December 16, 2020

The Key to Long-Term Gains

NAC Blog
NAC Blog

The Key to Long-Term Gains

The car business is challenging even in “normal” times; in a pandemic, it is even harder! Planning for and securing the future of your store is more important than ever, and leveraging today’s opportunities will ensure that your business enjoys success and security for years to come.

Despite the ongoing pandemic—and its effects on the economy—the auto industry has rebounded in recent months. Higher unit sales aren’t the only good news: according to November data, dealers’ average gross on a new vehicle sale is up significantly—by more than $800 per unit—versus a year ago. This is due in part to falling factory incentives and consumer preference for more expensive trucks and SUVs. F&I profits per unit are also rising for many stores, particularly as shoppers are confronted with economic uncertainty and are better able to see the value of products like service contracts. A study sponsored by Ally Financial this fall found that personal vehicle ownership is seen more positively by consumers as a result of the pandemic. The same study also found that vehicle owners are concerned about unexpected mechanical failures, both in terms of the disruption to their lives and the financial implications. These factors are great news for dealers, but ultimately represent short-term gains in a landscape riddled with uncertainty. In order to make the most of today’s income, successful dealers need to keep an eye on the future.

A recent survey of auto dealers reflects renewed confidence in the value of their businesses: more than 80% expect their dealership to hold or increase its current value. If you are preparing to sell or otherwise leverage the monetary value of your store, that’s one thing; but what if you aren’t planning to take that route? What paths to leveraging your store’s success are available to you?

These days, dealers have multiple options available to them when it comes to participation programs: profit sharing, reinsurance, and dealer-owned warranty companies all have their own advantages and selling points. Choosing the best one for your goals and risk tolerance is key to getting the most out of the profits you earn on today’s vehicle and product sales. The right provider matters, too: are there innovative or enhanced options for investing or growing your wealth? Consider the ability to access your funds as well: how much can you withdraw, how often, and for what purpose(s)? Understanding your options, knowing what your goals are, and choosing the right provider will enable you to capitalize on the success of your dealership in the present—and ensure its profitability in the future.

If you need help choosing the best profit participation and wealth-building program for your business, NAC can help! Visit our Profit Participation Programs page to learn about all the ways we help you grow your business, including with our newest program, Reinsurance Plus.

 

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