Cut Costs, Not Headcount, to Improve Dealership Efficiency

If you’re managing an auto dealership, you’ve got a lot on your plate. You need to find ways to spend smarter, cut costs, and meet the high expectations set for your buyers. Dealer Principal Owners and General Managers also must balance the high cost of technology with the people-side of running their business.

It’s not an easy process. And you still need to build a better customer experience for your buyers amidst a constantly changing environment. Sound troubling? It’s also expensive. Yet, dealers who fail to build an efficient business will miss out on the chance to sell and service vehicles to customers who can, and will, take their business elsewhere.

Before you panic and begin cutting back on the people who do the work providing the experience for your customers, take a moment to better understand the true cost of running your dealership. 

How much is technology really costing you?

The National Automobile Dealers Association (NADA) released a study in 2017 estimating the average dealership uses 6.8 different technology systems to complete every transaction. And that was prior to 2020, and prior to when nearly 75% of franchise dealers moved to a fully digitized retail environment due to the pandemic, based on a Cox Automotive Dealer Sentiment Survey. You need technology in order to run your dealership. But, disparate systems come with a hidden cost.

First, based on the lowest estimates, if your dealership is anywhere near these averages, you could be spending an extra $42,000 each year on just the integration fees to run these technologies. (Want to uncover the hidden fees lurking beneath the surface? Let’s do the math—plug in the numbers in this DMS integration fee calculator.)

Second, a non-linear buying process simply creates more opportunities for deal-breaking decision points. If your dealership is running on disconnected systems, consider the many hand-offs creating frustration for your customers. A study by AutoTrader revealed that customer satisfaction drops severely after the first 90 minutes a buyer spends in your dealership.  

How much does turnover cost?

Turnover and retention for dealerships has, and will continue to be, a top issue. Replacing team members can lower morale, cause scheduling conflicts, and disrupt your day-to-day workflows. But, it’s also a huge drag to your dealership’s bottom line. Research done by DrivingSales estimates that for every employee who leaves your dealership, you stand to lose $45,000.

Dealers who are able to reduce turnover and keep team members on the payroll for longer start to see instant savings. Rather than the constant flow of cash spent on recruiting new employees, training and onboarding, lost productivity for new, inexperienced workers, and lost continuity with customers, your dealership could forge ahead of the competition in no time.

How can connected technology improve time management?

It’s difficult to put a number on lost productivity and time management. You could be spending hours or weeks each month on reporting or training that builds over time. Or, your team might waste productivity constantly rekeying information into multiple systems. It’s hard to track, yet, when the accounting team at Budd Baer Auto Group switched their old payroll management system over to Payroll powered by Netchex, they literally won back weeks of time at the end of the month.

“We used to have to custom report or hand-create reports,” said Bryan Baer, General Manager Budd Baer Auto Group. “Now we can just click download and five minutes later we’re onto the next task. If I had to guess, we won back three to four labor days in a month.”

That’s two weeks of time to spend on skills development, two weeks to dedicate to onboarding, two weeks of time to devote to… you get the idea. Friction points between systems are a major time-waster, and your team’s time is valuable. When you improve workflows, you give your employees the ability to improve upon their careers in ways that help everyone succeed.

Investing in your team is the long game that results in high yields. Training, building trust, culture, and loyalty is an investment that improves everyone’s experience at your dealership. Want to experience the unexpected from your technology partners in 2021? Join us at Cox Automotive Experience — Reserve your spot today — and be surprised by what you can accomplish with the partners.



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