The Secret to Controlling Dealership Expenses By Sharon Kitzman, Dominion VUE DMS One of the significant challenges of running any automotive dealership is moderating expenses. General managers and dealer principals are responsible for controlling many costs, including payroll, vehicle inventory, floorplan, and parts inventory. Monthly bills add up, and there is less revenue to put toward necessary resources. A major opportunity for expense control may be the dealership’s software stack. According to the 2022 DMS Market Report by the Dealer Tech Nerd, the average franchise dealership spends $30,000 a month on software. With a mindset shift and careful evaluation, those costs can be reduced. A Breakdown of Dealership Software Costs Dealership software can be broken down into 29 categories. Here is an outline of the most expensive and necessary solutions for a typical franchise dealership. • The Dealer Management System or DMS is the core hub that connects all dealership data between departments and even multiple stores within a dealership group. The average monthly spend is $6,300. • Many areas of a business use Customer Relationship Management (CRM) tools to execute, track and analyze communications with customers and prospects, and maintain a historical profile of these interactions to help grow relationships. This software costs $2,000 per month. • Equity Mining software helps a dealer use customer information from a CRM and evaluate the revenue potential of a customer, considering trade-ins, future potential services, and more. This tool costs $2,000 per month. • Vehicle Inventory Management is software that holds the details for each vehicle on the lot, including owner history, the going market value, photos, and more. This software averages $1,700 per month. Amounts vary by category, but all tools contribute to this significant monthly cost. Knowing the value of each tool will allow you to evaluate your needs and consider how you might reduce costs. How to Evaluate Your Software Integrations Take stock of the software vendors you use. Gather your contracts, invoices, and any other information. The tools are likely integrated with your DMS. Here are some suggestions on how to evaluate them. • Take Note of Redundant Services as tools evolve and update, the features between some of them can become similar. After several enhancements, the CRM you originally purchased to manage 40
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