In a recent blog post for Auto Remarketing, Dale Pollak identified three areas that often pose efficiency challenges for many dealers. These areas could be impeding your dealership's performance and profitability.
Three Areas that Pose Efficiency Challenges
Pollak, the chairman and founder of vAuto, Inc. and a leading authority on dealership management strategies, believes that it will be tough for dealerships to match the success that was enjoyed in 2015.
While he believes it will be still be a robust year, he doesn't necessarily think that dealerships stand to be as profitable. He cites three factors for his reasoning: the ongoing compression of front-end margins, supply and demand imbalances, and market volatility.
In light of this outlook, Pollak is calling for dealers to take an impartial look at and review of their operations:
"The goal is to identify, and then work to eliminate, operational inefficiencies that currently impede dealership performance and profitability - and will only get worse if left unaddressed."
Here are three areas that pose efficiency challenges for many dealers:
- Inventory Age
Inventory supply and demand imbalances can create a lot of problems and hurt profitability. New or used, you don't want aging units taking up space and wasting your money. Finding new ways to become even more "age-aggressive" is challenging, but necessary. There's always something to try - customer incentives, ideas to keep your sales staff focused on aging units, incentives for your salespeople, etc.
- Transaction Times
The ongoing battle with transaction times has long been an Achilles heel of the industry. Studies show that buyer satisfaction increases if they spend less time in the sales process, but the start-to-finish transaction time remains lengthy at most stores. Pollak recommends that dealers re-think the stages in their sales processes or try to shift a greater portion of each transaction online. Set goals to try to reduce your average transaction times by a certain percentage and work to achieve them. Not only can you improve customer satisfaction, but if you are selling vehicles in less time, you are giving your salespeople more time to sell more cars.
- Employee Turnover
When you see the staggering statistics of employee turnover in the car sales field, it's hard not to think that dealers would sell more units and make more money if they weren't always trying to hire new people. Turnover is disruptive and costly, so you have to make an effort to reduce it. And it starts with implementing (or improving) a positive culture at your dealership. To combat the alarmingly high turnover that is common, Pollak suggest that you implement clear paths that promote longevity and loyalty, invest in management and mentoring programs, and lengthen and intensify your hiring process.
Improvement in any of these three areas could lead to better performance and profitability for your store.
Another Profit Center to Consider
Auto Credit Express has many great dealer products and solutions that can help you combat areas of inefficiency and increase your profits. There's a reason why we are the preferred lead and subprime software provider for many of the most successful special finance departments in the U.S. and Canada.
For more information, get in touch with one of our special finance experts by calling 888-535-2277. Or, you can fill out our easy and convenient contact form online and then we'll get in touch with you. Get your dealership on the fast track to maximizing your profit potential.