ProfitFocus™

During COVID-19, the automotive market experienced constrained vehicle supply, resulting in high new car gross margins, and delivering upwards of 5% bottom line net profit percentage of sales for the ‘average’ dealer, making the average dealer approximately ten times more profitable than the years before the pandemic.

The industry is now coming off three outstanding years with the market starting to turn and show signs of returning to pre-pandemic conditions, i.e., the average dealer in 2019 made 0.6% bottom-line net profit as a percentage of total top-line revenue.

A multi-franchised, privately owned dealership operation and a long-term client of ProfitFocus™, sought a solution to stabilise the business and drive long-term resilience to external market, customer and competitor activity by effectively managing relevant financial levers, focusing on optimising operational performance, managing cost structures, and understanding what top-performing dealers were delivering.

The dealership team and management utilised ProfitFocus's self-service dynamic dashboards to analyse historical and current market data to identify core drivers of profitability during COVID-19 versus today and ran various scenarios of future market conditions.

Industry benchmarking enabled the dealership operations executive team to track performance versus the market by segment and region to understand whether movements in their performance were market-driven or down to internal strategy and operational performance.

ProfitFocus's twenty-five years of dealer and industry performance data from across 1,800 dealerships pinpointed where the ‘pinch-points’ of the business operations were, and where time and energy should be spent to optimise.

With a clear understanding of critical profitability drivers, the dealership engaged the Deloitte Motor Industry Services advisory team to build an organisation-wide action plan to navigate the evolving market environment.

In 2023, the dealership operation, in collaboration with ProfitFocus™ and the Deloitte Motor Industry Services team, confidently and efficiently:

• Grew retail service revenue by 20%, unlocking additional potential within their Prime Marketing Area (PMA).
• Increased service efficiency metrics from 85% to 98%.
• Reduced service lead times from three weeks down to one week.
• Achieved a new profitability benchmark in the service department - up by 10%.