Anyone working in the retail automotive industry, particularly in a car dealership, are aware of how fleeting dealership profitability can be. Especially in times of economic uncertainty. 

I’ve been speaking to many a car dealership all over the country in the past year. Even where revenue has grown and business has expanded steadily. Consensus seems to be that expenses have grown just as much if not more.

Growing revenue as a car dealership is one thing but declining profitability is not great for any business.

Automotive retail is a costly business

Franchised dealers (read: 3 used car best practices, that new car dealers should adopt) are all too familiar with how expensive it is to maintain showrooms to OEM standards. But, regardless of dealer type, the challenge to move stock quickly and other obligations are just as costly. 

Thin margins don’t help

In recent years, new car retail profit margins have gotten thinner and can be as low as 0% but probably as thin as 2%, with aftersales margins probably at between 3% and 5%. There is almost no wiggle room for the unorganised. The car dealership has to operate efficiently and like clockwork or losses are quickly made.

Times have changed, but it’s still possible to thrive. 

As many of you who have followed me for a while already know, I believe that the car dealership psychographic mind set shift is where the gold is. The car dealership with experienced people and the right mind-set can reap massive rewards even in our flat economy.

Here are four strategic moves I would recommend to increase revenue & profitability:

  1. Focus on where customer (In-Market-Car-Shopper) attention is right now and communicate to their context

With customer attention just about maxed out, we constantly need to find new ways to get their attention and gain their trust – the automotive space is no exception. 

While there are many things, like technology, that have completely changed the game and continue to make the industry move at an extraordinary pace, there are also some fundamental things that don’t change over time. 

This makes customer attention even more valuable now than ever before, but it is becoming increasingly more difficult to acquire. This is why monitoring customer behaviour is so important. Once a car dealership knows the context of their car buying customer, it’s easier to get their attention. 

There is no such thing as communicating in a “one size fits all” fashion any longer. You need to communicate with your different customer segments differently based on their context!

  1. Be present online 

It’s a well known fact that car buying consumers now spend considerably more time online researching their next car, this makes the illusive in-market-car-shopper ever more anonymous. Consumer anonymouty is getting to a point there now they only visit an average of 1.2 car dealerships before buying a car.

The car dealership that is present online, all the time, everywhere, in the context of the consumer, will make more car sales (given a couple of other nuances around price transparency and car dealership “sales people’s” selling techniques)

We can no longer count on would-be car buyers devoting their time driving from dealership-to-dealership, including yours. You must be marketing to them in context.

Make sure you have a solid online presence, presenting your vehicles with the best possible images (this is another whole discussion), you are more than likely going to attract the right customer attention, ultimately driving them into your dealership.

Top Tip: Make sure your dealership website homepage, contains the list of cars for sale, so that consumers can start a search immediately on arrival. They are there for your cars, not your home page.

  1. Offer your own complimentary after-sales services

It’s estimated that 80% of a company’s future revenue will originate from its current core customers. So keep your current customers happy and they will be more likely to buy again from you. which means that, they’re extremely profitable for your business. 

Moreover, Customer Lifetime Value calcs teach us, loyal customers are worth up to 10 times as much as their first purchase. Cars are no different and arguably more valuable.

Find ways to make the customer loyal and sticky. It’s great news you sold a car to a brand new customer, but your dealership’s bottom line truly wins when you give him a very good reason to go back to you for recurring service, repair or even good coffee. 

  1. Engage with your customers after the sale

    E-mail is a dying antequated communication platform. Everything is moving to voice, but currently, we are on that journey. Find out what your customers preferred social media platform is, engage with them there. This take effort and very hard to automate. A generic email banged out every week to all customers in the database will become wallpaper if not used along with other forms of communication. Social media is the best place to keep you top of mind between purchases.