How Small Dealers Can Win the War Over Size

If you have been paying attention to industry trends I am sure you have noticed the ever-increasing gap between the size of smaller dealerships and large auto groups. Groups are swallowing up smaller dealers left and right as they continue to grow.

 

Of course, size matters when it comes to many things in the dealership world and the consolidation of the industry will end up primarily giving the large dealer groups cost advantages. They can acquire and maintain larger inventories and attract more consumers, decrease the costs of doing business by creating their own brand of bulk OEM parts straight from China and handle more service business simply because they have more bays and more technicians.

 

How then, are small dealerships supposed to compete?

 

Well, let’s talk about what can happen as these large groups continue to expand… they risk becoming mediocre. With the volume of vehicles they now need to sell, and the quantity of vehicles that must be serviced, the simple act of juggling this volume of work can quite easily turn them into more of an assembly line.

 

That’s where the smaller dealerships will find their edge. Smaller dealerships can have a more personal approach and provide more individual attention to their customers which can make them stand out. They can operate in a more agile manner, performing vehicle analysis for free and ranking them “Now” and “Later” so that the customer feels that you are truly looking out for them. The idea is to do something that large structured organizations typically don’t give the advisors or service managers the leeway to do.

 

I can personally relate to an incident where giving your service advisors more latitude, rather than less, (as large groups tend to do with their controls) would have helped. I had taken my Audi in for service, which was done on Friday, but I went to pick it up on Saturday. It was stored on the roof and, because of construction on a nearby building, there was a layer of sawdust on it. While they had washed the car, they did it right after service and so after the wash it got covered with sawdust. My bill was $3,500. I asked if they could wash it again, but they were thinly staffed, and the replacement advisor told me that it would take 45-minutes to get it done, at which point I left and went to a car wash and got it done myself. 

 

Wouldn’t it have been very powerful if the service advisor had said - “Sorry for the inconvenience, I am crediting you $25. Please take the car to a car wash as you are in a hurry!”  Simple things ... easy to do ... give every SA a $50 discretionary customer satisfaction discount.  Which is something luxury hotels routinely practice.

 

There are simple things that can be done in the service department such as improving communication with the customer with a better system of status updates and ETAs. Or offering multiple forms of communication including text messages, along with email and phone based on customer preference, would be a great start.

 

Smaller dealership can provide that personalized service that customers find satisfying and unexpected.  I have yet to see a dealer that does not discount their services to keep customers. How about offering a pickup and delivery service so that customers can get their cars repaired in the luxury of their home.

 

Now is the time to start thinking about what your dealership can do to differentiate itself if you want to compete in the future. The large auto groups will only continue to grow larger, so make sure that you don’t find yourself getting smaller at the same time.

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