Friday, December 27, 2013

It Is Coming

Unless I can't count January 5th will be the century mark to retirement and the real countdown will begin.  There was a time when I never thought this day would arrive.  And I guess I really shouldn't call it retirement because it is more like a life style change.  Retirement used to mean the end of a meaningful life.  No more work so many became depressed and just gave up.  Not so much anymore.  Retirement means less income but it also means less work.  No more getting up early to be on time.

Then there are the advantages that include such things as hobbies, projects and meaningful help around the neighborhood.  There is traveling.  Our first trip is already mapped out and will include our grandson as we previously promised.  We will leave Federal Way and travel south to Baker City, Oregon.  From there we travel to Hells Half Acre and then on to Yellowstone.  We'll wrap up the trip by visiting Glacier National Park and Spokane and then back to park the trailer at Gold Bar.  Almost 1900 hundred miles.

My two wheel drive Chevrolet Silverado will get a work out on this trip.  I have been looking at new trucks with all the fancy equipment and mirrors for trailer towing but while it is nice to drool there is no plans to replace our current truck.  We need to get new tires for the truck and the trailer and I would like to find some nice seat covers.  Other than that I don't see any need to spend anymore to hit the road.

We have made a decision to give a young fellow we hired a little over a year ago, the opportunity to take my place as I travel off into the sunset.  As of January 2nd I will step down as the parts manager, putting him in the hot seat and acting as consultant, advisor and parts counterperson.  While I will technically still be in charge I am changing my hours to 4/40 working Wednesday thru Saturday.  It will give me a little more time off and I will experience what some folks call normal working hours.  He has a great attitude and wants to learn so I think he will succeed.

There are some that don't like the idea that I am leaving and others who can hardly wait.  The business has changed so much in the past few years and I frankly see many more changes down the road that will effect how many dealers are around.  Our business relies a lot on the profits developed by the parts and service business.  Sales has long ago changed their business model.  Manufacturers now attach incentives to volume sales which causes dealers to become cutthroat.  Some sell at or below their cost in hopes of meeting the volume bonus mark and that causes other dealers to do the same thing in order to compete.  Dealerships do everything they can to keep customers coming back for service and parts to cover the overhead expense of operating the dealership.

A good percentage of the parts business comes from selling to mechanical and body shops that repair vehicles.  Collision repair parts account for a good percentage of the dollar volumes in this business.  As the vehicles become more sophisticated I can see them (the vehicles) protecting us against ourselves with all kinds of crash avoidance systems.  If we don't have crashes, we don't sell crash parts.

The other side of the coin will hit in the service drive where your friendly advisor writes up and suggest repairs or maintenance that maybe required for the safe operation of your vehicle.  They give you car 16 or 20 point inspections each time you come in and make recommendations (upsell) you on services that might need to be done.  Sooner than later the connected car will arrive and consumers will only buy those services recommended by the vehicle via the manufacturer.  Chevrolet has this with the On Star system.  The system monitors your vehicle and sends emails regarding needed services or issues with things like the tire monitor system.

All of these changes will cut into dealership profits.   In case you are wondering the vast majority of new car dealers work with a pretax net profit of 2.2% of sales dollars.   A dealership selling a total of $2,500,000 will have a pretax profit of $5,500 if everything is run correctly and expenses are closely monitored.  That is not a lot of money when you consider the amount of money a dealer has invested in property, buildings, and inventory.  A dealer could take their dollars and invest them in many other ways that would pay as much or more with less headaches.

But these changes are still a ways away and I expect the whole business model will change at some point, long after I am gone.

I am off until the beginning of the New Year and other than a doctors appointment today, I have nothing planned.  Thanks for dropping by.

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