It is a myth that the car dealers earn very good margins in sale of cars/SUV. A car dealers’ gross margin comes from sales margin of car ( appx 2-3 % of car value ) and margins from other allied business like accessories sales, New Car Insurance and Insurance Renewal, Retail Finance, Extended Warranty, Loyalty Card among others.
However the above gross margins after all the expense like manpower salary incentive, interest cost on inventory, rent on showroom infrastructure and depreciation plus other overhead expenses leaves a very thin margin to the dealer on sale of cars /SUV’s.
The dealership has to ensure that he maintains a minimum number of sales every month for the break-even and hence there is a lot of pressure on the sales team to give consistent retails month on month. DMS or Dealer Management System can play a crucial role in the sales process. Typically the ratio of retails to enquiries received is 1:6, i.e. the conversion ratio is about 18-20%. Hence large number of enquiries must be tracked at every stage through the effective usage of Dealer Management Solution.
Every dealer tries to offer 100 % test drive/demo to the customers. Hence, the DMS must have a comprehensive demo/test drive module which helps dealer ensure maximum utilization of the demo vehicle. He needs availability information in real time to schedule test drives when a customer calls or visits the dealership.
The next big question is how a car dealer makes profit?? The main profit comes from the workshop operations that includes labour income on service and body shop repairs and the spare parts/oil/consumables sales and other value added services. Hence there is great focus on workshop operations for the retention of the customers.
Today the OEM’s/Dealers are putting all their resources to retain their customers. It would make more sense to ensure there is a good utilization of the workshop resources by Shaping the demands. Hence the Customer Data Base Mining, Service Reminders System and follow up modules in the DMS play an important role.
The dealership needs to keep adequate inventory of spare parts for their workshop operations and also for the counter sales. The inventory has to be managed very well to prevent ageing and loss of interest costs. A good DMS must have a functionality of system suggested stocks based on the consumption pattern of line items.
Today is the age of mobility and the DMS must have the capability to operate the transactions and Dash Boards on the TABLET /IPads for the convenience of the dealers/OEM. Many OEM’s/Dealers prefer offline capability in the mobile applications. When the sales person or a service person is on the road he can capture all information regarding a prospect, check for available spares and request for parts and when he is back in office he can sync his data with the servers and ensure seamless operation. No more of making frantic calls to the dealerships to get information.
With the above features and more built in to the Ramco Dealer Management System, the dealer can improve the overall efficiency of operations thereby enhancing the bottom line /profit.