According to a recent study by the National Auto Dealers Association and Roadster, automotive dealerships are becoming more resilient and efficient in the COVID-19 era. The study was prompted by the industry’s rapid shift from in-person sales to online retail. Writing for Forbes, Jack R. Nerad reports that “the quick transition to online sales could have long-lasting benefits”:
While 76% percent of dealers surveyed said they were able to engage their customers more online, it was in salesroom efficiency that the numbers jump out at you. Of the dealers surveyed, 61% said that digital retailing improved their efficiency and 24% were able to increase the number of cars sold per person.”
Those are some pretty interesting statistics, but I found this section especially compelling (emphasis added):
“The study strongly suggests that digital retailing can help dealers be more cost-efficient. The benefits of online sales can improve efficiency in two key related metrics — vehicle sales per salesperson and vehicle sales per employee. According to NADA, in 2019, dealers spent an average of $4.09M in total personnel costs, but with online selling, it is likely that figure could be trimmed.
The COVID-19 crisis became a living laboratory for that because dealers across the country were forced to reduce staff. According to the Roadster/NADA study, dealerships that cut personnel and had online retailing solutions sold an average of 18+ cars per person in the surveyed month, a 38% increase over the average number of cars sold per person per month in 2019. At the same time, dealerships that reduced their staff to less than 25% but lacked a digital retailing solution sold an average of 12 cars per person.
One key reason that online selling worked so well is that saving time per transaction enables dealers to sell more with less. The shorter the transaction time, the more transactions a dealer’s staff can complete in the same amount of time. Online selling cuts transaction duration drastically because the car buyer does a significant amount of work prior to the completion of the deal, often unaided by dealer personnel.”
Here at KPA, we love when anyone talks about efficiency. Our focus on employee safety and workforce compliance is ultimately rooted in an obsession with efficiency. Making businesses run better—that’s what gets us out of bed excited in the morning.
Given the myriad regulatory demands and pressures within the industry, auto sales are extraordinarily difficult in the best of times. It’s nice to see that dealers are not only adapting to the times, but finding concrete ways to improve their operations in the long term.
Now that online retailing has proved to drive efficiency in dealerships, it’s time to look at every process within your dealership with an eye toward improvement. Most likely there are a few that can be tightened up. We’d be happy to give you some suggestions. Get in touch with us.