One Factor that Impacts Dealership Profitability

The word “transparency” gets floated around the automotive industry quite often – especially in the last few years. The days of “the invoice is locked in a safe at the corporate office” are gone and consumers have all of the access to data that they need. Yet some Dealerships are still trying to play the game.


I understand that dealerships need to be profitable, just as any business does, yet there is still a push-back from consumers on industry sentiment and trust when it comes to dealerships. The normal given reason for a lack of transparency is the pursuit of higher gross profits. With industry experts predicting a slowdown or even a decline in new car sales in the near future, profit is more important than ever to a dealership. According to this article, however, the lack of transparency could be hurting sales more than if the dealership had been completely  transparent from the beginning.


In the article, Congress ranked at the bottom in perceived level of trust by consumers, while service and technology companies were the most trusted. A whopping 65 percent believed that brands lied at least some of the time and 54 percent believed that the brands that they currently do business with are less than honest.


So, knowing that trust and transparency are actually good for business, how can a dealership be more transparent? Even if the Dealer scotch taped the vehicle invoices to the showroom windows consumers still wouldn’t believe those would they?


Really, it’s all about public communication. The facts are that the majority of consumers that leave reviews about a business do so in an emotional state, and that state is mostly when they’ve had a negative experience. For this reason, many dealerships pay little attention to the reviews that are left, whether those reviews are good or bad. Transparency online comes when dealerships are publicly responding to reviews – whether positive or negative – and actively looking to assist their customer in rectifying a problem or thanking them for their business, that is true engagement!


Have you ever read and been influenced by a review? I know I have, I won’t buy a thing on Amazon or go to a restaurant until I have read the reviews. There is no doubt reviews and responses from the business, have an impact on my (and your) decision making process.  


But let’s get back to the argument of profit and transparency versus non-transparency. This same study showed that 73 percent of the participants believe that transparency is so valuable to them that “they were either more likely or very likely to pay extra for products” they deemed more transparent. Assuming that is true, it is logical to believe that being transparent can be more profitable than not being transparent. At the very minimum, it is an equalizer. Yes, dealerships are always going to get those consumers who come in offering absurd figures for vehicles. Nothing is going to stop that. Build value, however, in a culture that is transparent enough that consumers can see it and they will come, believe, tell their friends, and become repeat purchasers! They may, perhaps, even have a great enough experience to be motivated to leave the dealership a great review.


Stop thinking about transparency as a “price” thing. There is no point in doing so. There is too much data out there to argue with a consumer. Sometimes that data is inaccurate, I agree. Does that mean a consumer will believe the dealership or the source of the data they read? Chances are good, the data will win over the dealership just about every time.


It’s time to pay attention to the feedback that you are receiving by both happy and unhappy consumers and respond to each and every one of those reviews. Make it non-negotiable with your management team and by doing so, you will not only influence the opinions of those consumers, but you could very well be influencing the opinions of the prospects that you don’t even know exist.


Happy Selling!!


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