2014 Auto Dealer Industry Hurdles and Outlook

Current pressures being felt in the auto dealership industry center around compliance and regulation matters, particularly surrounding the F&I function, customer retention and shifting buying habits of the consumer.  A good model to help maintain compliance with the ever-changing regulations should include periodic risk assessments and well developed and documented policies and procedures. These should include employee training and periodic internal audits of those policies and procedures.  Related to customer retention and buying habits, loyalty programs should be developed to promote long-standing relationships and additional focus on the dealership’s website, including functionality and ease of use, since customers are spending more time than ever shopping for vehicles online rather than visiting multiple dealerships.

With these increased pressures and regulations, what will the industry look like in the years to come?  Inherently, decreases in employee headcount and changes in pay plan structure for certain key positions (i.e., managers) are on the horizon.  Dealerships will continue to get better at what they do; therefore, headcount will be decreased and pay plans may be restructured to get more out of employees (e.g., paying managers based on gross per employee).  In addition, significant changes in the parts and service departments can be expected.   These two departments could be combined in order to increase efficiencies and cost control.  Also, the possibility for automatic inventory replenishment systems may become more prevalent.  These systems would be directly linked to the dealers’ inventory, and when a certain part reaches a pre-determined stock level, the manufacturer would automatically send additional inventory to the dealership.

Even though many things remain unsure, one thing that is certain is that compliance and regulation matters will not be going away soon.  So, as we start into the 2014 year, there is no better time to take a second look at our internal policies and procedures and tighten up where possible.

Schneider Downs provides audit, tax and business consulting services to auto dealers. Please contact us to learn more about our services.

© 2014 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax related matter.


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