Heads up – Automobile Dealerships

19/03/2018
We know every industry is subjected to dynamic changes and is always on the brink of contemporary trends and business progression by leaps and bounds. The auto industry is no stranger to this concept of breakthroughs. In recent times there have been changes of huge magnitude and impacts in all the related areas of Auto Dealership Business that has changed the very face of the auto industry in many ways. The changes are rapid and have long standing after effects on the extent of business revenue

“Nothing remains constant except change itself” a famous English saying is explaining it nicely.

We know every industry is subjected to dynamic changes and is always on the brink of contemporary trends and business progression by leaps and bounds. The auto industry is no stranger to this concept of breakthroughs. In recent times there have been changes of huge magnitude and impacts in all the related areas of Auto Dealership business that has changed the very face of the auto industry in many ways. The changes are rapid and have longstanding after effects on the extent of business revenue.

Until the end of 2012, the Automobile dealership business was very lucrative and prestigious. A lot of new investors had been attracted to the trade in this period. Getting a dealership of a good performing automotive brand was as tedious as winning a 20-kilometer marathon or even more. The race for the dealership started to spoil the game. “Show Off” outperformed the "Business Acumen" and the investors spend money by themselves and by compulsion of other channel partners involved. Soon the new investors started to feel the heat post their honeymoon period. While some have learned and adapted fast, others have wiped off from the mainstream. Some have stood up and some have fallen.

Fluctuations in operating profits are one of the pressing factors that have mainly contributed to the changes in the auto dealership business scenario. The aspects involved here are infrastructure, manpower, and equipment. There has been a massive increase in the costs involved in each of these aspects. Manpower and equipment investment is directly proportionate to the infrastructure investment. Some of the business houses were very calculative since inception, they invested wisely in all the three parameters and running successfully even in these turbulent days.

Like any other industry, we also focus on revenue and customer retention. From past 5 years, the industry had witnessed a paradigm shift in customer behavior. And as a result, the customer acquisition costs have increased. One needs to understand their customers and their expectation better, prior to making any plans for retention – Now a days this is done on assumptions. Always following a trial and error method in any campaign will cost both time and money.

Automobile dealership industry is not spared from competition who is providing numerous services like dealership network. They offer all the services offered by a brand recognized dealership. They sell cars, repair them, sell parts, and other add on services. Each of these available options has their own set of upsides which may appeal to the dealership customer base. In no way, they can match the experience provided by the recognized dealers still they keep their customers happy (?). With the digital revolution, the competition can easily reach directly to customers at a very less cost and effort.

To add on to this the revolutionary changes in terms of technology in the automobile industry have led to the invention of electrical and intelligent vehicles. This will lead to modest maintenance requirements which further shake the auto dealership business dynamics.

Owing to the now rampant use of cab services that provide enticing offers that are pocket friendly as well as the new highly economic concept of car pooling that caters to comfortable travelling has greatly disrupted the auto industry business. High initial cost of owning a vehicle is another aspect that has added to this shift in customer interests. Thus, a change in vehicle ownership concept is already triggered will affect both the sales and aftersales revenue of the dealership.

The steps one need to undertake to overcome the above challenges is meticulous planning. The need-based mode of action includes adapting cost cutting measures, spending wisely for customer acquisition, improved manpower utilization and improving the efficiencies of the various processes associated with automobile dealership business. A constant monitoring mechanism in all the respected areas is inevitable in terms of keeping your bottom line from declining or even to that matter to keep it steady in these days.

Team ottorate

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