Big Drive Auto

Running head: BIG DRIVE AUTO 1

Big Drive Auto

Big Drive Auto is a large scale dealer of cars and trucks. BDA offers repair services for

vehicles and sells repair parts. The company also sells motor oil, coolant, and replacement tires.

BDA is a multistate dealer and has been keeping data on the volume of sales in its various lines

of business for the past 10 years.

While reviewing the sales data, BDA’s vehicles sales spiked in 1999 (160,000 units) and

in 2003 (167,000 units) and gradually declined during the three years following the two peak

years. This can be attributed to the tough economic times that the country was going through

at the time. Because of the tough economic times there were more people out of work and

not purchasing new vehicles. People are hesitant about spending money on large purchases.

Customers are keeping their cars longer during this period. This explains why the

revenue for service has been constant during the same period. Tire sales, along with the sale of

coolant and motor oil also remained constant during this period because people cannot afford to

buy a new vehicle.

It is the recommendation of Learning Team B that BDA keeps the price of its vehicles

consistent with the competition on comparable models. These prices should remain until the

economic conditions improve. Keeping the prices low will ensure that people who can still

afford to buy a new vehicle will continue to do so. The lower prices will also keep existing

inventory from piling up at the dealerships.

Learning Team B also recommends the increase of all maintenance fees by 15%, people

are keeping their cars longer increasing the maintenance fees will generate additional revenue for

the company.

Learning Team B further recommends that DBA increase its advertising by 10% during

the upcoming year, this would help with non-price barriers. Advertising should emphasize that

BIG DRIVE AUTO 2

BDA's prices have remained low during the recession. Future...