How Data Analytics Improves Car Dealership Operations

No matter their size or location, car dealers must continually evolve their operations, selling strategies, and inventory to stay aligned with consumers’ ever-changing needs. 

To stay competitive in times of constant change, dealers must keep a close eye on both their customers’ experiences and their internal operations. Data is a critical factor in both of these efforts, as it helps dealers measure current performance, monitor trends over time, and make proactive decisions that drive their business forward. 

However, car dealers need a reliable data analytics strategy to ensure they can access, analyze, and act upon the data at their disposal — and do so in a timely manner.

The traditional approach of parsing through confusing spreadsheets or manually combining datasets simply won’t afford them the efficiency and agility they need to keep up with the market. 

In this blog, we will discuss the value of data analytics in car dealership operations and how dealers can leverage analytics tools to boost efficiency and improve performance across departments. 

Automate and Centralize Reporting 

Car dealership operations are complex and multi-faceted. Each department relies on the data within a dealer management system (DMS) and other operations platforms to manage customer relationships, monitor performance, and make informed decisions. 

However, most dealerships use manual, excel-based processes to extract and analyze the data inside these platforms — which means generating reports is tedious and time-consuming. 

Rather than asking employees to spend all day extracting DMS data by hand, dealerships can invest in a business intelligence (BI) solution that automatically pulls data from every system in their technology stack, then centralizes it in customizable dashboards. 

This approach saves hours of labor, reduces human error, and simplifies complex analyses with just a few clicks. Plus, employees have better access to data visualization and reporting capabilities. They can use this to track certain metrics or dig deeper into business insights, with no technical expertise required. 

A well-managed BI practice does not just improve efficiency; it also breaks down silos between multiple locations. It allows leadership teams to benchmark performance across dealerships and gain a complete picture of their operations — even if each dealer works out of a separate DMS. 

Access Timely Business Insights 

When dealerships rely solely on Excel-based reports to generate business insights, they typically end up analyzing critical data long after the “decision window,” meaning the time period in which that data could have informed an important business decision. 

Alternatively, the right BI and analytics platform provides users at every level of the business with near real-time access to data via regularly updated reports and dashboards.

Rather than generating reports once per month or quarter, car dealerships can run daily analyses on sales numbers, service team productivity, accounting activities, and more. 

Managers can measure efficiency, profitability, customer loyalty, and other core success factors on a daily basis, then use their findings to inform improvements. Doing so delivers the peace of mind that their strategic decisions are backed by accurate, up-to-date insights. 

The best part? These insights do not have to stay locked up in a data analyst’s office behind a wall of hard-to-read data models. Embedded analytics tools allow dealers to present BI insights directly inside the tools and systems their employees use every day in clear, digestible formats that enable business users to make informed decisions. 

Measure Performance Across Departments 

Each department in a dealership uses specific key performance indicators (KPIs) to measure success and progress toward overarching business goals. To effectively monitor and manage these KPIs, department heads need specialized analytics tools designed for the unique challenges of managing car dealership operations. 

These business leaders can use the pre-configured dashboards and reports inside of their BI platform to routinely measure performance in each department.

In many cases, these reports are available out-of-the-box and configured based on industry best practices, which means they align with standard benchmarks and automatically integrate data from dealers’ DMSs and other operations platforms. 

In the Sales Department, data analytics tools help dealers: 

• Measure progress toward pre-defined sales targets 

• Manage inventory levels and inventory aging 

• Calculate overall revenue and profit margins

• Track rebates, kick-backs, and all other incentives from OEMs or importers

In the After-Sales Department, data analytics tools help dealers: 

• Evaluate the accuracy of the service technicians

• Reduce open repair orders and invoicing delays 

• Track billable hours and overall efficiency

In the Finance Department, data analytics tools help dealers: 

• Simplify general accounting and budgeting processes

• Keep track of incoming and outgoing payments 

• Monitor evolving expenses and sources of revenue

Beyond time-sensitive performance management and financial recordkeeping, dealers can use department-level reports to monitor trends over time. For example, they might find that certain service technicians are more productive when working with specific vehicle makes or models, or they might notice that sales performance chronically declines near the end of every quarter. 

These insights, like many others uncovered through their BI solution, can help them make data-driven decisions that boost operational efficiency, reduce hidden costs, and improve their customers’ experiences. 

Pave the Way for Data-Driven Car Dealership Operations

Data analysis helps car dealers overcome their most pressing challenges, from balancing portfolios to managing operations across multiple locations. A well-managed BI and analytics strategy, combined with a reliable BI solution, simplifies the complexity of reporting and performance management. 

To learn more about which metrics you should be tracking in each department, download our guide, Creating a Data-Driven Automotive Dealership, today.