How incremental changes can improve profit margins

How incremental changes can improve profit margins

  • Post category:Automotive

In today’s challenging automotive retail market one of the most efficient methods of maintaining margins is to become agile, proactive and responsive to industry movements and by ccontinuously implementing incremental changes. 

In comparison to expensive, high-risk projects, incremental changes can demonstrate immediate, measurable benefits and require very little effort to implement. One dealership openly reports a gross profit of 10% on a like for like basis, by simply implementing initiatives that improve margins and increase volume sales.

With the current industry challenges such as used car stock acquisition, uncertainty of brexit, demonization of diesel and external factors influencing footfall, dealers are finding it difficult to predict their next strategic move.

Continuous improvement should never cease to exist

Creating a business culture that is always striving to perform better will put employees into the right mindset and openness towards change. Incremental changes are easier to digest, learn and embed into daily routines and culture. This continuous improvement process helps prevent obsolescence and maintains performance during any transitional periods.

There are multiple areas within a dealership that would benefit from minor changes to increase operational efficiency, productivity levels and profit margins. Our Buzz2Get service provides dealerships with simple tools and actionable insight that will lead to those incremental improvements.

Examples of highly useful incremental changes

By using every day tasks to monitor each stage of the forecourt process from purchase right through to consumer sale, any areas of improvement can be easily identified.

As an example, by continuously monitoring vehicle journeys through the preparation process using simple technology, you can decrease time inefficiencies, physical data entry errors and have complete control and transparency of each car at any given point.

Technology sounds rather like a major change and expensive too, however with the application of existing tools it becomes an incremental change, where by you are superseding manual data entry with a quick scan and simplistic push button functionality.

This is particularly useful to managers for tracking and identifying processes in need of improvement and highlights those that work well. By simplifying data entry within the preparation process you can continually maximise both productivity levels and profit margins. With less complication and fewer repetitions in the preparation steps and lack of miscommunication the process can run smoother, therefore delivering top quality cars ready to retail on to the forecourt quicker.

Incremental changes within the business are relatively low risk to pilot initiatives. Just a single small improvement can bring multiple benefits across the business and keep it’s culture open minded and ready for challenges that call for strategic adjustments to compete within the industry.

If you would like to find out more about driving operational efficiency by making a simple incremental change to your preparation process please contact Chris Scoot.