December 15, 2022
How dealership inventory management software can increase your net profits
It’s well known that new car dealers make a gross profit margin between 8 and 10% on the sale of each new vehicle. But did you know new car dealers make a net profit margin as low as 2.4% or less on each new car sale? Along with the rising cost of facilities, it takes at least nine people to execute the various transactional aspects of selling one car. These two factors alone can make it difficult to even meet the average net profit on a car sale, not to mention the challenges of current economic and consumer trends.
However, if you can sell cars more quickly and optimize operations, you can substantially increase your chances of boosting your net profit margin on car sales. And there’s no better way to improve your marketing and operations performance than data-driven software solutions designed specifically for dealership inventory management.
Keep tabs on your inventory
The old ways of dealership inventory management are obsolete today. There’s not enough time in the workday or, much less, available personnel to accomplish what a data-driven automotive inventory management software can do. What’s more, there are real-time functions that automated inventory provides that traditional inventory systems can’t duplicate.
With today’s technology, you can boost both your dealership’s merchandising and operational capabilities with the right automotive intentory management system. Look for software solutions that use leading analytical and geo-mapping technology to help you prioritize your inventory for higher car sales and lower operating costs.
Save money with dealership inventory management
At minimum, a vehicle inventory management system should help save your dealership money by keeping track of the number and the location of the cars in your fleet. However, the right solution should also give you many more powerful management advantages.
Some common profit-sapping problems the right automotive inventory management software can help remedy include:
Disorganized sales process
Nothing can hinder the outcomes of a busy car sales event like disorganization. This problem is why 60% of dealer personnel say they’ve faced the risk of losing a car sale when they couldn’t locate a vehicle on the lot. The right dealership inventory management system should let you know the location of every vehicle in your inventory. This feature could save money otherwise lost from:
Your dealership can quietly lose a lot of money in dead battery bills each month. A dead battery in a car a customer wants to test drive can also result in a lost sale. To avoid this, look for a dealer inventory management solution that lets you know when a vehicle has a low battery, thus saving your dealership time and money on avoidable expenses and missed sales opportunities.
Theft and misappropriations
Unfortunately, some people steal, and vehicles are popular targets of theft. Thieves stole nearly half a million vehicles in the first six months of 2022 alone. However, the right auto inventory management software can save you a large sum of money you could lose to theft thanks to a feature called virtual boundaries. The virtual boundaries feature is geo-mapping technology that allows you to monitor test drives and receive alerts when a vehicle leaves the lot without authorization.
Another feature you should look for? Direct integration with law enforcement. That way if someone does steal a car from your lot, the solution provider can automatically relay the vehicle’s location to your local police once you’ve contacted them.
Make money with car dealer inventory management
When it comes to marketing, many businesspeople (including dealership owners) focus on things like marketing channels, market segments, social media, paid advertising, and brand promotion. However, in order to have a more effective market strategy, you should also focus on product sourcing, competitive pricing, and merchandising.
Taking actionable steps to increase profitability
In this post-pandemic era of tighter net profit margins and financial uncertainty, every component of your dealership requires more thorough oversight and control to reduce costs. Traditional inventory management systems fall short of the capabilities you need to optimize your dealership’s merchandising and operational aspects enough to increase your net profit margin and ROI. DealerSocket Inventory+ and the LoJack vehicle management take the guesswork, oversight, and confusion out of inventory management and provide empowerment instead.
If you want to learn more about adding these two exceptional systems to your dealership, visit DealerSocket to get started.