How to Increase Dealer Profitability

September 19, 2023

There’s no shortage of auto market trends that have affected dealer profitability. These include limited inventory, rising prices, a stagnant economy, and the rapid adoption of electric vehicles—and that’s just the start. 

While there are challenges to overcome, they’re not insurmountable. With the right strategy, your dealership can increase profitability and market share as you look toward the future. 

5 Tips to Increase Dealer Profitability

Your goal is to increase profitability and sustain growth, but doing so is easier said than done. Here are five tips that can put you on the right path to success.

1. Increase Process Efficiency

Your dealership runs on its processes. Efficient processes result in more sales and profits. Inefficient processes can bog down your dealership, cutting into your profits and your business as a whole¹.

Review every process for ways to improve efficiency. Pay special attention to:

  • Vehicle acquisition
  • Inventory management
  • Sales and marketing strategies
  • Financing 
  • Vehicle delivery
  • Employee training and development
  • Event and promotion planning

2. Improve the Customer Experience 

Improving the customer experience is critical for cultivating brand loyalty and driving repeat business.

To start, dealerships should prioritize transparency in every transaction. Clear, upfront communication about vehicle pricing, finance options, and additional fees can prevent misunderstandings and foster trust. This transparency should extend to the digital world, ensuring online listings and quotes align with in-store offerings. You can also look at it the other way around: With the bulk of car buyers starting their research online², dealership details need to match what customers are seeing before they come in.

From there, investing in staff training is crucial. Knowledgeable salespeople who can address customer queries confidently and provide valuable advice enhance the buying experience. This professional guidance can make the difference between a one-time sale and a lifetime customer.

Finally, integrating technology can streamline operations and offer convenience. Online appointment systems, virtual car tours, or chatbots for instant inquiries can cater to the modern consumer's needs, making their interactions seamless and efficient. In an age of digital convenience, staying up to date with technology is pivotal for any dealership aiming for excellence in customer experience.

3. Get Serious About the Used Car Market

A trend that started during the COVID-19 pandemic, the used car market is experiencing major growth³. Economic concerns have consumers shopping for cheaper vehicles, and those who commute are turning their attention to the secondhand market. 

A competitive selection of reasonably priced used vehicles can have an immediate impact on dealer profitability. 

4. Offer More Aftermarket Services

Aftermarket services pose an opportunity for dealerships to boost profitability and enhance customer retention⁴.

Offering extended warranties and service contracts can provide customers with peace of mind while ensuring a steady revenue stream for the dealership. Such packages can cover a range of components, from essential engine parts to luxury add-ons like high-end audio systems.

Another idea is to offer customization options, such as vehicle detailing, window tinting, or specialized paint jobs. These services cater to customers seeking personalization, which helps with both customer satisfaction and profitability.

Dealers can partner with insurance providers to offer tailored packages, translating to commissions for each policy sold. This not only streamlines the car buying process for customers but also presents a lucrative upsell opportunity for dealers.

Think about it this way: Aftermarket services can transform a one-time vehicle sale into multiple revenue opportunities, significantly boosting profitability.

5. Take Advantage of Customer Surveys

Customer surveys have become an integral tool for businesses across all sectors, and car dealers are no exception. For this reason, they’ve become a solution for those asking how to increase dealer profitability, elevate their services, and retain clients⁴.

These are some crucial business areas customer surveys can provide insight on:

  • Informed Decision Making: Surveys provide actionable data, enabling dealerships to make informed choices about inventory selection, pricing strategies, and service offerings.
  • Enhanced Customer Experience: By understanding customer preferences and pain points, dealers can tailor their services, ensuring a smoother and more enjoyable buying process.
  • Brand Loyalty Cultivation: Addressing customer concerns and acting on feedback demonstrates commitment, fostering trust and long-term loyalty.
  • Identification of Training Needs: Feedback can highlight areas where staff might need additional training, be it in product knowledge or customer service techniques.
  • Benchmarking Performance: Regular surveys can track performance over time, allowing dealerships to gauge the effectiveness of implemented changes or new strategies.
  • Positive Online Reputation: Addressing and rectifying issues highlighted in surveys can prevent negative online reviews, while positive feedback can be showcased to attract potential buyers.
  • Increased Revenue: By aligning services with customer preferences and demands, dealers can boost sales, drive repeat business, and maximize upselling opportunities.

Customer feedback gives you the insights needed to stay competitive and relevant in a competitive market.


  1. Ryan, T. (6 June 2022). Solved: How to Build Sustainable Dealer Profitability. Fuse. Retrieved on August 30, 2023, from
  2. How to Increase Your Dealership Sales and Profitability. Porch Group Media. Retrieved on August 30, 2023, from
  3. US Used Car Market Size & Share Analysis - Growth Trends & Forecasts (2023 - 2028). Mordor Intelligence. Retrieved on August 28, 2023, from
  4. Increasing Dealership Profitability – The Best Tips & Strategies. Spyne. Retrieved on August 30, 2023, from