Rev Up Your Auto Dealers In 2011

1. Rev Up Your Auto Dealers In 2011 John Potter VP/Training Radio Advertising Bureau jpotter@rab.com

2. PDF of slides • Will be available • Watch for an e-mail following today’s webinar a link to download

3. Marketing Partner Beyond the CNA Know the auto business Know the dealership Speak the language Pro-actively provide marketing information

4. The Three Tiers Factory Dealer group Dealer

5. What’s in store… • Industry update & trends • Being an automotive marketing consultant • Thinking like a dealer • Dealer advertising • Dealer BRANDING • Resources

6. IndustryUpdate

7. Happy Times Are Here Again… Source: NADA, January, 2011; Automotive News, 1/12/2011

8. Happy Times Are Here Again… • December was up 11% from 2009 • January was up 17% over 2010 • 2011 Projections are +14% to 12.9 million units Source: Automotive News, 2/9/2011; JD Power, 1/27/2011

9. US Dealerships -1,550 -500 Source: NADA, January, 2010

10. The Year Ahead… • Used vehicles are short on supply – prices going up • New prices are steady • Selling new with trade-in is double win • Used is higher profit margin, but lower volume Jonathan Banks, NADA Analyst 2011 NADA Convention

11. The Changing Buyer… • Less youth are driving • Gen Y shuns negotiation • Online loans • 24/7 shopping • “They don’t think like you do.” Thomas Alexander Associate Professor Northwood University

12. The Changing Buyer… • 61% are interested in purchasing a hybrid • 30% after learning price is +$5,000 • Obama’s goal: 1 million by 2015 • Nissan & Chevy can’t meet that goal alone • Wheego? 100 mile range, 2-passenger, electric, $34,000

13. Thinking Like a Local Dealer

14. Think Like a Dealer… Working the Numbers Average Dealership Sales and Profits Total sales $26.4 million Total gross $4.0 million Net pre-tax $398.000 (1.5%) Sales slowdown Higher invoice, lower sticker Source: NADA, 2010

15. Think Like a Dealer… Working the Numbers Average Unit Price NEW $28,966 USED $14,976 Source: NADA, 2010

16. Think Like a Dealer… Working the Numbers Average Dealership Sales By Department Source: NADA, 2010

17. Think Like a Dealer… Working the Numbers Net Profit By Department Source: NADA, 2010

18. Think Like a Dealer… Working the Numbers 26% in income is from After-Market (F&I, service contracts and other) After-Market Source: NADA, 2010

19. Think Like a Dealer… Working the Numbers 26% in income is from After-Market (F&I, service contracts and other) After-Market Service contracts are now being sold to about 1/3 of new vehicle buyers Service Contracts Source: NADA, 2010

20. Think Like a Dealer… Working the Numbers New Vehicle Days’ Supply Source: NADA, 2010

21. Being an Automotive Marketing Consultant

22. Ask the right questionsGet the right answers CNA Questions • Professional • Informed Know the vocabulary • RAB Glossary of Auto Terms

24. Dealer Advertising

25. Think Like a Dealer… Working the Numbers Total US Dealership Advertising In Billions $5.4 Billion Source: NADA, 2009

26. Think Like a Dealer… Working the Numbers Average Dealership Advertising Expenses Source: NADA, 2009

27. Think Like a Dealer… Working the Numbers Total Dealership Advertising Per Unit Sold $ $661 Source: NADA, 2009

29. Think Like a Dealer… Working the Numbers Average Dealership Advertising Expenditures Source: NADA, 2009

30. Think Like a Dealer… Working the Numbers • Over 80% of new vehicle buyers research on the web before buying • Dealers are buying leads Edmunds.com Cars.com eBayMotors.com traderonline.com autobytel.com carsdirect.com kbb.com Jdpower.com/auto Source: NADA, 2009

31. Think Like a Dealer… Working the Numbers • Over 80% of new vehicle buyers research on the web before buying • Dealers are buying leads • Expanding their own digital initiatives • Website with inventory • Live webcams • Mobile apps • Hiring digital sales staffs • Concern: can we keep up with the business? • What message should they deliver? Source: NADA, 2009

32. Think Like a Dealer… Advertising Message Gorilla Marketing

33. Dealer BRANDING

34. Dealers Must Think BRANDING • Little dealer differentiation • Too little profit margin • Mega dealers sell multiple brands • Cheril Hendry, CEO of Brandtailers: “Selling on price touches off a race to the bottom.” • Stores with strong brand equity tend to have higher grosses, more repeats and referrals, and higher CSI. Source: Automotive News, 1/31/11

35. Dealers Must Think BRANDING Per deal profits grow when consumers understand a dealership’s values Source: Brandtailers Note: surveys conducted during 2010 at 28 non-luxury dealerships

36. Smart Dealers Think BRANDING • 27 dealerships • Goal: to be synonymous with excellence in customer service • “Driven by a better way”

37. Smart Dealers Think BRANDING Scott Simmers, GM: “We had to brand ourselves to define where we are and what franchises we have.”

38. Smart Dealers Think BRANDING • Claxton, GA • “Striving for excellence in every area of the business” • General Motors Genuine Leaders award for sales and service excellence • Cause marketers

39. Smart Dealers Think BRANDING Christmas Toy Drive • E-mail blasts to customers • Partnered with local chambers of commerce • Go to dealership's Facebook site and click the “like” button • A toy would be donated in the name of each person • 3,500 toys given costing $37,000 • 3 used cars to needy familes • Martin NeSmith said: “People who are fortunate enough to have financial means need to give back, and that's what we're trying to do.”

40. Smart Dealers Think BRANDING “You’re indifferent whether people buy a Toyota or Honda – as long as they buy it from you.” Larry Light CEO of Arcature, LLC, a leading global brand consultant and former CMO of McDonalds

41. Resources

42. Automotive News Sales Report

43. Automotive News Incentives