It is clear that we now find ourselves in a period where gross profit averages are diminishing…at least with new vehicles. The reasons for this are many and are not really important to discuss in this forum …the facts are the facts.

What is important is that we find a way to created additional car deals from people who already do business with your dealership ...our Parts and Service customers.

According to JD Powers, the average age of a vehicle on the road today is just under 12 years old….and the average ownership cycle is currently 6 1/2 years.Both of these trends are increasing.

The increasing cost of automobiles, coupled with extended term financing, has created these trends. People are simply keeping their automobiles longer.

Obviously, this is not good for retail automobile dealerships. We used to enjoy selling two vehicles to customers over a 6-7 year period …now (on the average) it is just one. Now consider the lower gross profit averages and this is real problem.

But the problem does not stop there. If we are to simply wait for the natural(average) trade-in and ownership cycle, the vehicles we will be trading for are older and will have more miles than most of our clients are searching for…and certainly would limit the number of vehicles qualifying for lifetime warranties.

This is why 2-5-year-old used vehicles are breaking the bank right now. With the exception of a bulk of lease returns and repos potentially hitting the market, this trend is likely to continue.

The “VIP VEHICLE EXCHANGE PROGRAM” will not only shorten the ownership cycle with our customer base, but it will provide your dealership with increased inventory of late model year/low mile vehicles that you bought right …but will create many more benefits.

The concept is relatively simple and yet without a process and game plan, difficult to execute.

We will be “Swapping Keys” with people in our service department using equity mining tools for our customers and identifying desired vehicles from customer who service with you but did not buy from your dealership (about 35%-40% of your Service Customers).

This process will be much more sophisticated than directing salespeople to: “Go work the service drive” and will require a dedicated staff to execute.

We will use research and proven word tracks set up by service advisors to set the table for our “Exchange Specialists”.

My guess is that salespeople will be lobbying to work in this area within 90 days of the launch. But before that, let’s examine just some of these benefits.

I am sure you will be able to identify additional benefits. Let’s talk and look at the potential financial dynamics of this program for your dealership.