How Motor Dealers Can Increase Profit Margins

29 Nov 2022 Helpful Tips


Profit. It’s the most important word in business. If your dealership cannot generate a profit, you won’t stay in business very long. That bring us to the question, how can Motor Dealers Increase Their Profit Margin in 2022?

EasyCars has put together 5 Proven Ways Motor Dealers Can Increase Profit Margins in 2022.

1. Find Cheap Vehicle Stock Options

There is no two ways around it. A lot of your dealership profit’s margins will come down to how cheap you can source vehicles for. The cheaper you can source vehicles for, the more profit you will make when it comes to selling the vehicle later.

To source cars at the cheapest possible price, you need to seek alternative options. Try to avoid going to vehicle auction houses and other popular avenues, the reason being is the more competition there is for a vehicle the more you have to pay.

The best way to source cheap vehicle stock is by taking advantage of vehicle trade ins and more importantly reaching out to your past customers. Reach out to some of your past customers and see if they are or know anyone who is thinking of selling their vehicle. As they have already built a relationship with you, they may be more motivated to help you out!

Related Article: How Australian Motor Dealers Can Get More Vehicle Stock in 2022.

2. Review Your Vehicle Pricing

The Used Car Industry has changed dramatically over the last 2 years. Used Cars are selling for much more now than they ever have in the past. To increase your profit margin, you need to ensure your vehicles are priced appropriately to current market standards.

Before you begin pricing your vehicles for sale, do your research and find out what the industry median is for each individual vehicle. Along with this, jump onto some of the car classified websites and see how much similar vehicle are selling for. Once you have an idea of what you can charge and what customers are paying, you can adapt your pricing strategy to meet the industry expectations.

3. Increase Your Vehicle Pricing

This point needs to be assessed thoroughly before implementation. Another way to increase profit margins is to increase your vehicles pricing. The reason why you need to tread carefully when it comes to increasing your vehicles pricing is you can potentially shut yourself off from many buyers.

Before you consider upping your pricing beyond your current, it is important that you research and see if customers will be willing to pay that amount. There is no point increasing your prices to try to boost profitability and having cars sit in the yard for much longer than it would usually. The longer a car sits in stock the more you will have to pay.

4. Up Sell

Your selling shouldn’t stop when a customer purchases a car. To boost profitability, you need to expand your dealerships revenue streams beyond the initial car sale. The best way to do this in the Motor Industry is to up sell vehicle add ons like warranty and accessories.

Up Selling will give your dealership the ability to drive greater revenue from a customer than you usually would. You can offer add ons at a reduced priced with the aim of keeping customers spending at your dealership. Upselling presents a great avenue to drive greater profitability for Motor Dealerships in 2022.

Related Article: 5 Opportunities for Motor Dealers in 2022.

5. Limit Discounts

We get it, all dealers need to discount on occasion to get a vehicle to sell. There is nothing wrong with discounting to an extent, but you don’t want to go too far because all you are doing is digging into your profit margins.

To boost profitability, it is important not to discount your vehicles too much. Discounts will always be needed and is common in the Used Car Industry, but it is important that you set a limit and never go beyond that point!

Final Word,

Increasing Profitability is no easy task. To increase profitability your dealership needs to have a clear plan in place and adapts to the industry changes. The 5 examples presented are a few proven and great ways Motor Dealers can increase profit in 2022.

We hope you enjoyed reading this article! To read more articles like this, please visit the EasyCars latest news page here.

About EasyCars,

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.

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