JUST as we were starting to see green shoots appearing in the market with improved house prices and extra car buying liquidity from the secondary market, we are impacted by the coronavirus.

Although this is significant, we hope it will only be short-term and we will see a solid rebound with pent-up demand and strong government incentives.

Considering the market conditions for the past two years, it is a positive that many dealers had already reduced their expenses.

In managing your business through COVID-19 pandemic there are two main considerations:
1. How do I conduct my business in a safe way for my employees?
2. How do I maximise any chance of earning revenue during this period?

Conducting business in a safe way:

1. Communication is critical in times of uncertainty.
   If you leave a void of information people tend to naturally fill it with rumour and it’s usually all bad news. Set up robust communications channels that people can rely on. This could be a daily email at the same time each day, conference call or a notice in the workshop.
2. Be open to suggestions.
   As the owner or manager you do not have to have all the answers. Have brainstorming sessions if you need to work out complex problems. The answer may come from an unexpected source.
3. Create a taskforce.
   For large organisations a taskforce can be a representative group of people to manage the crisis including communicating ‘up the line’.
4. Determine any role that can work from home.
   There are not many roles in a dealership that can work from home. Some administration tasks can as long there is a carrier system that can deliver the work to that person; ie. the parts driver takes deals to process to the admin clerk’s house.
5. Consider the ‘teams’ approach.
   Large organisations including KPMG are employing a ‘teams’ approach. Put simply, the workforce is split into two teams with each one working either in the office or remotely for the week and then they swap. This ensures continuity of service to our clients and greatly reduces the chance of spreading the virus. The added benefit of this is having half the workforce avoiding public transport.
6. Protect those who can’t work from home.
   For those roles that can’t be done remotely consider protection protocols such as rearranging the workspace and maintaining a distance from the public. Make available protection equipment. Schedule sanitising for workspaces.

Maximising revenue during a virus pandemic:

In recent conversations with our clients we have found that many dealers are still being visited by customers, particularly in the service department. Based on the announcements by prime minister Scott Morrison, it seems to be the view of the federal government that a total shutdown of business is not the preferred approach.

It is therefore fair to think that dealers will have the choice to continue to operate as usual each day. Considering that very few of dealer expenses are variable (increase or decrease with revenue), the cost of business will need to be covered as much as possible during this period whether revenue is created or not.

Therefore, dealers need to maximise every dollar of revenue available to them.

Here are some points to consider:

1. If a customer walks in to look at buying a vehicle, they are serious. Treat them like royalty. Thank them for coming in and spend as much time with them as they need. Now more than ever the term ‘tyre kicker’ is redundant. Your manager needs to meet each one of these precious customers and ensure they are given the right experience and every opportunity is made to facilitate a sale.
2. Ramp up your online activity. Many customers will be at home constantly monitoring social media channels. Tap into these channels and monitor closely so that customers can interact directly with someone at the dealership.
3. Customers who enter your dealership will most likely want a large discount or a ‘win’ given the environment. The biggest win they can get is the ability to buy the car. All cars are imported, factories overseas are closing, and stock supply shortages will begin and run until Christmas at the earliest. Therefore if they would like a new car, you have one they can buy today. No-one was worried about toilet paper three weeks ago!
4. Service is still strong and customers who are working from home have more time than usual to get their cars serviced. Customers may wish for their vehicles to be picked up and dropped off. Best to find a way to make this happen. Salespeople can be used to assist. Ramp up your service booking calls. Make sure they are calls, not emails or SMS, as a personal touch is more important now than ever. Offer a discount if need be to bring in the bookings.
5. Buy used cars. Don’t miss any purchase opportunity and if necessary pay overs for them. Without a guaranteed supply of new vehicles, used cars will become sought after and a lower average GP is still better than trying to sell thin air.

As we progress through this pandemic the fluidity of the situation will require us to adapt and overcome – something our industry has done time and time again. Our team will continue to share any further tactics which may be beneficial to you and your business.

For further assistance please do not hesitate to reach out to our team at mis@kpmg.com.au.

Joel Shashoua is a director of Motor Industry Services at KPMG.

By Joel Shashoua