Now for the “gravy.” As we all know, the sales departments (new, used and F&I) are the most profitable when times are good. In the times we are in now, we need to streamline these departments as much as possible. This means keeping new and used vehicle inventories as lean as possible. The finance department needs to make the best use of the customer’s time and try not to over-sell. Doing so can result in lost sales instead of additional income. Keep “add-ons” to a minimum and sell what is easily salable—GAP, extended service plans and maintenance products. Make sure used vehicles, trades or purchases are on the lot and ready for sale within 48 hours of arriving at the dealership.
It seems like the first place all businesses look to cut is personnel, which isn’t always the best decision. But if after careful analysis and efficiency improvements, it is necessary to cut personnel, however unpleasant, it must be done in all departments. That extra person here, extra person there can add up in not only noticeable expense, but also hidden expense, i.e., worker’s compensation premiums, excess unemployment taxes, etc. We are a people-driven business, from the switchboard operator and cashier to the service advisor and so on. We must make careful and deliberate decisions concerning personnel, as well as the total expense structure.
Overall, if we treat these dealerships as regular businesses and not as “auto dealerships,” even in times such as we now have, money can be made. When car sales return to some sense of normalcy, running an efficient business will result in even higher profitability for you.