As a Motor Dealer in the UAE, your biggest priority is to reduce costs and maximise profit. As the UAE Motor Industry continues to change, many dealers make the mistake of working in the day-to-day operations of the dealership instead of focusing on growth. When this happens, things tend to fall through the cracks which both increase costs and reduce profit. To be successful in 2022, Motor Dealers in the UAE need to reduce costs to escalate growth.
That brings us to the question, what costs can car dealers in the UAE reduce in 2022? The good news is there are many ways your dealership can reduce expenses and not impact either operations or customer service.
Here’s How UAE Car Dealers Can Reduce Costs in 2022.
1. Vehicle Advertising
Vehicle Advertising is a necessary but a costly task for all Motor Dealers. One of the biggest mistakes many motor dealers in the UAE make is not reporting on their vehicle advertising spend and Return On Investment. The problem with not accurately reporting on your vehicle advertising return is you could be paying more than you should be.
As Vehicle Advertising costs soar in the UAE, motor dealers must implement budget caps on their vehicle advertising. The benefit of placing a cap on your vehicle advertising is it stops your dealership paying over the allocated amount. Above all else your dealership needs to have a system in place which allows you to see what advertisers are providing a return and what advertisers are not.
Having a strong advertising reporting system set up gives you the ability to see where your money is going and what results you are receiving. The benefit of having this is you can make strategic advertising decisions. You can instantly stop spending money on advertisers that are not providing a return. The less money you spend on advertising the more cash you will have to spend on maximising growth.
Related Article: Online Advertising for Car Dealers in the UAE just got so much easier.
2. Vehicle Costs
Studies show that vehicle prices in the UAE have increased over 10% in the last year. Another common mistake that many dealerships make is getting into bidding wars with other parties to source new vehicles for their dealership. The problem with getting into a bidding war is you often pay more for a vehicle than it is worth which limits your profit margin in the long run.
With that being said, there still are ways Motor Dealers in the UAE can source good quality cheap used cars to sell. To avoid overspending on used car stock, motor dealers need to think outside of the box and look at alternative avenues. A quick example could be to reach out to your past customers to see if they are or know anyone who is looking to sell a car.
To be successful in an extremely competitive market you need to avoid sourcing vehicles through the popular and common methods as many people use these platforms. The more demand there is for something the more you will need to pay. By thinking outside of the box and finding alternative ways to source new stock you can greatly reduce your sourcing expenses.
Related article: How Car Dealers in the UAE Can Source More Vehicle Stock in 2022.
3. Labour Costs
Staff have always and will forever be one of the largest expenses for all businesses. In saying that, there are ways your dealership can minimise labour costs and not affect operations or customer service.
Every business has a sales cycle. Some months you are busier than others and that’s normal. Many businesses make the mistake of rostering on too many staff during quiet periods. The problem with this is if they are not generating a return on investment through sales, your dealership will be haemorrhaging money.
To minimise your staff costs, find out the months when you are busy throughout the year and when you are quiet. Once you understand your sales cycle only roster on the appropriate number of staff to cater for the demand. The less staff you need in the quiet periods the more you will save.
Related Article: How UAE Car Dealerships Can Reduce the Impacts of a Staff Shortage.
4. Overhead Expenses
Overheads are an expensive and cannot be avoided. However, there are ways of decreasing your overhead expenditure. A mistake that many businesses make is remaining loyal to their current utility providers for example your internet, electricity, and phone providers. The problem with this is you could be paying far more than what could be offered by others.
A quick and easy way to reduce your overhead expenses is by shopping around online. Find out what other providers may be offering, tell them what you are currently paying and see if they can make a better deal. Doing simple online research could save your dealership thousands in overheads costs every year!
5. Unused Equipment
The UAE Motor Industry has changed massively in the last 2 two years. With that being said some of your dealership’s equipment may not be needed in today’s environment. Many businesses make the mistake of keeping unused equipment on location connected to power sources and taking up valuable space. The problem with doing this is it costs your dealership money, and you may not even realise it.
To further decrease your costs, your dealership should remove old, unused equipment. The benefit of removing unused equipment is you can make money in return. If you are not using a particular piece of equipment someone else might. This gives you an opportunity to sell your unused equipment and make some extra money!
Related Article: Why Web-based Applications Are So Important For UAE Car Dealers.
Reducing costs is the key to success in business. There are many ways car dealers in the UAE can reduce expenses and escalate growth without impacting service or operations. The 5 tips mentioned above are a few great examples of how your dealership can reduce costs in 2022.
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EasyCars by Jeal is a UAE, Cloud-based, Dealer Management Software that automates the buying and selling of motor vehicles. Using the latest technologies, EasyCars removes frustrations experienced at the dealership and opens the doors to greater profitability.
EasyCars features include Vehicle Stock Management, Automated Vehicle Advertising, VAT Calculations, Business Reporting, and Integrated Accounting in the one central, easy to use software application.
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