Analyzing a high-unit, low-profit dealership – July 3, 2006

This latest series of articles recaps a portion of the opportunities that were uncovered by our GSA powersports specialists during actual consulting visits. The goal of this three-part series is to provide ideas to help you improve your dealership. The first part of the series looks at the dealer’s facility from the customer viewpoint.
Dealership Details
The subject dealership is located in an affluent suburb. They have recently moved into a well-designed, new facility. They are selling 1,100 units per year, but their overhead is high and profits are minimal. Their F&I department has low penetration rates on the few products they sell. The focus of our visit was to provide the dealer with a needs assessment of the facility and the sales and F&I departments. The goal for the recommended actions was to (a) increase unit sales, (b) create an effective F&I department and (c) increase overall profitability per vehicle sold (PVS).
The customer viewpoint
Signage for the dealership is fair. It is difficult to find the store because trees obscure the visibility of the main dealership sign. It is invisible less than a block from the dealership. Parking is adequate, but restrictive to larger trailers. The external appearance of the facility and landscaping is attractive and inviting. Much of the window area is covered by banners and painted graphics, which obscure the excellent window displays. There is no clearly visible “open” sign. The store hours sign is obscured by product decals on the front door.
This is a well-designed, new facility. The customer gets a “wow” feeling within the first 10 feet of entering the store. The customer’s eyes are drawn to the unit displays upon entry. There is an excellent traffic flow pattern created by the floor tile color pathway and the product displays. While the raised, spotlighted unit displays are visually stimulating, there are no related clothing and accessories displayed with the units. There are also no “lifestyle” displays to help customers visualize using the products.
Product videos run continuously on several large screens in the showroom area. However, the volume level and the type of music being played are not conducive to relaxed conversation.
There are three small sales offices located at the back of the showroom. They are constructed of cloth-covered divider panels, and do not afford a view of the showroom area for either the salesperson or the customer. They have a squeezed-in feeling. There is barely room for the salesperson, a desk and two chairs for customers.
There is one F&I office with desks for the two F&I people. Also constructed of cloth-covered panels, this area is not secure. Conversations can be overheard outside of the office, and customer records are visible on the desks.
No customer lounge area is available in the showroom area.
Recommended actions