From time to time, it’s important to consider the state of the commercial industry. This is true for both dealers who sell commercial vehicles, and those who do not sell commercial but may be considering it. Before we dive deeper into the state of the commercial industry, I have a question for the retail dealers who do not sell on the commercial side: What if you could exponentially increase your connections, leads, sales, and profits? More specifically, what if you could accomplish the following?
- Increase your average upfront gross profit by 300 to 400 percent per unit sold
- Double or triple your average net profit on every service incident
- Grow the parts department by 20 to 30 percent with little effort
- Reduce your cost of advertising dramatically and have the manufacturer pay at least 50% of your marketing, if not more
- Average at least 10 new prospect referrals with every new customer
- Have the average customer purchase a vehicle two to three times per year
- With the right finance plan and value, guarantee customer retention
- Dramatically grow your extended warranty business
- Be one of only 6% of all dealerships who provide the services you offer
- Do all this with little additional staff or extra cost to the dealership
Welcome to the world of commercial and fleet vehicle sales, the most profitable area of the automotive business where 94% of dealers don’t take advantage, likely because they don’t realize the benefits or don’t know where to begin.
But, you might say, aren’t vehicle sales up? Generally, yes, however there are growing problems on the retail side. Passenger car sales were down in 2018 by 13.1%. Ford has even decided to faze out its line of passenger cars – except for the Mustang and the new, China-manufactured Focus. And while parts and services departments are still making money, a record number of consumers are taking their vehicles to independent auto shops and national chains once their warranty expires.
Is there any light at the end of this automotive tunnel? Yes: commercial and fleet sales. Here are a few impressive facts that reflect the current state of the commercial vehicle sales industry:
- Commercial vehicle sales are up, and upfront gross profits are averaging 3X higher than retail sales.
- A business owner is far more likely to buy from the same commercial dealer again based on how he or she was treated.
- Commercial referral rates average 5X higher than retail referrals.
- Work vehicles go out of warranty faster and require more trips to the service department, creating more profit for you.
- Commercial consumers tend to buy extended warranties at a higher rate as well as maintenance packages.
- Commercial consumers are far more likely to stay with their original dealer for service parts, and their next vehicle purchase.
- There are far fewer commercial and fleet dealers with which to compete.
More and more we’re meeting retail dealers who want to explore the commercial business. What if you did too? This year could be your opportunity to get into the commercial and fleet business. In fact, there’s rarely been a better time to jump in, so take the leap.
About the Author
As the Founder and President of Commercial Truck Training, Ken has consulted, coached, and trained commercial dealers on individual, regional, and national business levels. Known as an industry leader, Ken has worked with companies like General Electric, General Motors, FCA, Ford, Commercial Truck Trader, and Equipment Trader.