Want To Make Money?

Some interesting statistics came across my desk recently that point to possible new revenue opportunities for independents.

Dennis DesRosiers published a recent Decade in Review which noted the dif- ferences in dealership revenues versus gross profits. What he found was while new vehicle sales continue to dominate dealership revenues, with 61.4 per cent of all revenues being generated this way in 2009, it was not, contrary to popular percep- tion, where the gross profits are coming from. His reading of the market statistics finds new vehicle sales account for 25.8 per cent of a dealership’s gross profits; but fixed operations, which DesRosiers includes, service work and parts wholesale, accounts for 10.4 per cent of revenue and 38 per cent of profits.

None of this is new to the independent marketplace. It has known for some time that profits come from ongoing maintenance work; and I have written several times last year about how dealerships will move aggressively to maintenance work to maintain profitability, particularly in a time of dealership closings and reduced vehicle sales from continuing economic uncertainty.

But what I’d like to suggest is there are opportunities for independents for further revenue growth by working together with dealerships for ongoing mainte- nance work or even sourcing some parts. Now before everyone pulls out the pitch- forks and torches, let’s step back for a moment and take a look at this honestly. Yes, for many years there has been a mantra amongst independents that dealership operations are the enemy, the dark forces of the independent universe that need to be fought. The reality, as many already know, is both sides have been work- ing together for some time; that many independents often have good, even great working relationships with dealership maintenance operations, helping them by taking work the dealership bays cannot do or dealerships helping the local inde- pendent fix a troubling issue on a new vehicle. In many smaller towns in Canada, this kind of relationship has been a fact of life for years.

A successful working relationship between dealerships and independents will be based on quality of work, the integrity of the operations and customer relation- ships. Dealerships, while certainly in competition with independents, cannot do all the work that will be needed on today’s vehicles, old and new. Independents must be there to offer a helping, and profitable hand to dealerships, just as dealerships can help independents by not only sending work their way but in supply them with parts or key repair information. Done right, it is mutually beneficial relation- ship that will let independents tap into the growing profits available from people who are now keeping vehicles longer and investing more in maintaining them.