Improve Inventory Management and Customer Satisfaction With Car Dealership Software

Car dealerships provide a vital distribution and service network for both manufacturers and buyers. They also create jobs in local communities.


Most dealerships have several departments that handle the different aspects of a sale, such as sales, finance, service and parts. The management team is responsible for ensuring that customer satisfaction levels are high and sales goals are met.

1. Inventory Management

Whether it’s to improve profitability or customer satisfaction, car dealerships must be adept at managing inventory. Having too few or too many vehicles on the lot can affect sales, and an unnecessarily long wait time for customers can lead to dissatisfaction. Getting the right balance can be difficult, but using the right dealership software can help.

For example, a car dealership management system can keep track of what’s being produced in-house, which products came from suppliers, and even what stage a product is in — all while streamlining communications and eliminating manual data entry errors. It also helps ensure that materials are available when they’re needed, and allows employees to run processes efficiently based on supply chain availability.

In addition, a dealership’s sales team can use dealer inventory management tools to optimize pricing and maximize profits. This is especially important during slow months, like January and February. Then, when they reprice a vehicle, dealers have the right data at their fingertips to ensure they’re competitively priced according to market demand. This will attract more shoppers and increase their chances of a sale.

2. Sales

Car dealership salespeople work hard to generate excitement and interest in a vehicle. They need to be creative and think out-of-the-box to sell cars these days. Those that don’t, will be left behind. Salesperson turnover remains high in this industry – and that’s why it is so important for car dealerships to have a hands-on owner or general manager who cares about the customer and repeat business.

A step above the salesperson on the management ladder is the assistant sales manager (mostly men). They help the salespeople close deals and ensure that the dealership is getting the deal it wants.

The finance and insurance managers may try to lure you into a pile of add-ons that can be very profitable for the dealer such as interior stain protection, paint protection and antitheft devices. It’s important to remember that you can negotiate these items separately and not let the dealer use them as a way to jack up the price of your new vehicle. You should also avoid falling into the trap of believing that the dealership is a good place to get a great deal on a vehicle because you’ll most likely find the same car for less elsewhere.

3. Finance

It’s common for buyers to visit a car dealership, find their ideal vehicle and then have an “oh I forgot about financing” moment. Dealerships offer a variety of financing options for consumers to choose from and often earn compensation if they arrange a loan through their company.

Dealership-arranged financing has its benefits, particularly for a buyer who has less-than-stellar credit. By contacting a number of financial institutions, the dealership can reach out to lenders who may be willing to offer the consumer financing they wouldn’t have been able to receive through their own bank or credit union.

However, the interest rates for these loans are usually higher. Plus, the lender is typically in a direct relationship with the dealership, which can create conflicts of interest that may lead to questionable tactics, such as lengthening the loan term to lower the monthly payment (though this costs the consumer more money in the long run). Dealerships also often require large down payments when arranging finance for their buyers. This is a way for them to mitigate the risk and make a profit.

4. Service

Car dealerships serve as the link between car manufacturers and consumers, selling new or used vehicles at a profit and assisting customers with financing options. They also stock and sell spare auto parts and provide maintenance services and warranty claims.

Having close relationships with manufacturers, dealer technicians are often highly trained in the specifics of each vehicle. They may also be able to access the latest software updates to diagnose problems and perform repairs more efficiently than independent mechanics. Dealerships also have the specialized diagnostic equipment needed for today’s complex vehicles and can guarantee their repairs since they are using original manufacturer parts.

Another service that car dealerships offer is the ability to handle the registration of a newly purchased vehicle. They can also provide a loaner car or shuttle to get you back and forth from the dealership while your car is getting repaired. They may also charge a document fee, which covers the time spent preparing and processing the paperwork. This can range from less than $100 to hundreds of dollars.

5. Parts

A well-optimized parts department is a powerful and often overlooked path to new revenue, higher profit margins, a good customer experience and enhancing the reputation of a dealership. Unfortunately, many dealership controllers and managers do not have a thorough understanding of parts department processes or how they relate to overall dealership operations.

Parts departments can cater to a variety of OEM buyers. These include customers who want to outfit their new vehicle with accessories; those who accidentally back into and crack their side mirrors; DIYers who enjoy working under the hood of their car; and the many consumers who need replacement parts for their existing cars.

Parts departments should focus on selling accessories and working with sales to help outfit vehicles in the showroom. Additionally, dealers should focus on marketing their parts and accessories online to capture a broader market of potential customers. Finally, they should track and analyze their parts department’s inventory performance through a metric called stock order performance, which is a measure of how quickly the department sells its stock orders to outside suppliers.