Recession to Hit Dealerships Hard. What’s Your Survival Plan?

December 21, 2018

Economists are predicting that another recession is coming our way. Dealers across the country are already seeing things shift. New car sales are decreasing, even with strong rebates in December. With factory money on the decline and signs that some incentives may go away, many dealers are scared.

Many dealership managers have gotten accustomed to low rates and a healthy economy which has made their job easier than in years past. But now it’s time to take action and find ways to replace potential profit loss.

3 Ways to Make up Lost Gross

If new car sales and profits are on the decline, how are you going to make up that lost gross?

First, look at your financial statement. When times are good, and your business is humming, things can get a little more relaxed, and expenses may not be getting watched as closely. Are you paying too much for convenience? This could be in the form of services, technology, or payroll. Here are three areas where you might be able to cut down and save.  


Are you paying a vendor for something an underutilized employee could be doing? Think janitorial services, taking photos of vehicles, etc. With the proper investment in tools and training, you can equip your existing staff to be more efficient and effective. That cuts down on outside expenses.


When it serves a purpose, technology can help your business operate more effectively. But if your technology isn’t generating ROI or your employees aren’t using it, it isn’t a good use of capital.

Vendors can do a great job of selling managers on the fact that they absolutely need to implement some new expensive tool. But are your people using it? Did the implementation of that product provide the benefits that were promised? If the answer is no, you should cancel it or replace it with a less expensive alternative.

There are plenty of alternatives out there to some of the more costly and well-marketed options.


You’ve probably heard the saying “Pay plans drive behavior.” Do your current comp plans align with the desired results? Do they sync up with the changing environment that you’re going to experience in 2019? If you want to keep your good people, you have to pay them, and that pay has to align with your store making money — not just selling cars.

Are you incentivizing too much on volume and not enough on gross? How does the bottom line performance of the store or department affect compensation? If you have a big, high-volume store, has your number of assistants grown over the past few years? Can you equip and prepare your team to accomplish more with fewer people?

These three areas are just a start when it comes to preparing your dealership for a much different environment in 2019. But there’s more you can do. And we can help.

Do the Math

At MAX Digital, we’ve been in the business of helping dealerships run more profitable and efficient operations for over 15 years. We’ve always believed that you need to both sell cars and make money. We have industry-leading tools that some of the largest and most successful groups in America have used for years. Many of these groups continue to grow and expand, acquiring stores and opening up new locations.

We’ve had dealers leave over the years for the promise of better results with more gadgets and features only to come back to what works. They looked at the numbers and did the math. MAX Digital stores were more profitable on the retail and wholesale side of their business. You should do the math, too.
Take the time to evaluate your technology spend. Take the time to evaluate our products, and let us show you how you can reduce your technology spend and improve your bottom line.