The 7 Habits Of Highly Profitable Dealers

BDO’s specialisation in the motor industry gives us extensive insight into the habits of highly profitable Dealers.
Aside from the vagaries of franchise performance, investment in facilities or activity by PMA; these are the key drivers behind a highly profitable dealership that we’ve observed.

1. Be Process-Driven

The most significant habit is having a process-driven culture. Top Dealers operate in an environment where process is not optional and the key driver is the discipline to sustain such policies. Dealers should foster employee ownership, explain their vision and involve their teams in the design and articulation of their processes.

2. Manage Stock

Almost every challenge and opportunity can be traced to stock. Constantly review the stocking and ageing policies and review your return on investment on vehicles. The best Dealers have the cleanest and best-aged stock. They also ensure their used cars are available for viewing on the internet within hours of coming into stock and are fully reconditioned within three days. Furthermore, with daily ordering of parts, why is it necessary to hold such high levels of stock?

3. Forecast Smart

Spend time setting monthly expectations. On review, you should drill down to individual levels, monitor them regularly throughout the month and take corrective actions as required to ensure you hit targets.

4. Retain Customers

Dealers need to ensure that they have effective Customer Relationship Management (CRM) processes. Customers approaching end of warranty, end of finance terms and manufacturer’s service intervals must be identified and engaged with. Effective processes must be engaging and frequent. As with all effective processes, a dealership’s CRM activities must be compulsory rather
than optional.

5. Retain Employees

There is a direct correlation between retention of staff and productivity measured as a gross per employee. This relates to the culture you embed in your dealership, as noted in point one.

6. Invest in Training

There is a direct link between profit and the amount of time and effort Dealers invest in training their people. It is evident that giving employees a clear career path and room to advance is a key differentiator for the top-performing groups.

7. Embrace Technology

The best Dealers use technology to amplify and enhance processes and strategies rather than let it drive their business. The importance of an up-to-date Customer Relationship Management (CRM) system is one of your most valuable assets. Therefore, you should ensure that there is full, dealership-wide commitment to data collection and management.

Mark Ward
Partner, Automotive – BDO

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