It’s the question that every business owner asks. How can I increase profit?
In this article, we will explore 10 proven strategies that your dealership can use to boost profits in today's competitive automotive market.
Whether you're a seasoned dealer or a newcomer to the industry, these tips will provide you with a base on ways you can increase profitability at your dealership in 2023.
Let’s get into it!
1. Diversify Your Vehicle Inventory
A mistake that so many dealerships make that hinders profit margins is only stocking one vehicle type. The problem with doing this is it limits your potential customer base. No two buyers are the same, to reach the greatest amount of car buyers it is important to diversify your vehicle inventory.
Research the market, see what vehicles customers are buying and try to find ways to source those vehicles to sell. The benefit of offering a wide range of vehicle options, from different makes and models and at various price points, is it will broaden your customer base and will increase your likelihood of making a sale which in turn will generate more profit.
2. Focus on Upselling
The Vehicle sale itself shouldn’t be your dealerships only focus. The reason being is, there is only a certain amount of profit you can make off a vehicle sale alone.
To increase profit margins at your dealership you need to find and implement new revenue streams. One of the best ways is to upsell things like, vehicle accessories, warranty options and even servicing packages. Upselling will increase your transaction value and profitability!
3. Offer Competitive Financing Options
Finance is a huge part of the Car Buying process. Without finance most customers can’t buy. The reason why so many customers overlook dealer finance is because many dealer finance options are not competitive.
Providing attractive and competitive financing options will lead to greater finance conversions which will ultimately increase your transaction value and profit margin generated off a vehicle sale.
4. Enhance Customer Experience
When it comes to buying and selling cars, customer service is the key! Buying a car is a massive decision and shouldn’t be taken lightly.
To increase your dealerships profit margins, it is essential that you provide the best and most welcoming customer service experience. Providing excellent customer service and building relationships with customers can lead to repeat business, word-of-mouth referrals, faster sales, and increased profits!
5. Use Online Sales Channels
Don’t understand the importance Online has on Vehicle Sales? Studies have shown 95% of Australian Car Buyers use the internet to find what car to buy and more importantly who to buy from.
Expanding your dealerships online presence through channels like your Dealership Website, and social media profiles will attract a wider audience and increase sales opportunities.
6. Offer Incentives and Run Promotions
Let’s face it, to be successful selling Cars in Australia you will need to offer incentives or run promotions. Offering special incentives or running a promotions creates a sense of urgency for buyers and encourages them to take action now and not wait until tomorrow.
Creating a sense of urgency for buyers can and will lead to faster sales which ultimately increase cashflow and profit levels.
7. Reduce Costs
It’s no secret that costs are rising and will continue to rise. One of the fastest and easiest ways to improve profitability in any business is to reduce costs where possible. Identifying and implementing cost-saving measures, such as reducing overhead expenses, and improving staff efficiency, will help increase profits margins almost instantly.
8. Provide After-Sales Services
Another key mistake that so many dealerships make is losing contact with a customer after the time of a vehicle purchase. There are so many ways your dealership can continue to generate revenue from customers beyond a vehicle sale itself.
Offering after-sales services, like as maintenance and repairs, insurances, and extended warranties, will generate additional revenue streams and increase profitability beyond current levels.
9. Explore New Markets
You should never limit yourself to one audience or location. The reason being is it limits your earning potential.
A great way your dealership can increase profit margins is by Expanding. Expanding into new markets or starting another dealership can open your doors to more potential buyers and new sales opportunities!
10. Build Partnerships
One of the best ways to drive more revenue at your dealership is by leveraging and building relationships with other companies. For example, your dealership can collaborate with Finance companies, insurance companies and everything in between.
By selling a partners product at your dealership you will earn commissions for your services and increase profit margins beyond your traditional vehicle sale!
Increasing profits is essential for any business. To thrive in today's competitive automotive industry your dealership needs to constantly look for new ways to drive revenue and scale profitability. The 10 tips presented are few proven ways your dealership can maximise profitability and achieve sustained success in the ever-evolving automotive market.
We hope you enjoyed reading this article. To read more articles like this, please visit the EasyCars latest news page here.
EasyCars by Jeal is an Australian, web-based, dealer management system that automates the buying and selling of motor vehicles. Using the latest technologies, EasyCars removes frustrations experienced at the dealership and opens your doors for greater growth.
EasyCars features include Simple Stock Management, Automated Advertising, Integrated Accounting, Government Compliance, Business Reporting, Facebook Automotive Inventory Ads, Reviews Management, Dealership Websites and more.
To learn more about EasyCars Dealer Management System or to arrange a no-obligation free demo, contact us today on 1300 473 744 or submit the form below.