Forward-Thinking Dealerships That Employ Connected Data and Automation Generate Higher Profit Margins by 18.5%, New Cox Automotive Study Shows

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Dec 06, 2022, 08:00 ET

The newly released Cox Automotive Forward-Thinking Dealers Study explores the tactics, investments and processes dealerships have made to enhance performance and profitability in sales, marketing, and inventory management.
Forward-thinking dealers embrace and have adopted data-driven technology and automation within their operations; they also have the highest sales volume per month, an average of 145 vehicles.
Dealers who have the highest profit margins have four characteristics in common: their operations are data-driven, personalized, automated, and connected.

ATLANTA, Dec. 6, 2022 /PRNewswire/ -- Forward-thinking dealers—a resilient group of automotive dealers that are weathering the headwinds of a challenging automotive industry marked by the ripple effects of a global pandemic, inventory shortages and economy constraints—have the highest profit margins of those surveyed at 18.5%, according to a new study published by Cox Automotive. The Cox Automotive Forward-Thinking Dealership Study reveals that dealers who embrace data science and automation have achieved results above and beyond what other dealers manage to accomplish.

Motivated by challenges that extend to supply, demand, financing, and a looming recession, Cox Automotive researched a select group of 449 dealers that are blazing a trail to help the broader retailing industry address rising consumer expectations and positively impact their sales volume and profitability. Researching dealer operations in sales, marketing and inventory management, the study uncovered that the secret to success for forward-thinking dealers is that they are well into their digital transformation and employ integrated technology, automation, and data throughout their operations.

Four Takeaways from the Forward-Thinking Dealership Study

This extensive study assessed the effectiveness of dealership operations and identified new technologies and processes that enhance performance and profitability. It categorized dealers across a spectrum of three groups: static, where dealers take a more traditional, manual approach to operations; modern, where dealers have a more evolved approach deploying both digital technology and manual processes; and forward-thinking, where dealers are more advanced into their digital transformation. Takeaways from the study include:

1. A dedicated marketing staff and CRM investment is key.

Nearly two in three forward-thinking dealers have a dedicated marketing staff and leadership team, including a chief marketing officer in place, versus only 18% of static dealers.
Forward-thinking dealers are two times more likely to say they live by their CRM. That's approximately 75% of forward thinkers vs. 33% of static dealers.
Approximately 56% of forward-thinking dealers market their service department to local car owners who didn't purchase a vehicle from them, while only 17% of static dealers do so.

2. A long-term vision is essential for inventory strategy.

Approximately 59% of forward-thinking dealers are more likely to have a long-term vision for inventory in place, versus 12% of static dealers.
Like the dedicated marketing function, close to 99% of forward-thinking dealers have a dedicated resource managing inventory, underscoring that the investment in staffing is just as important as an investment in technology.
Approximately 57% of forward-thinking dealers invest in merchandising their inventory by adding enhanced details for each vehicle, such as video or 360-degree views, versus 33% of static dealers who do the same.

3. Digital tools, presence and engagement are paramount.

Approximately 70% of forward-thinking dealers have electronic libraries that allow them to automatically generate contracts and forms which can then be easily sent to the lender; only 17% of static dealers have this capability.
Two in three forward-thinking dealers go the extra mile to stay on top of search performance providing advanced search filters on their website, such as monthly payment, distance, fuel type, miles per gallon, and much more so shoppers can home in on a specific unit they're looking for; only 17% of static dealers offer this today.
Approximately 82% of forward-thinking dealers mine their CRM to send out personalized emails to customers, whereas only 36% of static dealers do.

4. Forward-thinking dealers continually improve their tactical operations.

Additional tactics dealers plan to double down on include service pricing transparency, advertisements of personalized monthly payments and more automation, including direct integration with DMVs for title and registration processing, remote contract signing and AI-enabled deal structuring.

Additionally, apart from the study, Cox Automotive found that dealers using their digital innovations that create one complete view of the consumer and one connected deal, resulting in a faster and more personalized experience for their customers using one technology partner from start to finish. Cox Automotive clients using three or more products are shown to be more profitable compared to dealers who are less technologically and digitally advanced.

Leaning into data-driven, connected solutions also improves the customer's experience by offering more transparency and trust building in the deal, which in turn improves the experience for their staff, by making it more convenient, efficient, and profitable. Dealers who adopt multiple Cox Automotive solutions are averaging nearly $187,000 per month more in revenue.

"The Cox Automotive products that we use, we chose because of the level of integration they have," said Tom LaPointe, Internet Director, Preston Automotive Group, who operates 15 stores in Maryland. "We chose because of the reliability of the products and the support of the teams, and we know that those products are proven! Having all the data points at our fingertips gives us a huge advantage to confidently value a vehicle, make a decision whether to keep it, send it to auction, move it to another store, or adjust pricing. We can rely on that to help us put deals together every day."

"New dynamics are in play that require dealers to be visionary, nimble and pragmatic about the role of digital technology," said Lori Wittman, president of retail solutions at Cox Automotive. "Forward-thinking dealers are indeed investing in technology and data to transform their workflow processes. They've invested in the right places and the results are impressive, as they are netting the highest profit margins and sales of 145 vehicles per month on average."

To find out more, download the study highlights and eBook, and register to attend the Forward-Thinking Dealerships webinar, on coxautoinc.com/forward. will delve into the study's results and offer tactics for dealers who want to learn where they can start to make the most impact on their operations.

Study Background and Methodology

The Forward-Thinking Dealership Study measures where dealers are investing in technology and processes, key KPIs they are tracking and the impact these investments are having on dealerships today and the next three to five years. The study is based on a survey of 449 franchise dealers and was conducted from April 18, 2022 to August 18, 2022.

About Cox Automotive

Cox Automotive Inc. makes buying, selling, owning and using vehicles easier for everyone. The global company's more than 27,000 team members and family of brands, including Autotrader^®, Dealer.com^®, Dealertrack^®, Kelley Blue Book^®, Manheim^®, NextGear Capital^®, VinSolutions^®, vAuto^® and Xtime^®, are passionate about helping millions of car shoppers, 40,000 auto dealer clients across five continents and many others throughout the automotive industry thrive for generations to come. Cox Automotive is a subsidiary of Cox Enterprises Inc., a privately-owned, Atlanta-based company with annual revenues of nearly $20 billion. www.coxautoinc.com