Dealerships have long prioritized volume as the key to profitability. However, a shift in strategy is emerging—one that challenges the traditional high-volume approach in favor of acquiring fewer vehicles at better prices, selling at stronger margins, and streamlining operations for maximum efficiency.
For years, many dealerships have operated under the assumption that moving more cars equates to greater profit. Manufacturer incentives, sales targets, and the desire for market dominance have driven a relentless focus on monthly sales figures.
But with rising costs, changing consumer behavior, and economic pressures, dealerships are beginning to question whether high-volume sales are truly the most sustainable way forward.
Why More Isn’t Always Better
Chasing volume comes with significant challenges:
- Compressed Margins – Increased competition forces dealers to lower prices, cutting into profits.
- High Overheads – A larger inventory results in higher costs for storage, staffing, marketing, and reconditioning.
- Market Volatility – Economic fluctuations, supply chain disruptions, and interest rate hikes make high-volume strategies unpredictable.
- Operational Strain – Managing excessive stock requires more staff and administrative resources, increasing complexity and the risk of errors.
The New Approach: Fewer Cars, Better Margins
Instead of prioritizing sheer volume, many dealerships are refining their approach by focusing on strategic acquisitions, stronger pricing, and operational efficiency. This shift allows them to:
- Acquire fewer vehicles, but at better prices – Sourcing high-demand, high-margin models rather than bulk-buying low-margin stock.
- Maximize profitability per unit – Selling at stronger margins instead of discounting for quick turnover.
- Reduce mistakes and inefficiencies – A more selective stock approach allows for better decision-making and reduces costly errors.
- Lower operational costs – A leaner inventory requires fewer staff, less showroom space, and reduced marketing spend.
- Enhance customer experience – Focusing on fewer, high-quality deals allows dealerships to invest more time in each sale, building trust and long-term relationships.
What Dealers Can Learn
As market dynamics evolve, dealerships should assess whether their current approach is sustainable. Some key considerations include:
- Optimizing acquisitions – Using data-driven insights to identify vehicles that offer the best return on investment while avoiding unnecessary bulk purchases.
- Cutting operational waste – Maintaining a well-curated inventory to reduce overheads, staffing requirements, and financial risk.
- Refining pricing strategies – Moving away from aggressive discounting to protect margins and sustain long-term profitability.
- Focusing on strategic sales – A dealership selling fewer cars at better margins can achieve the same or higher profits as a high-volume dealership, but with less complexity, fewer risks, and lower costs.
As the automotive industry adapts, the dealerships that prioritize quality over quantity will be best positioned for sustainable profitability, reduced operational strain, and long-term success.
