5 Secrets to Improving Dealership Profitability


According to statistics, new car dealerships have increased by 1.6% every year from 2016 up to now. And while the industry seems to be growing, are the dealerships profitable? Only time will tell. Dealership profitability depends on profit margins, which tend to be pretty low compared to other industries. If you’ve just started a dealership or need to boost its profitability, here are 5 things you can do.

  1. Streamline Your Sales Process

To attract more customers, ensure that your dealership’s sales process is streamlined. By having a streamlined process, you save time, boost efficiency, and close more deals. A streamlined sales process is also a good training tool for new salespeople–it’s easy to show them what process to follow.

Having a good system in place will go a long way towards ensuring that customers are served fast and efficiently. As more people buy cars , the higher your revenue will be. A National Automobile Dealers Association (NADA) review showed that dealerships wrote more than 265 million repair orders, while service and parts sales were more than $111 billion in 2020. 

  1. Recruit the Best Talent

According to NADA data, dealerships in the US had employed 888,200 people as of April 2020. Managing talent effectively has a positive impact on dealership profitability. When you have a great team in place, your dealership can handle sales, repairs, and customer support without any problems.

Retaining the best talent also saves you money you would have spent recruiting new people and training them. Therefore, after hiring great employees, find ways to retain them and make them loyal to your dealership.

  1. Develop an Online Presence

Like other businesses, dealerships must have an online presence in order to reach more customers. Car buyers are increasingly using online tools to look for products and services before they make a purchase. 

You can’t rely solely on walk-in clients. Build a website that provides a great experience to your potential customers. When updating your website and social media pages, use car images HD that accurately represent the vehicles in your showroom to attract more customers. This strategy can help boost sales.

  1. Use Low-Cost Competitive Strategies

Adopt a low-cost competitive strategy to gain an edge. When your services cost less than the competitor’s, you may attract more customers and increase your revenue. Over time, you can introduce new services that will earn the business more money. This sales strategy gets clients to your dealership, especially if marketed well. Use it to your advantage.

  1. Use Tiered Pricing

Adopt a tiered pricing strategy for your cars. Based on your inventory, you can decide which vehicles need to be priced higher or lower. For instance, different versions of the same car model can be priced differently, based on their year of manufacture. This strategy minimizes the losses you make from unsold cars.

Managing a dealership that’s not very profitable can be frustrating. By adopting these strategies, you can turn your fortunes around and increase your dealership’s revenue.

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