By Desiree Homer
As the profit margins on new vehicles narrow, many dealers have invested their focus to the growth of used and certified pre-owned vehicles. Others are developing entirely new channels for revenue and thinking outside the box. Here are some of the latest and creative ways dealers are diversifying their cash flow for results.
It’s All About Perspective
Thomas England, a partner at DHG Dealerships, shared with Automotive News his perspective in identifying opportunities. He cites many retailers focus entirely on new and used sales, but there is so much more. Reflect on your total sales and cash flow that comes in and gets paid right back out. Ask yourself, “how do I get my hands on more of that cash?” England points out it’s all about perspective and recognizing the opportunities from expense control to various partner transactions, to extract more cash. It’s about examining your marketing, insurance, and warranty offerings to find ways to grow revenue channels.
Incorporating Tire Sales & Body Shops
Some dealerships are finding new revenue opportunities within their parts and service departments. They’re branching out to offer tire sales to attract new maintenance customers, outside of their brand specialties. Many are expanding to include auto body repair as well. Instead of outsourcing some of those services to body shops or PDR specialists, dealers are learning how to bring those dollars in-house. Reducing the number of outsourcing partners, even by a small margin, can translate to increased dealership cash flow.
One Montana Dealer Also Sells Hunting & Firearms
Retailers are venturing into non-automotive territories to grow their revenue channels, too. One dealership in Montana, has an entirely separate operation under its roof, to meet the hunting needs of their more remote lifestyle customers. They sell firearms, licenses, and hunting bows, transforming their dealership into the one-stop-shop for those who need to buy a rugged pickup and a shotgun to hang in the back window or a fishing license. Obviously, this isn’t ideal in every market. It does, however, demonstrate how creating unique offers that make sense to area consumers, can be an additional source of revenue.
One Mitsubishi Dealer Is Buying Up Used Teslas & Lifted Trucks
A Mitsubishi franchise dealer in Texas has expanded its used car segment by stocking quick-turn vehicles. They focus on models that meet area demand to augment the traditional used vehicle acquisition strategy. They stock up on Toyota Camrys and even those specialty vehicles like Teslas at auction. They also explored buying lifted trucks and have since included lift kits as part of their own service department offerings. David Buam, Jr., the general manager of this dealership, told Automotive News they began to realize a demand for lifted and beefier trucks. He soon recognized the opportunity to offer lifting services would help him keep those outsourced dollars in-house. “There’s only so many Mitsubishis to service,” he says.
The savviest dealer owners are learning how to keep more of their cash within their dealerships. Some are tapping into more traditional best practices, like preloading vehicles with F&I extras or offering after-market accessories. Others are embarking into entirely new territories and thinking outside the box. The key takeaway here is learning how to examine your business aspects and look for opportunities to keep more of your spendable cash as well as create unique channels for new revenue.