their performance, many are turning to practices franchised dealers have been using for some time to increase their service business and retain customers.

One practice, which automotive consultant Ed French of AutoProfit says “builds the cadence of turn” is to offer buyers prepaid maintenance services to establish the independent dealer’s service center as a “known commodity.”

Prepaid maintenance programs (PPMs) can help dealers bring buyers back for regular oil changes and other discounted services that build with them a habit of servicing their vehicle with the selling dealer.

Customers who develop a habit of maintaining their car at your store are 60 times more likely to purchase their next vehicle from you, DMEautomotive has noted.

Ryan Williams, president of prepaid maintenance program company Fidelis PPM, says independent dealers providing these plans to buyers can help them turn cost-centered service facilities into break-even operations and for many, profit centers.

“Independent dealers using PPMs to drive service and purchase retention are enjoying repair order upsell advantages of $70 per repair more and retention of 68 percent or more of customers whom the dealership has given to or sold prepaid maintenance,” Williams says.

These advantages are similar to what franchised dealers who are employing these plans enjoy, Williams says. According to NIADA data, half of all independent dealerships operate up to five service bays. Using dealership-branded prepaid maintenance programs is a proven way to help keep those bays productive.

A recent report from J.D. Power, Automotive Analyst Note, Satisfied Service Customers Likely to Remain Loyal to the Future notes, “complimentary maintenance and prepaid maintenance also drive more visits to dealers.”  Customers that indicated they either prepaid for a maintenance package or that their vehicle included complimentary maintenance when purchased in the 2015 study made 88 percent of their service visits to dealerships in 2017; those who did not have this benefit in 2015 made 75 percent of their service visits to dealers in 2017.

These plans typically feature a package of discounted oil services, tire rotations, fluid service or other routine maintenance functions. Plan holders are encouraged to use these services several times a year to better maintain their investment and develop a habit of returning to the dealer not the aftermarket for these services.

The current market favors dealers who promote their business to retain customers, French says.

“The market is changing rapidly, and the answer is yes, PPMs are right for it for three basic reasons,” he says. One is the average miles on preowned cars that independents are selling are less than ever; they’re newer than ever; and the average transaction price for used vehicles at franchised dealers is $19,000 and $16,000 for independents.

“These factors make service contracts attractive to buyers at independent dealerships to help mitigate the risk that comes with cars that are more expensive. I look at PPMs as a complement to service contracts because PPM use establishes a pattern of owners returning to their independent dealer’s service facilities to have these routine services done there,” French says.

Independent dealers who link customers back to their dealerships by using PPMs continue a retention strategy those cars original dealers and owners started.

“The cars that are now flowing into independent dealers’ lots these days are off-lease cars in superb condition because they have been well taken care of, and many were placed into service with the lessee holding a PPM from the leasing dealership to keep those customers returning to that dealership,” French notes. “If you’re selling cars having already been enrolled in prepaid maintenance plans why not keep it that way because it’s going to extend the second half of the vehicle’s life.”

Buying vehicles having previous PPM coverage can help independents build value into their inventory. French notes that Carfax reports indicate regularity of service visits, which he says suggests those vehicles in their earlier lives where benefits of more routine maintenances promoted by preventive maintenance. Sharing this report with prospective buyers is a great way to build confidence in that vehicle and the reason to continue that level of maintenance that a PPM can drive.

PPMs for used-car buyers

Putting PPM coverage into the hands of used-car buyers helps connect them to the dealership after the sale. Consider these points from the Fidelis PPM report; Loyalty is Elusive, Customer Retention is Measurable, about used-car buyers:

  • Risk-avoidance consumers who want peace of mind about future vehicle maintenance needs.  They have grown up watching OEMs give PPMs away with the purchase of new cars and come to expect similar treatment for the used vehicles they purchase.  
  • Cash-flow-strapped consumers whom notes cannot meet even a $500 emergency expenditure.
  • Leading busy lifestyles with little tolerance for inconveniences like vehicle maintenance -- prepaid plans help smooth the bumps
  • Deal shoppers whom retailers report that 85 percent of consumers look for coupons before visiting a dealer. PPM packages convey value to these buyers.

PPM best practices

Dealers using prepaid maintenance programs to increase store retention build a culture around these benefits.

