Car Dealership Management Tips

Car dealerships sell new and used cars, provide financing, sell car insurance and offer maintenance and repair services. Some dealers also sell car parts.


Many dealerships have specialists in each of these areas. The idea is to do one thing very well. Similar to a restaurant where the waiters, bartenders and chefs each focus on their specialties.

Customer Service

Car dealership customer service is the key to increasing brand loyalty and gaining a competitive edge. While many manufacturers deliver similar levels of vehicle quality, a great customer experience is what differentiates brands and drives long-term revenue growth. It encompasses every interaction from marketing touchpoints to product delivery and even a customer’s time in the dealership’s service department.

A good car dealership customer service team is the direct link between customers and a dealer. Its members are able to extract maximum value from a customer’s relationship through repeated business and referrals, especially if they are able to help the customer solve problems that might arise after a sale.

As a result, a car dealership’s customer service teams must be able to handle a wide range of situations and customer demands in order to create a positive image for the company. They should also be able to troubleshoot issues and provide accurate information about new products and services that are available.

Moreover, the car dealership customer service must be able to work effectively with other departments, specifically sales, to ensure that the dealership provides a seamless and integrated customer experience. One of the most important aspects of this is addressing any negative reviews or complaints that might be posted online, which can damage a company’s reputation and lead to a loss in sales.

Inventory Management

Car dealerships need to balance customer demand with supply. Having too many vehicles in inventory can slow down the sales process and result in lost revenue. Keeping inventory at the right level ensures that customers get to see what you have, while still leaving room for future vehicle orders. This can be accomplished by using data-driven management practices, which are based on dealership-specific customer and industry data.

During times of uncertainty, such as the semiconductor shortage, it’s critical that dealerships use a data-driven approach to analyzing and optimizing their inventory management processes. This will help them to identify localized trends and market demands, and make the best decisions for their businesses.

For example, a dealer can decide whether to keep an inventory vehicle or send it to auction. This will depend on a number of factors, from the vehicle’s history and reconditioning costs to current customer demand. The ability to predict market demand and pricing is essential for car dealers as it allows them to maximize the profitability of their pre-owned used inventory.

A car dealership can also increase its profitability by diversifying its inventory. This can be done by selecting a mix of popular makes and models that are appealing to a broad range of shoppers. It’s also important to provide a diverse selection of vehicle options, such as fuel-efficient cars and trucks. This can attract more buyers and help to improve the chance of making a sale.


Depending on the lenders they’re signed up with, dealers can offer financing through their in-house finance departments. This is known as indirect financing. Dealerships often approve buyers with good, and sometimes poor, credit scores. These loans are called subprime financing. Indirect financing allows the dealership to increase revenue and attract car buyers who might not be able to find funding outside the dealership.

Auto dealerships can also partner with independent lending companies to provide customers with a variety of financing options. The lending company prequalifies prospective borrowers by performing a soft credit inquiry. Then, if the borrower is approved, the lender writes a check that the customer brings to the dealership to pay for the vehicle. The dealership then sells the contract to the finance company for collection services.

This type of financing can be less complex than the traditional process because the dealer’s finance team handles most of the paperwork and knows all the loan terms before the customer arrives at the dealership. The dealer may even offer a preapproval application that potential buyers can fill out before arriving at the dealership to save time. But it’s important for a buyer to consider all the options before choosing to work with a dealership’s finance department. A direct lender can usually offer a lower interest rate and better loan terms.

Legal Issues

Car dealerships are subject to state and federal consumer protection laws, as well as other business regulations. If you are a victim of car fraud or other deceptive trade practices, you can file a complaint with a government agency or a lawyer. A lawyer can help you gather all of your evidence and prepare a case for court.

A lawyer can also help you get compensation from a car dealership if you have purchased a lemon. These are cars that have major problems that can’t be fixed, and many states have “lemon law” provisions that help consumers get a cash settlement or new car replacement if they purchase a defective vehicle.

Some car dealers engage in misleading advertising and pricing practices, such as bait-and-switch pricing or falsely claiming that certain add-on products are mandatory to obtain financing. Such claims can be grounds for a lawsuit against the dealer, as they are often illegal.

In addition, there are cases in which a car dealer violates the law by not disclosing material facts. For example, if you sign a contract for a loan with a dealer and the dealer fails to tell you that the interest rate is higher than the advertised rate, they may have violated both real estate and contract law. A lawyer can help you determine whether this is the case and file a claim against the car dealer for negligence or misrepresentation.