Five Easy Ways to Cut Costs and Improve Profits

Here are five things you can start doing now that will translate into immediate and substantial savings for your dealership:

1. Shop floor plan lenders. With so many national, regional and local lenders reducing their rates, chances are good that you can lower your inventory financing costs. Dealers are realizing tens of thousands of dollars in annual savings by actively managing this major expense item.

2. Eliminate paper printouts of your monthly financials. Most DMSs allow you to save ledgers and schedules in electronic formats, which are easier to work with and can be used in most communications, including with the IRS. The savings on paper, printing and equipment maintenance can be substantial.

3. Audit your advertising. Make sure you get all the rating points you’re paying for. Ask for ad flight reports to ensure minimum points were achieved, and if not, secure the discounts or credits.

4. Restructure your ad agency relationships. Many dealerships using agencies have reduced costs by replacing the traditional 15 percent agency commission with flat fees, or with payment based on performance, such as an uptick in sales, which allows advertising costs to rise and fall with sales activity.

5. Shop insurance providers. Insurance is complex, and dealers can be at a disadvantage negotiating premiums. Obtain quotes from multiple carriers and be sure you are comparing apples to apples in terms of coverage. Some carriers are hungry for business; you might find substantial premium savings at a company with a good rating. We have developed a sample insurance renewal letter that many of our dealer clients are using. You can request a copy by emailing me at

These are just a few quick and easy steps toward reducing your operating costs. Implement then now and start enjoying the savings.

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About the Author(s)
Rex is a Principal of HBK CPAs & Consultants and directs the firm’s Dealership Group. He has worked extensively in the dealership industry since 1984 as a department manager, a general manager and an owner, as well as providing tax, accounting and operational consulting services exclusively to dealers as an independent CPA. This experience includes working closely with hundreds of dealers from coast-to-coast since 1987 on creative tax planning and financial statements issues. He provides clients with a wide range of transaction work services, and consults for them in specialty areas such as operations, government regulatory compliance, valuations and M&A feasibility studies. Rex is active in many professional associations. He is the current Chairman of the BDO Dealership Industry Group, contributes articles and commentary to dealership industry publications, is frequently called upon to speak to industry associations and conferences, provides expert testimony, and is regularly quoted by industry and the general media.
Hill, Barth & King LLC has prepared this material for informational purposes only. Any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or under any state or local tax law or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. Please do not hesitate to contact us if you have any questions regarding the matter.