WITH more than 150 years of combined experience in the retail automotive industry, the motor industry services team at Pitcher Partners has helped countless dealership groups uncover meaningful profit improvements. 

Before we get too far into this financial year we are sharing five innovative ways that forward-thinking dealers are using right now to strip costs out of their businesses – without sacrificing service or results.

Diana Kao

1. Establishing new retail formats with used vehicles as the “anchor” brand.

They then add new vehicle brands for additional income streams without increasing the cost base by using low-cost, high-impact showrooms.

It’s no secret that Eagers is well underway with their Automall concept with locations in Indooroopilly, Aspley, Osborne Park etc. It makes sense to cluster the new vehicle brands under one roof, share property costs and to increase customer dwell time by providing them the opportunity to browse new cars like they would in a department store. 

Interestingly, we have also come across dealer groups which have decided to make their used vehicle operations the “anchor brand” in their retail format. This almost reverse concept will inevitably generate more profit from day one. It involves a lower initial investment from both a cost and time perspective. 

For example there are no OEM CI requirements for used vehicles which means a shorter time to market with minimal showroom build or upgrade costs or even use of an existing showroom. But, for new cars, even a CI upgrade of the showroom can take between 5 – 6 months for a metro dealership. Used cars also deliver higher best practice gross profit percentages. 

Then, once the used vehicle operation is established, dealers then add new vehicle brands to the site; typically Chinese brands with low CI requirements, gambling on at least one of these new entrants to take off, all the while riding on the coattails of a profitable used vehicle operation.

2. Self-service tech that actually pays off 

Dealers have already begun using the Maccas style kiosks for their service departments, with dealers recording 100 per cent ROI in upsells per day after only being in the market for two months. 

The aim of these kiosks is to free up the service advisors to deal with the complex jobs whilst allowing customers with the standard services to serve themselves. One luxury brand also cited improvements in customer satisfaction indexes. Other brands have approved the use of these service kiosks across their network and are now in the implementation phase with subsidies available to dealers who jump on board. Chances are, this will become the new “normal” and may allow dealers to run a leaner service advisor team whilst providing customers a more streamlined experience with improved convenience as they can now potentially drop and pick up their car outside normal trading hours.

3.Turn text into profit with smarter and more efficient service communication

According to the LiveHelpNow website:

• 48 per cent of customers prefer direct communication from businesses through text
• 90 per cent of customers prefer text over phone calls

Therefore, a combination of Triage + Podium just makes sense with text playing to customers’ preferred medium of communication.

In basic terms, Triage is a system and process that allows technicians to easily upsell on repair orders while Podium handles the customer communication piece through scripted texts. 

The combination of the two minimises “manhandling” by service advisors, as updates can be automated depending on where in the Triage process the repair order sits. Text also has a higher open rate (99 per cent vs 17-28 per cent for emails) with Podium saying that “on average, customers authorise additional work within 3 minutes of receiving the text.” 

The combination of these two systems not only helps upsells, but also allows for a lean service advisor team whose focus is to deal with the larger dollar value, more complex work that genuinely requires attention while leaving the more standard, update type communications to a system and process.

4. Rethinking general manager incentives for leaner operations by rewarding GMs who actually trim the fat

GMs reading this will be thinking to themselves: I am already paid a percentage of net profit which is gross less expenses, so how is the alternative different? 

Interestingly, there are dealer groups out there who are directly targeting GMs on managing their expenses and specifically holding the operators accountable in managing their expenses against budget. This is the ultimate example of “do more with less”. It forces GMs to divert at least some of their attention away from sales, vehicles sales, parts sales and service sales, to coming up with more efficiencies and inventing new ways of doing business.

5. Build leadership depth with the ‘hub and spoke’ model 

As dealer groups grow, especially through acquisition, sometimes a middle management layer gets implemented whose day-to-day job is to manage a portfolio of dealerships, usually based on geography and often this is split between sales and aftersales. 

An alternative to this middle management layer is to implement a “hub and spoke” model for DPs whereby a senior DP leads a cluster of dealerships to achieve the group’s overall vision. This structure also creates a mentoring relationship between the senior DP and the other DPs and allows the dealer group to continue to invest in their talent at the highest levels, keeping them engaged and driving towards a common goal.

Key benefits to this model:

• Consistent leadership vision
• Shared learning/mentoring
• Stronger culture across dealerships

These strategies aren’t just cost-cutting…they’re smart, scalable, and focused on customer and team experience.