Quality. Customers. Employees. Profit. The four cornerstones (pillars) of a successful automotive dealership. While at first glance many managers may find these pillars to be common sense, any dealership struggling to make a profit or in the midst of turning a struggling company into a thriving resource for its community knows that what’s common sense for one is death for another. Let’s take a deeper look into each of these cornerstones and see what value they bring to your automobile organization.
Quality is something we may attribute to the automobile manufacturer and their ability to produce a quality car. While quality is important when producing cars, it’s just as important when selling them. At a car dealership, quality is found in the details many managers easily overlook. For example, being nice to people in the service department. Training employees to not only work efficiently, but to do their best and let the value they provide shine through to the customer.
Understanding the needs of your neighborhood and the possible changes in demographics over time is imperative to connecting with clients and building a solid base of repeat customers. This doesn’t happen overnight. Knowing your customers by name and treating them as more than a number is one strong way to connect with them individually and create repeat clients.
Human Capital is the name of the game in the car dealership business. Success in this one pillar is what separates the successful dealerships from those that continuously struggle. Employee development doesn’t happen through artificial intelligence (AI) or software management programs. They can’t touch the unique needs of the automobile industry as it changes as a whole, as each community changes, as generations change.
According to the National Automobile Dealers Association (NADA), the new-vehicle department of a car dealership accounts for about 58% of a dealership’s total sales but less than 26% of a dealership’s total gross profit. In addition to car sales, that figure also reflects profits from finance and insurance (F&I) products sold on new cars. The used-vehicle department represents only about 31% of a dealerships’ total sales, but profit is close to that of the new-car department: nearly 25%. of a dealership’s gross profit. Most of the profit comes from a car dealerships service and parts department.
The cookie-cutter training that comes from the manufacturer only fixes surface level issues – by its very nature it can’t go in-depth and address underlying issues of cultural, geographical, and historical identity that’s unique to every community.
Investing in your employees and creating human capital, building long-term relationships with customers, and ensuring there is high quality in the details is what builds a sustainable automobile dealership. A car dealership that is profitable, contributes to its community, and is a positive source of employment in its neighborhood.