Factors That Determine Profitability for UAE Motor Dealerships

12 Jul 2022 Helpful Tips

Profit. It is the most important word in business. As a Motor Dealer in the UAE, your biggest priority is to maximise profit. There are many factors that determine whether your dealership will be profitable or not, some of which you may not be aware of.

Here are 5 Factors that Determine Profitability for UAE Motor Dealers in 2022.

1. Vehicle Acquisition Cost

One of the biggest expenses for all Motor Dealers is Vehicle Acquisition. The price that your dealership acquires vehicles for will determine whether your dealership is profitable or not. A mistake that many motor dealerships make is getting into bidding wars for vehicles. The problem with this is you risk overpaying, and you limit profit margins.

To generate a profit on your vehicles, your dealership needs to source vehicles at the lowest possible price! To avoid overpaying for vehicles, it is so important that your dealership researches and understands industry standard vehicle prices and customer demand. The more knowledge your dealership has, the less likely you are to overpay for a vehicle. If a vehicle price doesn’t add up, walk away, there will always be another car to purchase.

Related Article: How Car Dealers in the UAE Can Source More Vehicle Stock in 2022.

2. Vehicle Advertising

Vehicle Advertising is an expensive but essential cost for all Motor Dealerships. With that being said, the more your dealership spends on vehicle advertising, the less profit you will generate when your vehicle sells.

To reduce your dealerships vehicle advertising spend, you need to have a strong reporting system. The benefit of having a strong reporting system is your dealership can quickly see what advertisers are generating leads and what advertisers are not. For advertisers that don’t generate leads for your dealership, you can instantly stop sending your listings to them. The quicker your dealership can identify what advertisers are providing an ROI and what ones are not, the quicker your dealership can make decisions that reduce total advertising costs.

Related Article: How UAE Car Dealers Can Reduce Costs in 2022.

3. Vehicle Pricing

The price that your dealership sells your vehicles for will play a huge factor in determining whether your dealership is profitable or not.

Customers are become more and more price sensitive, having a vehicle price that is either too high or too low will turn customers away from purchasing from your dealership. Before your dealership puts a vehicle up for sale, it is so important that you research the latest industry pricing. Look at what competitors are selling similar cars for and try to offer customers something better. The better your dealerships pricing strategy is, the more likely customers will be to convert.

Related Article: Reasons Why UAE Motor Dealerships Fail – How your Dealership Can Avoid Them.

4. Sales Staff

Your dealerships staff will play a huge role in determining whether your dealership is profitable or not. The better your staff perform, the more profit you will generate, it’s that simple.

Before you employ a salesman, it is so important that you train them correctly. Ensure they understand their roles and responsibilities and assist them with getting up to speed. The more knowledgeable your sales staff are, the more they will be able to help the customer.

Related Article: How UAE Car Dealerships Can Reduce the Impacts of a Staff Shortage.

5. Customer Service

Customer service is arguably the most important part of the car buying process, even more than price. If your dealership doesn’t provide a welcoming customer service experience, customers will go to other dealerships who do.

To maximise profitability, Motor Dealers in the UAE need to provide the best customer service experience as possible. Help your customer, listen to their requests and most importantly make your sales process as fast and easy as it can possibly be.

Related Article: How UAE Car Dealers Can Improve Customer Service.

Final Word,

Generating profit for your dealership is not an easy task. There are many things that go into generating a profit than what is often realised. The 5 Factors mentioned above will determine whether your dealership is profitable or not in 2022.

We hope you enjoyed reading this article. To read more articles like this, please visit the EasyCars latest news page here.

About EasyCars,

EasyCars by Jeal is a UAE Motor Industry Specific, Dealer Management Software that automates the daily tasks of running a motor dealership. Using the latest technologies, EasyCars removes frustrations experienced at the dealership - opening the doors to future growth.

EasyCars features include Simple Stock Management, Automated Advertising, Automatic VAT Calculations, Xero Accounting Integration, Facebook Automotive Inventory Ads, Dealer Websites and Business Reporting in the one central management software.

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