How to Grow Your Independent Car Dealership
Though dealerships were badly affected by the pandemic, they were well on the road to recovery by the end of 2021. Instead of worrying about how to sustain the business, they’re now able to continue planning for growth.
Everything was radically transformed, new trends were introduced, and consumer behavior changed. Combining these with the number of cars sold each year in the US (17 million) means tough competition amongst dealerships, and the need for independent dealerships to expand their business increases.
What are some of the growth opportunities and tricks that will help your dealership thrive? Whether you’re new to the industry or a seasoned veteran, there are many available resources to help you. We’ve done the leg work and listed some of our best articles so you can make the most of 2022 and grow your dealership.
Tips for Starting Your Independent Dealership
If you’ve always had a passion for new or old automobiles and you’ve dreamed of owning your own business, a car dealership may be the right fit for you. Owning an independent car dealership can be a viable career path as customers always need quality new and used cars.
But before you begin purchasing cars and signing a rental lease, form a business plan and decide if you want to focus primarily on new or used cars. Do you intend to sell just one brand or multiple brands? You’ll need to have a good estimate of the initial costs, including car prices, employee salaries, lease and sales agreement costs, and more.
While a passion for cars certainly helps in the industry, a knack for retail sales is just as important. From the condition of the vehicle to building trust and rapport with your customers, knowing how to handle the sales process from beginning to end is key to a successful dealership.
Why is Car Dealership Financing Important?
If you’ve decided to start your own car dealership, the chances are you already have substantial experience in the sector. While it’s important to provide a healthy range of automobiles for customers to choose from, you’ll also need to offer financing programs and understand the importance of financing to start an independent dealership successfully.
Customers have grown to expect every dealership to offer in-house financing. If yours doesn’t, you might miss potential customers before they even walk through the door. Financing can also lead to greater customer satisfaction and sales.
How to Establish In-House Financing for Your Dealership?
The first step to establishing in-house financing at your dealership is to decide which financing products you want to offer. Once you’ve decided on the financing products that will suit your demographic, your next step is to contact lenders that offer those products. This may take effort and time but working with multiple lenders provides your customers with more options.
Alternatively, you can work with a lending partner like Vantage Finance. We can connect your dealership with lenders that match your needs and help you to optimize your finance and insurance (F&I) department.
Is an F&I Department Important in a Dealership?
Regardless of the size of the dealership, there’s no reason not to have an F&I department. If you run a smaller dealership, you know that it takes more effort to win over customers than it does for your larger competitors. This is why financing for small car dealerships is an important and often overlooked opportunity.
Customers expect you to provide in-house F&I services like large dealerships. Not offering these services will give customers the wrong idea that you’re either cutting corners or not able to afford them. You want to build trust with your customers and ensure your dealership provides the best customer experience.
Financing for small car dealerships is more than just adding to your profit margin. It can help close more sales, especially for used cars.
How to Structure Deals for Profit?
Almost all lenders use an automated system to verify customer credentials and speed up the loan process. The latest technology can help you build internal credit scoring models based on levers like Loan-to-Value ratio, trade equity, and credit that can be used to optimize deal structures. Once you understand how these key components of a deal structure interact and the various ways to speed up the loan decision process, the art of structuring it for profit will come naturally.
Having an experienced F&I manager or department is crucial to this process. Once they learn a lender’s likes and dislikes, they can emphasize the likes and work to mitigate or compensate for the dislikes. The F&I manager will also know which lender guidelines are non-negotiable, so you don’t waste valuable time putting together a non-starter deal.
Tips on Boosting Your Sales Numbers
Trying to boost your sales numbers can be frustrating and challenging. This is especially true for smaller independent dealerships, as you’re competing against larger dealerships that have more cars and in-house financing options. That’s why independent dealerships are always on the lookout for tips and strategies to give them a leg up and improve their marketing efforts.
Managing your online presence by building a functional, clean website and taking the time to engage with your audience is crucial to boosting sales. Try answering potential customers’ questions on social media and reach out to existing customers for reviews. If you receive a bad review, address it immediately and ensure you do your best to provide a better experience to that customer.
Tips on Closing Car Deals
Part of boosting your sales numbers is closing car deals quickly. The best way to do that is to make sure the customer trusts you enough that they’re getting a good value for their money. Car buying doesn’t have to be a tedious task that takes hours to complete.
While customers may approach buying a car in a logical manner, the actual act of buying it is emotional. Being honest and helping your customers create a mental image of them already owning the vehicle will encourage them to make the purchase. Providing flexible financing options will also help speed things along.
How Vantage Finance Can Help with Dealership Growth
The goal of any dealership is to offer quality service and increase sales numbers. Understanding the importance of F&I, structuring deals correctly for profit, and learning the tips and tricks to boost car sales can help you with that.
If you want to expand your range of financing programs, Vantage Finance can help. We are a virtual finance company that connects independent auto dealerships to a wide range of lenders that many cannot access. We can provide your customers with the financing option they’re looking for to help you close that deal sooner.
We know your dealership is ready to improve sales and close more deals. Contact us at Vantage Finance, and we’ll connect you with the right vehicle financing for your dealership.
Are you interested in closing more deals and improving customer experience? Contact us today, and we’ll help set you up with the best vehicle financing.
