Ron Frey
| 1 November 2017

How to Stay Relevant as a Dealer in an Uncertain Future

Age-old wisdom tells us that nothing about tomorrow is guaranteed. But, in the automotive retail industry, we can often act like the good fortune we’re experiencing today is a sure bet tomorrow. Dealers have to balance an infinite number of moving parts each day, so planning for the future can become a “nice-to-have” instead of a “need-to-have.” For the past few years, dealers have been riding a sales high — selling more than 17 million units a year since 2015. And while it’s still “the good old days” in many ways, that likely won’t remain the case. How to Stay Relevant as a Dealer in an Uncertain Future There are a lot of different factors that could mean change on the horizon. Interest rates are increasing, margins continue to compress, customers expect a different experience, and there are new entrants to the market that could cause a fundamental shift in how we do business.
So how do you, as a dealer, stay relevant in an ever-changing industry?

Embrace Change

While you could argue that the willingness to embrace change is a necessary life skill, it’s particularly important in adjusting to the coming changes in the industry. Maintaining the status quo is comfortable, and might even work for a time, but “the way we’ve always done it” isn’t a sustainable strategy. Embracing change means being open to different ideas that your team or other industry professionals bring to you — and even seeking out cutting-edge technologies and strategies. It means being willing to take a risk on new concepts — and being willing to fail. Agility and flexibility allow you to adjust to changes, potentially staying ahead so that your business comes out on top.

Understand Your Customer and Their Changing Needs

While market conditions affect a significant portion of your business, the driving force behind change is often your customer. It’s no secret that the demands of customers have significantly shifted in the past few years — consumer expectations are much more focused on experience than they ever have been. As other companies like Amazon and Netflix have put the customer experience at the center of their business model, consumers have come to expect simplicity, mobility and a quality experience. But one model has never —nor will it ever — fit every customer. In the midst of change, it’s essential for dealers to keep a pulse on the needs of their specific customers and create customized workflows that complement the experience their customers want.

Focus on Fixed Ops and Used Cars

How to Stay Relevant as a Dealer in an Uncertain Future While margins on new car sales compress, dealers can adjust by focusing their attention on two other profit-driving areas of the dealership: fixed operations and used cars. According to the recent NADA Data Mid-Year Report, the total gross from Service is nearing 50 percent, but only constitutes about 12 percent of the total sales for a dealership.1 Focusing your strategy on selling service can be a key to success. The profit margin for used cars is also much more favorable than for new cars; consider adjusting your resources and strategy to incorporate a stronger focus on used cars and service.


It’s one thing to embrace change, set strategy and talk about making adjustments, but it’s another to actually execute. When you’re thinking through your strategy, make sure you consider the follow-through: which groups or individuals will be responsible for implementing changes? Consider how you leverage your technology or service providers to help you make adjustments. Set measureable goals and in six months, evaluate the success of the changes you’re making.
To run a successful business, it’s essential not to wait for the red flags to start waving. Instead, look ahead to the future and set your business up for success by planning for change.
Need help with how to navigate an uncertain future? Talk to us.
1 NADA Data 2017: Mid-Year Report

Ron Frey
Ron Frey

Ron Frey serves as CDK's Global Chief Strategy Officer. He joined CDK in 2017 and has responsibility for corporate strategy, business development, and product management. Frey is an automotive innovator, beginning his career in the automotive industry in 1985 when he identified a niche market founding a full-service auto-buying service that grew into one of the nation's leading credit union auto-buying programs before selling to TrueCar in 2005.