Auto shop with vehicles in rows

With interest rates remaining high and sales either stagnating or dropping, dealerships are exploring new ways to maximize their return on investment (ROI). As Cox Automotive predicts, new vehicle sales in the U.S. are expected to increase by less than 2%, finishing at 15.7 million sales in 2024. In this challenging market, achieving the highest possible ROI on every investment is more crucial than ever. 

The Essential Role of ROI in Dealership Success 

Maximizing dealership ROI is key for any dealership’s sustainability and growth. According to the National Automobile Dealers Association (NADA), the service department alone can account for up to 49% of a dealership’s gross profits.  

With current market trends showing a less than 1% increase in used vehicle sales, the service department’s role becomes even more critical and simple things, like ensuring all vehicles are in optimal health, help build trust, loyalty, and sales. 

Customer Satisfaction: A Pillar of Vehicle Health Management 

Industry standards show dealerships with high customer satisfaction scores in their service departments see a higher customer retention rate than those with low scores.  

Trust and satisfaction are essential to increasing your profit. According to a HubSpot study, customer retention rates increase by 5% for every 1% increase in customer satisfaction. Another study finds that only a 5% increase in customer retention has the potential to increase dealership revenue by 25-95%. This demonstrates just one of the many impacts that vehicle health management has on a dealership’s long-term success and profitability. 

Improving ROI Through Vehicle Health Management 

Studies emphasize the importance of battery health in vehicle health management, which can directly impact a dealership’s bottom line. Our technology is a game-changer in this area, saving dealer groups significant costs on battery replacements with vehicle health scans. Ensuring vehicles are test-drive-ready and free from issues like dead batteries can significantly enhance the customer experience. 

For instance, consider the significant revenue potential of a service advisor. According to recent studies, a service advisor managing 12 customers daily can generate an impressive $49,000 monthly labor gross profit. This figure doesn’t account for the associated parts gross profit, which typically adds another $24,500. Now, imagine the added value that our technology brings to the table. 

By providing real-time diagnostics and maintenance reminders, our technology can enable service advisors to proactively address issues and recommend necessary services, leading to increased service appointments and higher revenue. 

Additionally, real-time odometer mileage reporting allows service advisors to tailor their recommendations based on a vehicle’s usage, further enhancing customer trust and boosting service retention. This personalized approach boosts revenue and strengthens customer loyalty, contributing to the dealership’s long-term profitability. 

Our platform also aids in reading check engine light codes and identifying open recalls, adding another layer of safety for customers and opening additional revenue streams through necessary service and repairs. Furthermore, accurate odometer mileage reporting allows for personalized marketing messaging directly to customers’ phones based on their actual driving habits. 

Safeguarding Your Inventory: Enhancing Dealership Backend Profits 

Protecting the dealership’s inventory is another critical aspect of maximizing ROI. Our solutions help safeguard the dealership’s assets from potential losses due to battery failures. Additionally, selling our technology as a non-cancelable hard add-on creates new revenue streams through value-added services. 

Let’s examine some numbers to illustrate the potential savings in battery replacements. The average cost of replacing just one battery is around $250, not including labor costs. With an average dealership holding about 279 new vehicles and 317 used cars at any given time, if just one-third of the used cars required a battery replacement each year, it would cost approximately $28,000. By integrating our dealership lot management system to track battery levels consistently, dealerships can save substantial expenses annually.

In fact, a corporate fixed operations director from Southern California reported that across their. 15 stores, they spent over $600,000 on replacement batteries in 2017. After installing our technology in 2018, their battery replacement costs plummeted to less than $20,000, resulting in annual savings of $580,000. These savings can significantly benefit any dealership, allowing for reinvestment in advertising, showroom improvements or employee training. 

Driving Success: The Future of Dealership ROI Through Vehicle Health Management 

Effective vehicle health management is a key strategy in maximizing dealership ROI in the current automotive market. By leveraging advanced technology solutions, dealerships can ensure their inventory is in top condition, enhance the customer experience, and create new revenue opportunities. Embracing these strategies can lead to significant savings, increased profitability, and sustained growth in the competitive automotive industry. 

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