More than a decade removed from the Great Recession, media analysts and economists believe there is potential for an economic downturn to occur within the next few years. Despite the speculation, the automotive finance market appears to be strong. In fact, Experian’s Q3 2019 State of the Automotive Finance Market report continues to show year-over-year growth and low delinquency rates — signs of an overall healthy market. 

Still, it’s always a best practice to prepare your dealership for the worst. Ten years ago, dealerships were forced to assess business practices on the fly. Many pivoted to a focus on used vehicles — keeping older trade-ins on their lots to resell. Others invested in their service departments to focus on parts and routine maintenance and amplified their presence online to reach more potential car shoppers. While many of these dealerships were able to adapt and adjust during the turmoil, moving forward, you will be better served to prepare ahead of time. And with the exact timing of a financial downturn largely unforeseen, now is as good a time as any. 

During times of economic distress, organizations need to review business models and strategies. For auto dealers, there are three considerations for dealers as they prepare their systems and practices for a potential economic downturn.

Identify local in-market car buyers

You don’t need to attract customers from far and wide. In fact, a bevy of potential car shoppers likely live within 15 miles of your dealership. The more you understand about your local prospects, the better positioned you will be to reach them with right message at the right time. For instance, did the individual just purchase a home? Are their lease terms set to expire? This level of insight can help you identify the prospects most likely to be in the market for their next vehicle and enable you to create and deliver messages that resonate.

If you can address a potential customer’s specific needs, the more likely they are to convert. Time-after-time, we’ve seen well-tailored ads perform better than generic ones. More importantly, you can reduce wasted ad spend on out-of-market customers. And the less money you waste during an economic downturn, the better positioned you will be to sustain success.

Offer ways to help your customers secure the car of their dreams

Maximizing sales results takes more than showing your customer a vehicle. As a guru of the car-buying experience – you’re there to not only offer advice and insights based off years of experience, but to provide the support your customers need to purchase the vehicle of their dreams.

Oftentimes, support is needed when your customers are assessing their vehicle financing options. During times of economic distress, budgets will be leaner and personal finances may have taken a turn for the worse — so what can you do if you have a willing customer who can’t qualify for the best rates?

Tools and resources, such as Experian Boost can open access to better credit for your customers—more importantly this is credit that they’ve earned. That means better rates for the customer, and you can augment current sales and strengthen future relationships down the line.

Ensure you’re purchasing high-quality used vehicles

Just as shoppers need to make sure their credit scores are in order, you need to make sure your pre-owned inventory is of a strong enough quality. Vehicle history reports will help you gauge the reliability of used cars compared to other vehicles in its class and the likelihood of it being on the road in five years. This is especially critical if your dealership needs to place a stronger emphasis on used car sales.

It may seem counterintuitive to plan and prepare for an economic downturn during a period of extended growth, but the importance of the task cannot be lost. Smarter decisions and a commitment to better understanding your customers and inventory can set you up for success. The full impact of the next financial crisis cannot be predicted, but the better prepared your dealership is, the more likely you are to weather the storm and continue successfully serving your customers at healthy margins.

John Gray is Experian’s president of automotive, North America.