New Year, New Strategy: How to Maximize Dealership Profits In 2022

Image of Ken Graham
Ken Graham

Prepare your dealership for increased inventory (and the threat of decreased profit margins) by promoting your service center now.

As we enter the new year, many dealerships are thinking of ways to increase their dealership's profit margin now and in the future. This is especially true since auto dealerships have faced unprecedented inventory shortages and, as a result, potentially increased profit margins due to marked-up prices. 

However, with new-vehicle inventories anticipated to improve slightly in 2022, we are faced with a new challenge: how can dealerships avoid crashed profits once auto pricing returns to a more normal level? The hidden key to success lies in an unlikely place: your service department.

Here, we’ll outline how promoting your service department will lead to increased revenue without increasing your overhead costs. Here's how to lock in your dealership's competitive advantage now.

 

Vehicle Inventory May Increase Again—Why That May Be Bad for Dealers

Vehicle inventory has been at an all-time low for some time now due to supply constraints, including the global shortage of microchips. With decreased supply and ever-increasing demand, US consumers are willing to spend more, thus giving a much-needed boost to auto dealers’ revenues.

Although the supply shortage continues, analysts anticipate new-vehicle inventories to improve slightly in 2022. While in one sense this is welcome news, it also means potentially negatively impacted profits for dealers that have benefited from the recent pricing power.

Because dealerships' profit margins may crash once vehicle inventory increases again, it's wise to prepare now.

 

Ensure a Competitive Advantage by Promoting Your Service Center Now

Because dealerships' profit margins may take a noticeable dive once vehicle inventory increases again, it's crucial for dealers to develop their strategies now to maintain their bottom line. Vehicle inventory will still be limited in the early part of 2022, making this the perfect time to focus on your service department. 

If you want to make sure your business remains profitable, invest time and money into marketing your car dealership service department. Doing so will be a strong differentiator in ensuring your sales numbers and overall gross profits remain steady throughout the year.

Why? Because your service department is the most reliable driver of profitability. In fact, an average 49% of a dealership’s total yearly gross profit is attributed to the service and parts department—not from new or used vehicle sales. 

You can safeguard your dealership’s profitability all year long by focusing your marketing efforts on steering buyers into your service lane. Promoting this trusted profit center will help guarantee your competitive advantage now and in the future. Fortunately, there are easy ways you can begin driving customers into your service lane immediately.

 

Dealer Takeaway

In an effort to prepare for potential increases to vehicle inventories in 2022, dealerships should focus on promoting their most reliable profit generator now: their service department. This means establishing a trusted marketing strategy now that will increase traffic and sales before boosted vehicle pricing takes a hit later in the year.

Edifice can help you do just that. Reach out to our experts today to improve your dealership’s marketing and make 2022 your most profitable year yet. 

 

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