NATDA Magazine May/Jun 2018 May/June 2018 - Page 10

After an NATDA Dealer Success Group meeting last month, a dealer asked me for help. They had two questions for me. • How could they handle the current backlog enforced by most trailer manufacturers? • How could they mitigate the negative impact of a potential loss of sales? We talked about several things. Ultimately, we came to the same conclusion. There’s really very little that can be done. No, I’m not a pessimist. After 30 years in business, I’ve just discovered you shouldn’t worry about things you have no control over. Instead, focus your energy on things you do. The situation is going to get worse before it gets better. However, at some point in the future, manufacturers will beg you to help them move an abundance of trailers. Why? Because, capitalism will, ultimately, work its magic. Manufacturers will continue to build out their capability to meet demand. But, as dealers are forced to go to a different manufacturer to find a more accessible trailer supply, the market will fill. With a full market, the demand will drop, prices will go down and some manufactures that were in the market will cease to exist. One manufacturer that you thought wouldn’t fail will. One that you’ve never heard of will begin their rise to the top. This happens not just in the trailer industry, but every business that has ever existed in a free market economy. 10 The question isn’t what you can do. Instead, it should be how to protect your business as the market adjusts. In the beginning, like lemmings over the cliff, dealers will put in more orders and manufacturers will make delivery promises they can’t keep. Customers who promise they will wait, won’t, and dealers will end up with inventory they can’t sell when the overabundance takes place. The most important thing you can do is take a deep breath. Focus on what you can control, which is service and parts. With a demand for new trailers that can’t be met by the manufacturers, the need to repair and service existing trailers will become greater. If you haven’t considered the huge dollars your shop can produce and ways you can increase your service capacity, now is the time to focus on that. One technician, at $80 an hour, can produce $100,000 of gross profit in labor and parts sales if your shop is running at just 85%. At a 15% GPM on trailers, you would have to sell over $650,000 of new trailers to make the same amount of money. If your shop runs at 100%, you will need to sell over $750,000 in new trailers to make the same profit just one tech can produce out of your shop. I’m not advocating you stop selling trailers. However, now is the time to change your focus on what you can control and stop worrying about what you can’t. NATDA Dealership Performance Training program includes online modules and documented processes, so dealers can improve every aspect of their dealership – from the parts department to trailer sales. For more information and to sign-up, please contact NATDA at 727-360-0304. NATDA Magazine