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How to Run a Car Dealership

Interestingly, selling cars is just one small part of running a successful car dealership. Learn what it really takes to succeed in new and used car sales.

Owning and running a car dealership can be equally exciting and exhausting.

On the one hand, it’s a competitive market. In 2017, there were 16,812 new car franchised dealerships and 145,364 used car dealerships operating in the United States, all vying for the chance to help a customer make (potentially) the second largest purchase of their life. Convincing someone to buy a car can be tough enough, but it’s only made harder by stiff competition.

On the other hand, due to the sheer size of the country and the distance most people need to commute to work or travel to the closest grocery store, nearly every household in the U.S. owns at least one car. And, with 6.3 million cars sold in 2017 alone, there’s no sign the industry is slowing down anytime soon.

So, how can the owner of a car dealership ensure success? The key — as it is in most small businesses — is understanding your customer and providing them what they need.

Start the sale online

One common mistake car dealerships make is focusing primarily on the in-store experience. It’s true that getting a customer into your showroom and into a test drive is crucial to making a sale. But, the modern car buyer doesn’t start their search for a new or used car by visiting your lot.

The data shows that most customers do a tremendous amount of research online before even contacting a dealer, much less actually buying a car. They’re going to research everything from safety test results to reviews from other drivers, and they’re going to actively seek out details and prices at numerous dealerships in the area before deciding where and when they want to visit the lot.  

It’s interesting to note that, while most customers come into the dealership on Saturdays and Sundays, 30 percent of total online inventory views and 37 percent of total leads occur on Mondays and Tuesdays. That’s because they’re always researching their purchase long before visiting a dealership in-person.

The customer’s online research is the first step of the sales process. If you ignore this step or fail to offer sufficient information to satisfy the customer at this point, they’re unlikely to make it to Step Two. Your website, social media channels, and third-party vehicle sales sites and apps have to accomplish the job of your best salesperson, all day every day, or you’re losing sales.

Ensure your digital channels are always up to date with the inventory you have in stock, and that every vehicle profile includes high-quality pictures, and detailed, accurate information. Likewise, make sure your best products and promotions are continually spotlighted online. Finally, make sure visitors to your website can clearly see why your dealership is different from the rest, and why they should shop with you. 

Going the extra mile

You probably don’t need research to prove that a lot of customers have a negative opinion of car dealerships. But, the research exists nonetheless. 87 percent of Americans dislike something about shopping for a vehicle and 61 percent feel taken advantage of during the car buying process. This may sound discouraging at first, but it’s actually an opportunity for your dealership to focus on the customer and stand out from your competition.

Whether it’s negotiating, understanding all their financing options, or just the fear of buyer’s remorse, you and your staff need to recognize that most people dread the car buying process. If you can manage to make customers feel more comfortable with the process, it’s sure to come back to you as they become more likely to visit your dealership. 54 percent of customers confirmed they would buy from a dealership that offers their preferred experience, even if that dealership didn’t have the lowest price available.

You can demonstrate this preferred experience to customers in many different ways. Just a few examples include:

  • Offer them plenty of educational information on your website that breaks down every aspect of the buying process in clear, simple language.
  • Make sure all your salespeople are on the same page when it comes to messaging, and work hard to avoid pushy, hard-sell tactics.
  • Make your showroom as comfortable and inviting as possible.
  • Streamline the paperwork portion of the process as much as possible so people aren’t there for hours.

Take full advantage of the positive impact of these efforts by encouraging every satisfied customer to leave you a review online or spread the word some other way. One dealership in North Carolina makes a point of following up with every single customer 4-6 weeks after their purchase to see how things are going. In the midst of the conversation, they regularly get enthusiastic words of praise from their happy customers, so they always ask, “can I quote you on that?” They have hundreds of quotes posted on a bulletin board in the center of their showroom, along with thank you cards, printed Instagram posts, and more!

Be a team player

As noted above, buying a car is a long-term, expensive purchase. Customers feel like they have to get it right, but they often aren’t very confident in their ability to do so. So, there needs to be a solid bond of trust between a customer and the dealership, or the deal will go south quickly. One proven way dealerships have built that trust with current and potential customers is by getting involved in the community. It’s important that people get to know you and your business outside of the stress and worry of the vehicle buying process. Some popular ways to accomplish this include:  

  • Being an active member of the local Chamber of Commerce
  • Sponsoring a local youth sports team
  • Participating in community business initiatives like Small Business Saturday
  • Offering space on your lot for fundraisers or other community events

Creating a positive, trusting relationship with your local community can keep your business top-of-mind when a local resident starts shopping for a vehicle, and it can also be a great source of referrals. As we all know, if someone we know recommends a business, we automatically feel more confident with them than someone else.

Cover your basics

Finally, it’s important to recognize the basic tasks involved in running a successful business that are just as important to your car dealership as they are to the local hardware store, laundromat, or restaurant:

  • Maintain excellent financial and legal records at all times
  • Keep your storeroom and lot clean and presentable
  • Never stop marketing and advertising, even when you’re busier than you can handle
  • Invest in good staff and make sure your best workers want to stay
  • Whatever you do, try to have fun — running a successful business is a huge commitment of time and energy, so if you’re not enjoying yourself, you’re not likely to succeed.

Running a successful car dealership has as much to do with understanding your customer as it does understanding the cars you sell. By understanding how customers shop for cars, how they feel about the process, and what can be done to improve their experience, you can differentiate yourself from the competition and come out on top. If you’d like more recommendations and industry advice, check out BusinessesForSale.com resources for everything you need to know about buying, selling, and running your own business.



Bruce Hakutizwi

About the author

USA and International BusinessesForSale.com Manager for BusinessesForSale.com, a global online marketplace for buying and selling small medium size businesses. The website has over 60,000 business listings and attracts over 1.5 million buyers to the site every month.

@BizForSaleUS

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