Car dealerships are the heart of the automotive industry. It is where many of the industry’s transaction takes place. As a result, the majority of the revenue made by this sector is gained from dealerships. Despite this, some dealerships still tend to struggle to reach the revenue they want.
Before we start helping you improve your car dealership, we’ll have to set a benchmark for what is considered to be a low-performing dealership. The average dealership earns annual revenue of $59.6 million. These dealerships sell an average of 1,045 cars annually. If you think that you are close to this benchmark, maybe a couple of millions off or a couple of hundreds off from cars sold annually, then your dealership is fine. However, if you are way off from the averages, then you’re going to need some improvement in your dealership. Here are some ways you can improve your car dealership.
Offer New Services
One of the greatest mistakes that dealerships make is that they stick to selling cars instead of gaining sales from other forms of revenue such as repair. Did you know that 259 million repair orders were done in 2017? Your dealership could have gotten a decent amount of profit from that if only you had the service. This is why you should consider offering new services to your clients.
There are many services you can offer your clients for your dealership. For example, many car dealerships offer auto-detailing and repair services. Many car owners want better detail on their cars. Some might even look for better upholstery. These are revenue streams you aren’t taking advantage of, so make sure you offer other services in your dealership. Furthermore, having other services ensures that you’re earning money no matter what. It means that your dealership is operating every day and that you don’t rely on car sales to keep you afloat.
Remember to keep your dealership operating. Don’t wait for car sales. You’ll have to get revenues elsewhere. Having new services will ensure that no matter what, you’ll have a constant revenue stream.
Do Trade-Ins
Many dealerships earn decent cash from simple trade-ins. But it’s quite surprising to know that there are still some dealerships that don’t have a trade-in feature.
Trade-in might not be your goal right now, especially if you’re primarily selling brand-new cars from manufacturers. However, it should be something that you’re thinking about in the future. Without trade-ins, you’re missing a lot of profit in the industry. It’s been reported that dealerships earn $2,000 from trade-ins alone. $3,000 more on selling add-ons and helping their clients take a loan. This is a decent chunk of cash that can help you gain that $50 million average revenue that other dealerships get every year.
Imagine if you start doing trade-ins right now. You’re missing out a lot by not having this feature in your dealership, the same way you’re missing out on revenue from other services.
Sell Used Cars
Car dealerships take the lion’s share of used cars sold in the industry. About 60% of sales made in dealerships are used cars. There is a huge chance that you’re not gaining that much income is because you’re too busy selling brand-new vehicles.
It is certainly true that selling brand-new vehicles from respectable manufacturers can gain you a decent profit. However, brand-new cars aren’t easily sold. You might sell a couple of these to keep your dealership afloat, but chances are, you’re not selling enough to grow your business. Not many Americans are willing to spend thousands of dollars on a brand-new vehicle. Some are looking for a cheaper alternative: a vehicle that has been used but not for a long time. There are also thousands of Americans looking to sell vehicles such as this through trade-ins. This is why both trade-ins and selling used cars go hand-in-hand in dealerships, and you won’t see one without the other.
Once you start selling used cars, you’ll start to gain profit you might not otherwise have without it. You can quickly earn a couple of million dollars from this feature alone. You can also help your neighbors, family members, and friends to sell their old cars. Moreover, this gives you access to old cars you can restore for a decent profit. You can start selling old sports cars in your dealership, which is quite rare in the industry.
These are just some ways you can improve your dealership today. These improvements will ensure that you can gain a decent amount of profit to help you reach the average or more than the average of what dealerships earn every year. Try integrating all or some of these improvements to make your car dealership grow throughout the years.