Cost-cutting and after-sales, the road back to profit

With many car businesses having been totally re-structured this year, the word coming from many showrooms is that traditional demarcation lines have been scrapped in favour of ‘an all hands to the pump’ attitude. General Managers will no longer leave the day to day running of the business to their line managers but rather take hands on role in scrutinising all aspects of the operation. It has long been known in any business – but perhaps more so in the car trade – that wastage and out of control expenses will erode bottom line profit, and with a reduction in staff only the beginning, managers are being challenged almost daily to save money and micro manage their cost bases. The old adage of looking after the pennies is very relevant in our business as often people blindly accept and sign off costs without perhaps understanding the impact of not scrutinising every bill will have. With much work carried out on cars being sub contracted, from smart repairs, glass and windscreen replacement to sat-nav, in car phone kits and alloy wheel repairs, it is easy to see that if costs are not monitored then not only may dealers be paying too much but unlike work that is carried out ‘in house’, the business cannot even benefit from it.

By driving down prices from suppliers and the fact that cost savings will be almost like adding profit the impact for customers will mean that in the long run the decreasing number of buyers will mean better deals on cars.

Conversely there will be a more “hard sell” attitude to after-sales profit, making up for the drop in car sales and we are already seeing evidence of service front line staff being re-trained as sales people to try and up-sell service work to customers rather than just reacting to what a customer asks.
So it seems that there will be haggling to be done in all aspects of buying and maintaining cars as we move forward and drivers must be ready to judge for themselves whether to have their repair work carried out at franchised dealers, who will be taking on independents for this type of business.

It, of course, stands to reason that car dealerships have to find ways of remaining profitable in the brave new world of car retailing and after-sales will definitely be one of them.