Business Plans:
(continued)
Used Car Business Business Plan (Industry Description)
Industry Description
- Background of the Industry—Immediately following World War II, there were roughly nine buyers for every new car produced. Sales personnel merely had to find out who could afford a new car. "Afford" was defined as paying cash. This condition existed until the early 1950s when supply began to discover that some new terms were creeping into the retail salesperson's vocabulary. Words like "overallowance," "discount," "deal," and "terms." The emphasis, however, was still not on product but on price. In addition, the asking price was no longer final. There was also, if you could haggle a little, a taking price. It was possible to bargain with the dealer for the first time.
During the 1960s, other new merchandising techniques were introduced. "Sticker price," "fleet price," "hard sell," "50 over invoice," "high-powered advertising," and "free" accessories were but a few new innovations. The buyer was becoming better educated, better able to buy—thanks to 24- and 36-month payments—but still confused and fearful of price. "Good deals" became "bad deals" after talking to friends and neighbors. Caution became the watchword when buying a car.
The advent of the 1970s brought more confusion to buyers with new procedures like leasing, 48-month payments, credit unions, rebates, and consumer advocates. However, in defense of the consumer, books on "How to Buy a Car," "Invoice Prices U.S. Cars," and "Used Car Buyers Guide," were published and sold by the millions.
During the 1970s automobile salespeople became conditioned to the notion that customers were interested in only one thing—the very lowest price. The automobile showroom atmosphere didn't change very much from the 1970s to the 1980s. Most retail salespeople saw the business of selling automobile as an "us against them" hard-sell game. Those who sold popular Japanese products became arrogant and insensitive to their customers and those of us who sold American vehicles continued with the approach that price, and price alone, sells vehicles.
As the 1980s came to a close, however, the winds of change began to impact the retail automobile marketplace. Today, in the mid 1990s, the business of retailing automobiles is quite different than it has ever been in the past.
In today's marketplace, 5 out of every 6 cars sold in the United States are used. - Trade Association Assistance—Federal Register offers assistance with compliance guidelines for used car rules and (NADA) National Auto Dealers Association offers assistance.
- Industry Trends—Vehicle sales seems to be a trend with our Michigan seasons. While the sun is shining and the temperatures are warm, outdoor family activities become more popular, encouraging camping, vacations, and sight seeing. These activities increase the demand for minivans, station wagons, and sport utility vehicles. As the kids head back to school and the weather turns cold, road conditions deteriorate. This creates demand for a more rugged, durable unit such as light duty trucks and vans. The extra security of four-wheel drive is also more popular during this season.
- Number and Kind of Businesses in the Area in the Industry—There are four new car dealerships in Alpena that offer a line of used vehicles. There are also three used car lots in town offering a very limited selection of units.
- Major Influences on the Industry
- Government Regulations—An important regulation of the government is to obtain and maintain a class "B" license. The Federal Trade Commission also publishes rules and regulations for operating a used car lot. The used car rule has four basic components. (1) Prepare and display a Buyers Guide on each used vehicle offered to the consumer. (2) To include a special disclosure in the contract of sale. (3) To identify the final warranty terms in the contract of sale. (4) To give the purchaser a copy of the Buyers Guide that includes the final warranty terms.
- Business Cycle—Ups and downs go with any industry, but with the sale of used vehicles there seems to be more of a plateau. When the economy is good, sales are great. When the economy is sluggish, used cars are still in demand because of their price factor.
Resumes and Personality Profiles
