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7 key value drivers for auto dealerships


As Canada's automotive retail industry changes and consolidates at a rapid pace, now is the time for many owners to decide whether they will sell their dealership business, retire, or expand.

No matter the path ahead, it's essential to understand and strengthen your auto dealership's value drivers. While numerous factors can affect the worth of your dealership, owners should consider the seven outlined in the infographic below.

To learn more about adapting your auto retail business to the changing market, read our full Automotive Outlook 2019 report:

Read the full report

Your inventory is one of the more tangible assets that contribute to the business’s overall worth. Owners should consider:

  • Cash value of the vehicles
  • Inventory management and turnover rate
  • Consumer trends

The value of automotive brands can differ based on vehicle type, performance, consumer preferences, and other factors. Diversifying your OEM portfolio can contribute to the worth of your business by increasing:

  • Inventory value
  • Employee knowledge and experience 
  • Operational efficiency

As property values increase and availability decreases, the land a dealership sits on could be one of the most valuable assets for an owner. It can also eclipse other costs for those who want to expand.

An experienced advisor can help you understand what a property is worth, how it aligns with your business model, and what opportunities are available, including:

  • Utilizing the equity of the property
  • Leasing land to a developer
  • Optimizing your bricks and mortar footprint

Urban dealerships are in high demand, but this trend could change as consolidation increases. As buyers seek acquisition opportunities, their considerations may include:

  • Potential market size
  • Ease of finding staff
  • Geographic diversity

A modern technology framework can help you operate your business more efficiently and attract potential buyers who want a turnkey operation. A comprehensive strategy can include:

  • CRM software
  • Benchmarking and CPM tools
  • Cloud capabilities
  • Data analytics and lead generation
  • Cybersecurity
  • Digital marketing, including mobile

The people who help you run your business and make strategic decisions—employees, advisors, and successors—provide intangible, and often irreplaceable, value. A strong management team that can assist with a smooth leadership transition can be an attractive selling point. Other key positions may include:

  • Marketing and IT specialists
  • Salespeople
  • Technicians

Maximizing the profitability of the parts and service department can do more than improve your dealership’s bottom line. A fluctuating absorption rate could also help owners measure:

  • Customer experience
  • The strength of your teams
  • The health of your business strategy

Drive your business forward

The experienced advisors at BDO can perform a valuation of your dealership and develop strategies to help grow your business and manage your long-term financial security. Contact our automotive retail team today to learn more.

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