4-Step Guide To Making Sure Your Dealership is Optimizing Profit Margin

by Kristine on December 21, 2022


Profit margin is one of the most important metrics a dealership can track. And yet, many dealerships don't have a way to make sure they're hitting their profit goals every month.

That's because there's no one-size-fits-all formula for calculating profit margin. Every dealership has different costs and operates in different environments.

But if you want your dealership to succeed, you need to make sure you're keeping an eye on the right numbers—and that means making sure your profit margin is where it needs to be.

This guide will show you how to increase your profit margin with 4 simple steps.

Step 1: Profit Margin 101

Profit margin is the amount of money you make per sale. It's calculated by dividing your gross profit by your total sales.

The higher your profit margin, the more money you make for every dollar you bring in.

Profit margins are important because they show how well your dealership is doing at selling cars and making a profit. You need to know how much money you're making on each car so that you can improve upon it—either by lowering costs or finding ways to increase revenue. If you don't have a high enough profit margin, then chances are, you aren't making enough money from each car sale, which means somewhere along the line there's a problem with either your inventory or how much work goes into selling a vehicle.

Why Is Profit Margin Important?

Profit margins are important because they tell you how much money you have in excess to invest in other things—like advertising or research and development. If your profit margin is high enough that you can invest in these things without affecting your ability to pay your employees or other expenses, then you should try to increase those investments accordingly.

Step 2: The 5 Golden Rules of Pricing Repairs and Services

If you're selling automotive products, there's no question that you want to make sure your business is making a profit. After all, if your customers aren't buying, then your business will fail. That's why it's important to keep an eye on your pricing, and make sure that you're getting the best possible price for each service or product you offer.

Here are 5 golden rules for keeping your prices at their highest possible level:

  1. Don't be afraid to be different-If everybody is charging the same price for the same service, there's no incentive for customers to choose you over anyone else. If you can offer something that's not just as good, but even better, than what your competitors are offering, then you'll have an advantage over them. This doesn't mean that you should try to undercut your competitors—that would be bad for business! Instead, think about what customers are looking for when they come into your dealership, and see if there's a way that you can provide that at a lower cost.
  2. Think about what customers want and need, not just what they ask for. If you're selling cars, then your customers probably don't want to buy the same old car as everyone else on the lot. They want something that's cool and different, and it's up to you to find ways to get them into those vehicles instead of their boring old beige sedan. Try some electric vehicles perhaps.This creates an additional value that you just generated that the customer did not know about before coming in.
  3. Get creative about how you price your cars In the car industry, there are a lot of different things that go into figuring out how much a car is worth. There's the list price (what the manufacturer says it's worth), trade-in value (how much someone would get if they traded in their old vehicle), and retail value (what a customer would pay for it). If you're selling vehicles and trying to make more money. You need to find creative ways to get people into those cars.
  4. Make sure your people are trained well and ready to go. No matter what kind of product or service you're selling, the key is getting it in front of as many eyes as possible. This means giving your employees the tools they need to do their job well and making sure they know how to use them properly. When you do this, the results will speak for themselves.
  5. Have fun! You're in business to make money and run a successful operation, but it's important not to lose sight of the fact that your company is built on providing a service or selling products that people want or need. If you don't enjoy what you do, chances are good that your customers won't either.

Step 3: How to Talk about Money with Your Customers

When it comes to the automotive industry, there are many moving parts. Car dealerships need to keep their doors open and their lights on so they can sell cars. But how do you talk about money with your customers?

Talking about money with your customers can be a nerve-wracking experience. Even if you're the best at what you do and have the best product, it's hard to know what your potential clients are thinking when they walk into your dealership. Are they going to bite? Or are they just looking for a test drive? How do you know whether or not their budget will work with your profit margins?

Here's how to make sure that your dealership has the right profit margin for every customer:

  1. Know your customer: A lot of people think that their customer is everyone. But if you want to make sure that your profit margin is in the right place, then you need to know exactly who you are selling things to. For example, if most of your customers are single mothers with two children but one car and two jobs each; then it's probably not a good idea to sell them a brand new sports car.
  2. Know your costs: Next, you need to know what all of your expenses are going to be before you start selling things. If you don't know what it costs to make something; then how will you know if someone is paying too much for it? For example, if people are buying a new car from you every two years instead of every five years; then there's a problem somewhere that needs fixing.
  3. Know your target market: Finally, you need to know who your customers are and where they live. If you don't know their habits or preferences; then how will you sell them something that makes their lives easier?

There are a lot of things that go into running a successful business. The three points above are just the beginning of what you need to know; but they're also the most important because it's from these three things that everything else will flow.

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Step 4: Use a Shuttle Management Software

When it comes to improving profits, one of the most important things you can do is manage your fleet well. This means making sure that your vehicles are always in good condition and well-maintained, which will save you a lot of money in the long run.

One great way to do this is with shuttle management software. These tools will help your dealership improve its profit margin by tracking and monitoring your fleet performance in real-time.

Quickride is a shuttle management software that allows you to view all of your vehicles' performance metrics at the touch of a button. It also provides a detailed breakdown of each shuttle's ride completion/cancellation history so that you can better understand where costs are coming from.

By using Quickride's shuttle management software, you'll be able to:

  1. Keep track of all your shuttles' locations in real-time, so you know exactly where they are at any given moment.
  2. Monitor driver behavior by tracking speed limits and adherence to company policies, so that you can prevent any accidents before they happen
  3. Provides real-time route optimization and routing software that helps you reduce costs while improving customer satisfaction.


A good dealership is a profitable dealership. It's that simple. If you're not making money, you're not going to be in business for very long. And if you're not earning more on each car sale than it costs to sell it, then something needs to change.

The good news is, there are lots of things dealerships can do that will help them increase their profits and make sure they have the right profit margin.

At the end of the day, it's all about the numbers game. If you want to be successful in the car business, you need to focus on making sure you have the right profit margin. And this doesn't just mean selling cars at a higher price than what it costs to buy them from the manufacturer. It means providing value for your customers so that they're willing to pay more for what they get from you. 

Topics: centralized shuttle management system, auto tips, automotive business, fixedops