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                                     The Next Frontier in Gross Profits

My grandparents passed away between 66 and nearly           getting lost in the dark, The heated and cooled seating
90 years of age. Both of my grandfathers had heart          with neck, back, and thigh massage will comfort me
attacks while doing physical farm labor and both            even when my RLS is acting up. I will be able to run
grandmothers lasted much longer and went from               several businesses remotely or just take a call on my
retirement homes to nursing homes, walkers to               wireless headset from my grandson. My command
wheelchairs, and then on to their maker without so much     center will be available in Cadillac, Hummer, or oh yes,
as a whimper about old age, aches and pains, or loss of     my favorite, Harley Davidson trim, styling and name
freedoms. They understood that time and miles lead to       plating. Yours can have whatever styling makes your
an end. They were at peace with that.                       special statement. How about a chrome Rolls grill?
                                                            Tailfins anyone? I won’t be completely satisfied until my
My parents currently live in a retirement home and have     unit beams me back to my room automatically when I
thoroughly planned their demise. When it is time for one    nod off for my afternoon nap.
of them to move on to a nursing home, the other will go
along too. Lifelong companions ‘til death do them part.     What is the average gross profit per new vehicle sold
No whining about mom’s arthritis or dad’s farm-worn         these days? Shrinking sales gross profit is the norm
back, constant headaches, loss of vision and hearing, or    unless your manufacturer happens to drop something
the 20 other ailments that come with 60 plus years of       exceptionally hot and somewhat affordable in your lap.
honest labor. They, like my grandparents, are content to    Of course, once production meets demand, the short-
accept the time and miles thing, planning to slip away      term windfall is gone and the downslide returns.
quietly with dignity.
                                                            How would you like to have several models in your
Then, there is me. World, prepare yourself for me! I am a   inventory that consistently book a $3000 to $6000
Baby Boomer. I understand mom and dad’s philosophy,         average gross, new or used, and the auto manufacturer
even respect them for it immensely; however, I am not       doesn’t control your supply or demand? What if I told
going down quietly. When it comes to losing                 you that annual demand for these higher profit vehicles
freedoms as I age, I plan to go down kicking and            and extremely profitable associated accessories will
screaming like a three year old throwing himself on         triple in the next 5 years and then double again in 5
the floor and holding his breath. According to one          more years? Not everyone will want or need one of
recent survey, more baby boomers expect to live forever     these vehicles, but you could probably sell 2 or 3 of
than the number of boomers who will have a serious          these vehicles this month and 5 or 6 per month next year
conversation about planning for their end. Large            with some minimal marketing. Hmmm… that’s $300,000
numbers of boomers prefer to believe that modern            gross profit before F&I for selling 60 additional high
medical advancements will arrive in time to save them.      demand vehicles that my competitors don’t offer. Are
Most boomers have been spoiled their entire lives when      you interested yet?
compared to prior generations and no one is going to
take their freedoms away. We will not be passive or         Triple that number in 5 years for an extra $900,000 plus
quiet. We expect more. We want and will have bionic         F&I for a cool $1,000,000 in additional gross profit. You
parts when our bodies fail. Will it be worth                might spend 50K in advertising to earn that million.
accommodating us? With $2.3 trillion in purchasing          That’s $166.00 per unit. Compare that to your current
power at our hot little baby boomer fingertips, our         results. O.K., now you’re interested! If you go after this
constituency and looming retirement are too large to        market with a passion, these numbers are just
ignore. You will want to offer us the products and          scratching the surface of what is available to you.
services that we want or we will find someone who will.
                                                            What else will happen when the largest driving
Have you seen some of those “junkers” they call             population in our history, the baby-boomers, trade in
scooters? Ooh baby, I hope I get one with the wicker        their Chevrolets for wheel chairs and scooters? This
basket on the front and those cheap chrome bicycle          large population of boomers, age 44 to 63 this year, will
rear view mirrors, “NOT”!                                   still drive sales volume in the auto industry for a few
                                                            years; but change is coming and this change will mean
My scooter will be a full blown command center with         fewer automobile drivers which translates into fewer
a retractable 22” flat panel LCD monitor, touch and voice   buyers. The number of children per household has fallen
controls, Wi-Fi, Bluetooth, HDTV and satellite radio plus   from nearly 2.5 to just over 1.5 children per household,
GPS with navigation so that I can find that cute old lady   and this number continues downward.
Perkin’s room at the other end of the home without
Fewer drivers doesn’t just mean fewer vehicle sales. It       associated accessories will be limited to one or two
also means less maintenance service and fewer repairs,        dealers per city population of 100,000 to 500,000.
fewer collision repairs, and reduced parts sales. The
number of service departments operating at capacity has       Taking on mobility is a whole dealership commitment.
declined substantially and the number of technicians per      Do plenty of research and then decide if the opportunity
dealership has dropped by nearly 17% nationally over          is there for you. If there is a large mobility dealer or
the past 7 years. How can there still be a technician         supplier in your community, how good are they? You
shortage? Remember, children per household are down           probably know a lot more about customer service and
36% so 18 to 25 year old entry-level technician types are     marketing than most other businesses, especially if your
also down.                                                    competition is a drug store or medical supply chain as it
                                                              is in many communities. Maybe your competition would
Required maintenance will continue to decline. Warranty       like a better facility with deeper resources to operate out
repairs decline nearly 10% each year because new cars         of and a mutually beneficial arrangement can be made.
and trucks are definitely made better. Here is most of        Don’t forget that almost all auto manufacturers have a
what you have left to sell.                                   mobility program that reimburses an average of
                                                              $1000.00 towards mobility equipment that installs on a
    1.    Declining gross profit new vehicles                 customer’s vehicle. Are you asking each of your current
    2.    Used vehicles                                       buyers if they have a family member who could use
    3.    F&I with fewer service contract sales               something as simple as a hitch-mounted scooter carrier
    4.    Declining customer pay repairs                      or lift? The possibilities in mobility are nearly endless.
    5.    Declining maintenance needs                         Maybe mobility is just the “lift” your store’s gross profit
    6.    Declining warranty repairs                          needs.
    7.    Tires
    8.    Accessories
    9.    Mobility
    10.   Conveniences

