NADA/McKinsey study on improving dealership performance
A new study by McKinsey & Company concludes that if automakers and dealers make the needed investments in operations and marketing, average dealership profitability could reach the levels of todayês top performing dealers. The study, presented at the NADA/J.D. Power Automotive Forum in New York City, was conducted in cooperation with NADA.
Our research busts the myth that most of the factors that effectively drive dealer success, such as sufficient scale and brand strength, remain beyond the industryês control, said Steven Knupfer, a senior partner at McKinsey and 20-year veteran in the auto industry. Instead, we discovered that internal operating practices differentiate highly profitable retailers from their peers today even more than in 2006, when NADA and McKinsey conducted a similar analysis.
Although auto sales are recovering nicely from the recession, profits have plateaued over the last two years and have failed to keep pace with growing volumes, said Robert Mathis, a partner in McKinseyês Automotive & Assembly Practice.
To attract and retain digital buyers, dealers and automakers need to work together on their marketing strategy, Michael Regan, NADA vice president of industry affairs, said at the Automotive Forum.Download Bulletin PDF