  • Extend equal responsibility to F&I and service for promoting the plan to keep them involved, cooperative, and invested in program success
  • Link pay plans and spiffs to plan-based production goals and targets
  • Use a program offering automated marketing, claims reporting, and other features
  • Reminder mailings, especially those that show savings occurred through plan use, keeps usage above 65 percent
  • Make it mobile, as 53 percent of consumers likely to schedule service appointments will use a mobile device
  • Be sure the plan mechanisms provide reliable performance and ROI reporting for management

“Margin squeeze, competition, and unusual market factors mean every dealer — franchise and independent — must use whatever measures possible to improve R.O.I. and retain customers. The prepaid maintenance product is an excellent product that used-car buyers find exceptionally useful these days as they seek to protect both their vehicle investment and their budget,” Williams says.


COMMENTARY: 3 wide-ranging trends dealers should monitor in 2018


In my more than 15 years in the auto industry, I’ve seen various ups and downs in the market as well as both wild optimism and doom and gloom. We’ve experienced record-breaking new-car sales the last few years, and as we dive deep into 2018, most dealers are optimistic that we’ll continue to enjoy strong sales, with only a small decline in overall volume.

Here are three trends to keep an eye on in 2018:

Tight used-car inventory

Following what’s now called the Great Recession in 2008, we saw a lot of belt tightening both from consumers and dealers. That was followed by “Cash For Clunkers” and also the trend of consumers hanging on to their vehicles for eight to 10 years before eventually selling or trading them in. Fast forward a decade later, and most of the consumers who decided to hold on to their used car longer than normal have finally given in, disposed of their vehicle, and upgraded. The result? Fewer in-market car shoppers ready to sell, trade and purchase. Which of course means less readily available inventory for dealers to stock their lots with.

Used-car acquisition is at the core of any strong dealership’s business model, and finding the “right” units to stock isn’t easy. Over the last several years, it’s been even tougher to find inventory through traditional channels (physical auctions, trade-ins, etc.)

The recent hurricanes have also had a significant impact, with Black Book estimating that up to 1 million vehicles (including commercial and fleet vehicles) along the Gulf Coast were salvaged. That development sucked the inventory out of many markets, as used vehicles were routed to the flooded areas where demand was high.

What we’ll continue to see in 2018 is increased competition for a limited inventory pool. That means dealers will need to roll up their sleeves and look for alternative sources of used vehicles. That might mean more online and non-traditional auctions, dealer-to-dealer transactions, and street purchases.

Consolidation will continue

Large dealer groups and mega chains will continue to grow and expand in 2018. That can either be a threat to or opportunity for smaller dealers, depending on how they position themselves.

Let’s face it. The mega chains have economies of scale that single-point or small multi-roof operations just don’t have. At the same time, though, large dealer groups are much like a battleship, turning slow and unable to react quickly in some instances.

Single-point and small dealer groups have the ability to pivot and change direction quickly.

They can try new strategies for vehicle acquisition, sales and marketing, and quickly gauge results and implement change. They can also harness the power of selling “local” and leverage relationships within their community.

The good news for smaller dealers is that they can operate just as efficiently as larger dealer groups. The mega chains have the resources to analyze data and optimize local inventory, but so do the small dealers who implement the right inventory-management tools.

The right time to research new tools and vendors isn’t when sales are down; it’s when things are going well. So if a downturn is coming, and it will at some point, be ready. Get your house in order now, and make sure your team is armed with the processes and tools it needs to be as efficient as possible for the lowest monthly cost to your store.

More distractions

Is your dealership worried about self-driving cars, vehicle-subscription services, and ride sharing? How about Carvana grabbing market share, or Amazon getting into auto sales?

These developments are real, they have legs, and they will take some market share from local dealers. But there’s no need to panic. There is a long runway in front of us before some of these things take off. In some instances, the infrastructure, processes and regulations are potentially decades away.

I predict we will see small incremental changes in pockets around the country, but not to the extent that the auto industry will be completely revolutionized in 2018.

Rather than worry about things you can’t control, you should continue to focus on what you can control: your inventory, merchandising and customer experience. Leveraging good up-to-date data will help you select and sell the rights cars at the right price for your local market.

Also, nearly all dealers can benefit from creating an “Amazon-like” experience for shoppers. This means total transparency across all departments, a quick and simple way for consumers to transact online, a customer-first approach, zero-pressure sales departments, and top-notch customer service. Focus on speed and making it easy for your customers to do business.

Overall, I think 2018 has the potential to be a great year for dealers! Those positioned to see the most success will be the ones that re-evaluate their processes and operations regularly (as every good dealership that wants to evolve and grow should do).

Dealers, don’t be distracted by all the noise of pending disruption. Listen to it, take note, and be cautious. But remember, focus on what you can control, and position yourself accordingly in your local market. I wish all of you a Happy New Year and continued success in 2018.

Josh Dougherty is vice president of sales with DealersLink (, an automotive systems integration and networking technology company based in Broomfield, Colo.