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5 Ways to Increase New Car Sales in a Down

Updated December 5, 2014

Oh, how the mighty have fallen. Dare I say it but I believe there might be a curse involved in being the world’s number one auto manufacturer. As of this writing, Toyota sales are in a tailspin thanks to a nasty recall and competitors like Ford, Honda and Hyundai are picking up the scraps. Even GM, who was once number one and went bankrupt, is seeing a sales gain thanks to what happened to Toyota. Eventually, however, automakers will need to realize that short term fixes to long term sales problems (“cash for clunkers” comes to mind) are not the answer. The auto industry is at a true crossroads and only the true innovators will survive. Here are five tips for helping to spur new car sales in a depressed economy.

Stop the Government from Mandating Innovation – When a national economy is in the skids you first cut taxes to spur business expansion and you never, ever introduce sweeping emissions and fuel economy standards that current technology does not support. Are car engineers supposed wave a magic wand and poof all the particulate matter and gas-guzzling will go away? Car companies will do what consumers demand of them. Consumers wanted big, heavy cars with powerful V8s and 19 airbags just a few years ago. Now everyone is concerned about pollution and the environment and car makers are stepping up with vehicles to cater to that market. Some manufacturers are selling clean diesels, others hybrids and it seems everybody is looking for that next big “alternative fuelled vehicle” mega-hit. But if you make it legally impossible to manufacture a 7 passenger SUV with a V8 for someone who wants it you are denying automakers a profit. The equation is simple. If an automaker has more models to sell the more likely it will turn a profit. And do we really want to bail out GM again?

Cut Dealerships With Terrible Customer Service Ratings -Automakers really need to check into this thoroughly as many car dealers cheat by offering customers a “free car wash or oil change” if they bring in their post-sales customer service questionnaire (CSI Report). Then the dealer fills out the survey themselves with perfect scores and sends it in to the manufacturer. (Trust me it happens every day. I used to work at car dealerships.) Not all dealerships do cheat like this, however, and many dealers take pride in knowing new car buyers are being offered a positive, state of the art shopping experience. These dealers who are honest innovators (find out by VISITING dealer randomly) should be kept and all dealers that are not up to standard should be given 6 months to improve. If they continue with negative customer service a manufacturer should end their business relationship with that franchise. (GM and Chrysler had to do it but the effects have been mostly positive barring some lawsuits.)

Attract New Car Buyers By Adding Standard Long Term Warranties -Many new car manufacturer warranties have lots of limitations and fine print like the fact that the 10 year/100,000 mile powertrain warranty in a Hyundai/Kia not being transferrable to the second owner. That devastates used values for Hyundai/Kia models even though this car company has the reliability rankings to prove its vehicles rarely even need to use that long warranty. The key here is that a car maker must have good quality and be willing to back up their new cars with at least 5 years full warranty coverage and 10 years/100,000 miles of coverage for the engine and transmission. This will show customer’s that they have a “friend” at the automaker and that they are “taken care of” for what most likely will be the length of their lease or finance contract. (Note: People hate nothing more than paying for repairs when they are still making car payments.) Also, automakers need to make the warranty fully transferrable so when the customer sells their car down the road they will get more of their money back. This positive feeling will probably lead this customer back to the same dealership and like magic there will be a repeat sale!

End Incentives and Just Sell New Cars at One Real Price – Nothing irks new car buyers more than feeling like they are paying too much for a new car. This feeling is made worse when a person buys a car and then the automaker releases a $5,000 off MSRP scheme the next day. How about just lowering the prices of your car line-up permanently and announce an end to “rebate programs.” People would be intrigued by the sheer honesty of it all and media coverage of an “honest automaker” would help increase showroom traffic. If an automaker wants to create a lease or finance rate that is special announce that this is a permanent offer that will never be changed. Customers don’t mind paying for a new car they just don’t want to feel like they paid too much. Gimmicks Work!-Hyundai proved that the use of promotional gimmicks work when they were one of the few worldwide auto manufacturers to see sales grow in 2009. Some of them like the “Get $300 a month for 3 months” deal were dumb but with the state of the U.S. economy it was brilliant on their part to offer a very special vehicle buy-back scheme. The company guaranteed it would buy back your new car within the first car if you lost your job. That offer made Hyundai seem like not only a manufacturer that truly cares about its customers but it also captures the unique zeitgeist of the 2010 new car sales market. People are uncertain of their economic future and they want an automaker to insure them that it will all be okay if you buy one of their cars. What new car manufacturers need now is to be more clever and creative when it comes to attracting new customers and as this Hyundai sales gimmick proved the simplest answers are always the best. Honesty, simplicity and directness are all new car sales tactics that can improve both short term and long term sales growth. Because we all know Toyota won’t sit idle for long.

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Chris Riley
About Chris Riley

I have been wrecking cars for as long as I've been driving them but I keep coming back for more. Two wheels or four, I'm all in. GearHeads.org gives me a chance to give something back to the automobile community.

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