Recession Tips for Car Dealers: Cut Waste & Increase PVR

The car industry has seen its fair share of positive growth in recent years and this presents much to celebrate. As with many areas of the economy hit by the pandemic, however, it’s common now for dealerships to tell you that sales are facing a new downtrend. This is inevitable and the economy is always going to face its ups and downs. In order to protect your business’s future and safeguard your assets when times become unpredictable, maximizing the efficiency of your car dealership is a must. 

The car industry has seen its fair share of positive growth in recent years and this presents much to celebrate. As with many areas of the economy hit by the pandemic, however, it’s common now for dealerships to tell you that sales are facing a new downtrend. This is inevitable and the economy is always going to face its ups and downs. In order to protect your business’s future and safeguard your assets when times become unpredictable, maximizing the efficiency of your car dealership is a must. 

 

Cost-cutting tactics can help you minimize your losses and set you up on a more stable road for the future. Are you searching for tips? Whether you sell new cars or used cars, check out our top tips for running a dealership in a potential recession. 

Cut Vendors & Audit Fees

One of the first and most elemental approaches you can take to saving your business money is to cut unnecessary vendors. Basic business sense says you should buy your supplies in bulk and track your use. This includes everything from paper to pens, paper towels, soap, and more. Make sure you aren’t overbuying and using more supplies than you need to as this defeats any potential gain brought on by bulk purchases, of course.

 

Secondly, consider what you pay to audit your business. Some experts advise transitioning to a self-audit system, which can save you a considerable amount in costs. This takes extra work and training in order to be accomplished properly but it could be worth the investment in the long run. Some sources claim a self-audit can cut traditional, in-person auditing costs by 50% to 75%.

 

If you can’t do a self-audit, examine how much you’re paying for your audit fees. Is there a way to get things done in a more cost effective way? Do some research and compare pricing to find the best deal.

Look at Your Payroll

In order to run your business successfully you need to keep your Payroll to Revenue Ratio in mind to gain a profit. This measures how efficient, productive, and effective the employees in your company are. Generally speaking, as a successful dealer you should be making $250,000 in revenue for every full time employee you have. If you aren’t managing to pull this in, you might consider downsizing some of your staff.

 

As a rule of thumb, you should be spending around 15% to 30% of your gross sales on employee payroll. In order to figure this out, it’s recommended that dealers track PVR, or the gross income per vehicle retailed on their lot. In addition, it can be beneficial to look at market penetration and the profit margin of all your products. Are your sales agents promoting enough optional add-ons during the sales process? Is the potential of loans offered being maximized? Every additional bit of income counts.

Are You Top Heavy?

Yes, we’re going to talk about management. No one likes to admit it but management is expensive, and too much can sometimes prevent an organization from moving forwards. Too much management or ineffective management can shrink employee incentives to contribute more to the organization and bring new ideas to the table. 

 

Are you paying too much for your managers? Do you have too many? These are valid questions when looking at how your business can reduce costs and save. Harvard Business Review suggests you put more management responsibilities in the hands of your employees and let those who deal with the frontlines make more of your decisions.

Analyze Marketing Budget

It can also be beneficial to take a look at your marketing budget. Are you spending your marketing dollars in the best way possible? Do you have proof that your marketing is gaining results? It often costs more money to gain new customers than to retain older ones. Examine how your business is dealing with its customer relationship management (CRM). Take steps to leverage your existing customer data. Use this information to inform your sales team on how best to conduct follow-ups with potential repeat customers based on their interests. Make your promotions relevant and if you can’t prove they are, scrap them.

Is Your BDC a Cost Center or a Profit Center?

 

Your automotive business development center, or automotive BDC, can be a pillar of your dealership. This is the department that makes outbound calls to create new leads and also manages inbound calls from customers interested in setting up a sales appointment. This department is essential but ask yourself how much it’s costing you to maintain and run. Is your BDC making you money or costing you money? It should be a profit center, and if it’s not, consider the next point in this article.

Consider Outsourcing Your BDC

 

Many dealerships now find the best way to maximize the efficiency of their BDC is to outsource the work. By outsourcing your BDC, you can access the most effective sales agents and get access to the right resources at the right time. Companies like VaVende can help you protect the profitability of your dealership while bringing in the new leads you need to stay competitive.

Partner with VaVende and see the difference

 

VaVende offers leading outsourced BDC for car dealerships to help you get ahead. Our outsourced call center operations allow you to scale your dealership’s operations to meet your ever-changing needs. Reliable and ready for change when you need it, VaVende offers competitive pricing and high quality service. 

 

With comprehensive billing that’s straightforward and fair, we focus on saving your dealership money so you can protect your bottom line. Our packages offer inclusive inbound only, inbound/outbound, and outbound only services with unlimited calls. With access to high quality agents, you get the best of both worlds!

 

Contact VaVende to schedule a demo and learn how you can increase your internet sales by up to 20%. Set a demo to improve your customer experience today. Effective BDC is just one call away and it could be the key to propelling your dealership into the future.