In the United States, automakers rely on franchised dealers for virtually all new-car sales and for providing parts and service to car buyers. The performance of dealerships therefore has a significant impact on the automakers’ profitability. A survey of US auto dealerships finds that top performers are more than three times as profitable as average ones and highlights three ways in which top dealerships distinguish themselves. Our study suggests that automakers should investigate ways of collaborating more with dealers to improve their performance, because both parties appear likely to reap substantial benefits from such efforts.
To understand what separates the best dealerships from the rest, we conducted 15 in-depth interviews with high performers and then surveyed more than 700 owners and general managers to assess their operational practices.1 Next, we compared the responses of the dealers with their key financial metrics2 and evaluated different practices to investigate the correlation with performance. The study showed a strong correlation between certain practices and the financial results of dealers and confirmed our experience that operational and other practices can substantially affect the performance of dealerships.
We expected that certain static factors largely outside the immediate control of dealers would influence their...