You can downsize all departments. Save your way into a
profit. It works. Unfortunately, this only works for a year
or two. Then you had better figure out how to grow some
gross profit again or figure out where you’re going to
work next year. I’m not suggesting that you don’t
streamline your personnel and operation. It’s past time.
Do it now and get your store as healthy as possible.
Getting healthy does not necessarily mean cutting
individual salaries; in fact, it may mean paying your most
talented people more so that you can operate just as
efficiently with a smaller number of employees. This
reduces benefit expenses that cost from 20% to 30% of
each employee’s wages.

The baby boomer population of 77 million will begin
retirement this year and 10,000 people will continue
to join the retirement ranks every day for the next
twenty years. This tidal wave will have a substantial
impact on society, culture, consumerism, the work force,
the economy and your business. Sharper business
operators will diversify to meet the needs of this rising
opportunity. In fact, your company’s survival may
depend upon further diversification and staying light of
foot in order to capitalize on the rapid-fire demand
changes of the next decade.

Will you catch a piece of this wave or will you be left
clinging to some archaic structure of years gone by?                   This thought-provoking article is courtesy of Hal Scott
There’s a good chance that you can find some                           Consulting. Hal is president and CEO of Hal Scott
                                                                       Consulting and providing on-site
underutilized space in your service department or body
                                                                       A-Z fixed operations training and a 100% guaranteed
shop to do anything from fairly major mobility fabrication             Service Satisfaction / Retention package that dealers
to lighter projects like installing scooter lifts and hand             can self implement for less than $1000. Average CSI
controls. Much like the wholesale parts industry, we                   increase is 11.7% points in just 4 months.
believe that large volume sales, installations, and                  
service     of    mobility-equipped       vehicles     and           

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