At a time when it’s reported dealers are spending an average of 101% of GP on expenses* it’s vital to look at options for creating clear space between revenue and expenditure.
This statistic won’t be news to anyone with experience in the automotive industry, we all know there are times when you need strong nerves to push through the leaner periods.
The cycle of lower demand, increased supply, larger floorplans, heavier discounting, and reduced stock turn is not unusual, and the businesses that flourish on the other side are often those who continue to invest and operate in a consistent, high-quality manner irrespective of the state of the market.
As Henry Ford put it, “The airplane takes off against the wind”. A punchy analogy but the obvious question is “How does that relate to actions I can take in my business?”.
I believe, one big opportunity for dealerships is in data; specifically in its usage and process.
Sticking with the Henry Ford analogy, he refined and automated production, lowering input resources, delivering value for customers, and improving sales and margins for his business.
He did that in an industrial setting but the same rules apply to software, technology, and data.
I’ll give you two specific examples I have heard from new Titan DMS customers in the last few weeks:
BMW Sydney let us know of immediate improvements to their business through our live reporting function. Having real-time visibility of progress toward daily goals enabled their teams to tailor actions to hit those goals. If, by mid-afternoon, billing was looking light against the daily target the whole team was aware and focused on taking individual actions to bring it into line.
Not all reports need to be live, but in this instance changing from a system that ran reports the following day, when no remedial action could be taken, to a system that provided real-time visibility, created positive actions and a genuine, measurable daily revenue benefit.
This brings to mind two common, but undeniable, business truths:
- “If you can measure it, you can manage it”
- “Clarity in direction ensures unity in action.”
The second example comes from Grand Prix; three sites not far from our home base in Brisbane. Their Group Financial Controller, Irwin Lee fed back that with Titan DMS, his team was now saving around 5 hours per week, per site, from not having to chase around departments finding information to get ROs closed before the jobs could be billed. That’s 15 hours per week from ONE improved process.
Time is money. What revenue opportunities or expense savings could there be with those 15 hours every week?
While this was a good opportunity for me to point out a couple of specific benefits of our DMS, I do truly believe that they perfectly illustrate the overall points I’m trying to make.
If you want to increase the gap between revenue and expenditure, I believe:
- The right software, used correctly, powers teams and processes to significant improvements. Over time, businesses grow coping mechanisms around legacy systems. This “creep of inefficiency” becomes a huge anchor to growth and sucks resources from more productive activities. So, be bold in adopting software that can make a real step-change to your business.
- Clarity creates motivated actions. Reporting valuable information to the right people at the right time empowers them to align their actions to a goal. Across a whole team, this can be hugely powerful.
- Automate for efficiency. Are manual processes draining time and resources? Data ingestion, API connections, and internal system automation can all reduce manual handling, reducing resource requirements, and incidence of error.
In a period when profits are hard to come by and margins are tough to protect, the more you can systematise and drive process refinement and productive actions, the more likely you are to be on the right side of those worrying average figures!
Regards
Matt
*BDO Presentation at AADA 2024
Published:
March 31, 2025
Updated:
March 31, 2025
