The competitive environment is getting harder for car dealers.
Dealer profit margins continue to decrease year over year, despite industry record new and used car sales.
Digging a bit deeper, analysis of the last five years of both new and used sales tell a story of significant margin compression. Since 2011, NADA data shows dealer profit margins on new cars has decreased by 30 percent and used cars by 20 percent.
Inventory management and pricing software tools are widespread and have eliminated many of the advantages individual dealerships had in the past. Dealers are now much smarter around which vehicles to stock and how to price them.
Increasing transparency in the shopping process means that customers are better equipped than ever to continue to drive down profit margins.
In addition to price pressure, dealers are facing greater challenges keeping their service customers, especially after the vehicle’s warranty period ends.
What Can Be Done?
The concept of 20-groups and data sharing amongst dealers has provided may benefits — from communicating operational best practices to identifying specific areas to improve. Yet the industry has been challenged to provide dealers with the real-time intelligence needed to stay ahead of their competition.
Despite many available software tools, the competitive landscape for dealers continues to get even more challenging, and there hasn’t been an efficient way to understand what your competitors are doing in real time and take immediate action to ensure that you’re staying one step ahead.
The Ideal Competitive Intelligence Tool
Dealers need tools to continuously monitor their competition in real time, allowing them to be informed and prepared at all times.
The ideal competitive intelligence tool would allow monitoring of the following metrics:
- Turn time
- Website performance
- Service operations
In addition to the above, dealers should receive alerts when they’re getting beaten by the competition across any of these metrics – push alerts to notify them only if and when they need to act.
The Future of Competitive Intelligence Software for Car Dealers
The effective use of competitive intelligence software in industries outside of automotive is widespread. For whatever reason, the automotive industry has been slow to adopt. Which will provide early adopting dealers a true advantage in their local market.
We’re entering a new era where industry data will be harnessed to provide dealers with real-time intelligence on their competitors, delivering actionable insights exactly if and when they need to take action.
Steve Greenfield is CEO/Founder of CompetitorPro, a company providing real-time competitive metrics to allow dealers to benchmark performance vs. specific competitors, identify performance gaps, and take specific actions to close those performance gaps.
Find out more at www.CompetitorPro.com.