What to Look Out For in Your Local Competitors

December 12, 2022

Automotive retail is presently very profitable, meaning that in many places around the country, multiple dealerships in the same area are all doing very well. However, this doesn’t mean that competition for market share and overall sales is lessened. On the contrary, dealerships that are flush with cash have more money to invest in projects that will help them outcompete their nearby rivals.

Why is this happening? In addition to greatly increased profits per vehicle, there are fewer dealership owners overall – even though the number of stores has not changed significantly.  Automotive News has reported that 22.7% of all US rooftops (a total of 4,138) were owned by the top 150 dealer groups, as of the end of 2021.

This trend toward concentration and consolidation can be seen across small, mid-size, and large dealer groups. It will continue into the foreseeable future, giving these increasingly larger groups more “muscle” to compete in the marketplace. 

How to compete on a strategic basis

As both privately-owned and publicly-financed dealer groups increase in size, they tend to take a more corporate-based, analytical approach to competing in their markets. The primary objective is to support their future profitability and performance. In order to compete strategically, it’s helpful to consider the most important dynamics between your dealership and your competitors. These may include:

Your respective portfolios of auto brands: Dealerships selling different brands may compete against each other if they target the same market segment. Whether the brands your competitors sell are aimed at the mass market, luxury buyers, high-end exotic aficionados, or a combination thereof, they will typically play to the strengths of each brand. Whether it is reliability, high-tech features, comfort, or performance, these attributes attract the subset of buyers to whom they are most important. Your dealerships’ brands in the same segments can compete on equal footing.

While the vehicle makers typically do a good job of promoting the vehicles themselves, you want to be the dealership where the sale is made and the customers come back for their next car, truck, or SUV. Brand and consumer loyalty form the bedrock of your sales results, but you also want to attract those buyers who have been giving their business to other dealers in your market segment. 

These are the people whom you have the opportunity to convert to long-term, brand-loyal customers, by providing customer service that is over and above what your competitors are capable of. Once you achieve this, you can count on them for repeat business and referrals, year after year. And that means increased market share on an ongoing basis!

Customers like these are worth their weight in gold. Once you have them, you will want to court them, treating them like the very special people that they are to you. Provide exceptional customer service while maintaining a steady stream of positive communication with them. Invite them to special events you hold at your store to introduce new models, potentially including new EVs that could form the future of the cars you sell. Encourage them to bring guests along to these events, because these loyal customers are your greatest brand evangelists and can generate sales beyond themselves.

Marketing saturation locally in both traditional and digital channels: You will want to exceed your competitors in terms of marketing impact across all relevant media. By benchmarking their marketing efforts, you can develop a strategy for coming out on top. 

Traditional media

While most consumers go online when car shopping, not all do. Maintaining an adequate but targeted presence in the traditional realm so that your older, less tech-savvy, and non-digitally connected potential customers will know you are there and are ready to serve them. Traditional marketing also generates brand awareness in your physical marketplace, building trust with future customers, including those who will search you out online.

This could include a presence on mass media like:

  • TV
  • Radio
  • Newspaper
  • Billboards

Direct mail (DM) is also worthy of your marketing efforts. DM lets you target customers by income, location, and many other parameters. You have much less competition in the mailbox than you do online. With DM, you can also send different offers to different customers.

A direct mailer is a physical object, meaning each recipient will definitely get their hands and eyes on it; they will inherently give you consideration, even if only for a moment. DM gives you accountability as well, letting you know exactly how many consumers respond to each of your campaigns. DM has additionally been proven to increase the results of your digital campaigns when used in tandem!

Digital media

Of course, digital marketing has become the cornerstone of every dealership’s marketing efforts. Evolving from its initial pre-car shopping research function, digital has become an alternate buying channel, first with Tesla, then with the online used car startups, and now with most dealers, who instituted it initially as a pandemic lockdown survival strategy. 

This makes your dealership website very important to the overall success of your dealership, across all of its profit centers. Your site must be able to:

  • Make it easy to explore your inventory of new and used vehicles
  • Interact with website visitors whenever they shop by using chatbots
  • Offer test drive appointments 
  • Provide online financing and F&I services for buyers who want it
  • Offer a home delivery option
  • Let service customers schedule appointments
  • Sell parts online
  • Add regularly updated, quality content that gives you marketing authority on Google
  • Generate traffic through your social media channels

Who has the better reputation in the community: The primary factor in your dealership’s reputation is customer satisfaction. The same goes for your competition. Today’s consumers are very likely to check your store’s online reviews, as well as those of your rivals, before ever setting foot into a showroom. What these customers find will either bring them to you or send them down the street. Which will it be for your dealership?

A good reputation generated by high levels of customer satisfaction can propel your business to great success in the marketplace, especially if it exceeds that of your competitors. From social media platforms to review sites like Yelp, your customers will enthusiastically use the internet to air both their satisfaction and their grievances. 

Having a good online reputation can absolutely attract more car shoppers to your dealership, compared to other dealers who don’t have the “street cred” that you do! Studies have shown that about half of all decisions to try a new brand, product, or service are the result of these types of recommendations. Treat your customers right and you will prosper!

DCG Acquisitions is a partner with the know-how to help you assess local markets

DCG Acquisitions is a highly knowledgeable partner: We help dealer principals acquire the best possible new stores by considering the intricacies of their particular local markets. DCG Acquisitions is there for you, from the beginning of the process through the final signatures on the agreement. DCG Acquisitions is a full-service mergers and acquisitions firm in every sense of the term.

DCG Acquisitions has an impeccable reputation and a long track record of proven results, because we’re committed to service beyond the sale. The DCG Acquisitions team has personally closed billions in transactions to date. Our experienced team of experts manage efficient, high-return acquisitions.

Contact DCG Acquisitions to speak directly with an automotive M&A specialist and learn how our expertise can help you get the most out of your next dealership purchase.