How to Reduce Your Operational Expenses as a Car Dealer

Estimated reading time: 2 mins

One of the most problematic areas of running a car dealership is keeping your costs low. You will need to be everywhere to get your hands on the best deals, and willing to travel to meet customers. You will also sometimes need to take a risk with people, cars, and trust your instincts. There are some important costs you cannot avoid, but there are certain ways you can reduce them, so you are able to manage your finances and maintain your liquidity better. Find out more below.


You don’t want to spend time and money insuring every car that you buy and sell. Instead, you might want to look into a comprehensive Motor Traders Insurance that doesn’t only cover you for driving the cars, but also helps you deal with customer complaints and legal challenges. Every dealer needs to have adequate insurance in place to avoid reputation loss, compensation cases, and save money on legal fees.

Choose the Best People

Not choosing the right people to sell your cars can also cost you too much. It is better to incentivize and reward the best people who will help you increase your revenue and profit than paying peanuts and getting monkeys. Assess every car sales applicant based on their first few weeks’ performance, and if you are not happy with how they deal with customers, let them go instead of waiting for them to improve and losing customers.

Storage Costs

One of the greatest costs you will have in your business is storing your cars safely. The good news is that there are plenty of ways you can cut the cost. First of all, the shorter period of time you keep the cars the less you will pay. Second, you can team up with other businesses with a large secure car park, so you can get a better price than having your own outlet.

Valeting Contract

You want your cars to look appealing and sell fast, you will have to valet them before your potential buyers would test drive them. Instead of ordering one-off services, you should team up with a valeting company that offers pick up and delivery. Monthly contracts, depending on your sales volumes, can save you time and money. Your staff might not have the time to clean the cars all the time, and you don’t want to employ a person full time for the job, either.

Financing Partnerships

Another part of the business that needs your attention when trying to cut back your operational costs is finance. You don’t have to employ a full time finance advisor. Simply team up with an independent car finance agent who will assist your customers and – instead of charging you for the service – get paid based on the amount of the credit in the form of commission.

The car sales industry is highly competitive. You will have to offer more for your customers’ money than other companies without increasing your operational expenses. Use the above tips to cut back costs and improve your customer service.

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