Are you measuring the right data to maximize your dealership’s success?
Running a profitable car dealership in 2024 requires more than just tracking gross profit and inventory turnover. The most successful dealerships focus on key performance indicators (KPIs) that drive efficiency, profitability, and long-term growth.
Many dealers track common metrics, but there are several overlooked KPIs that can make a significant impact on business performance. Below are five dealership metrics you should be tracking to improve operations and maximize profit.
1. Reconditioning Time-to-Market (TTM)
Why It Matters:
Every additional day a car spends in reconditioning reduces potential profit and increases carrying costs. Dealers often track days to turn, but reconditioning time is equally important.
Benchmark:
Ideally, reconditioning should take three to five days or less to ensure vehicles reach the lot quickly.
How to Improve:
- Implement reconditioning software to identify bottlenecks.
- Automate task assignments to recon teams for faster turnaround.
- Set clear benchmarks and hold vendors accountable for delays.
Carketa Solution:
Carketa’s reconditioning tracking system helps dealerships reduce time-to-market, ensuring cars move to the lot faster and sell at peak value.
2. Appraisal-to-Sale Ratio
Why It Matters:
If your dealership appraises a high volume of vehicles but only purchases a fraction, valuable leads and opportunities are being lost.
Benchmark:
Top-performing dealerships aim to convert at least 60% of appraisals into acquisitions.
How to Improve:
- Use real-time market data to make more competitive offers.
- Analyze reasons for declined offers to improve closing strategies.
- Train staff on negotiation techniques to increase conversion rates.
Carketa Solution:
Carketa’s appraisal tools provide dealers with real-time pricing insights, ensuring competitive offers that increase conversion rates.
3. Inventory Age Profile
Why It Matters:
Stale inventory ties up capital and lowers margins. Instead of only tracking days to turn, dealers should monitor the percentage of inventory that exceeds 60+ days on the lot.
Benchmark:
No more than 10-15% of inventory should be 60+ days old.
How to Improve:
- Use market-driven pricing to stay competitive.
- Identify and discount aged inventory before profitability declines.
- Run targeted promotions to move aging stock.
Carketa Solution:
Carketa’s Dealer Analytics provides real-time insights into inventory health, helping dealers maintain a high-turnover lot.
4. Front-End vs. Back-End Gross Profit Split
Why It Matters:
Many dealers focus heavily on front-end margins, but backend products (such as extended warranties and financing) contribute significantly to profitability.
Benchmark:
At least 40% of gross profit should come from backend revenue streams.
How to Improve:
- Train finance and insurance (F&I) managers to present value-driven upsells.
- Bundle F&I products into financing packages to increase sales.
- Track backend revenue per deal to identify growth opportunities.
Carketa Solution:
Carketa’s pricing and market analytics tools help dealers structure competitive deals that optimize both front-end and backend profitability.
5. Website Lead-to-Show Ratio
Why It Matters:
Website traffic is only valuable if it translates into in-store visits and sales. Tracking how many online leads actually visit the dealership can highlight opportunities for improvement in follow-up and engagement.
Benchmark:
At least 50% of online leads should turn into in-store visits.
How to Improve:
- Respond to online leads within 10 minutes to increase engagement.
- Use SMS and video messaging to create personalized responses.
- Retarget website visitors with digital ads to encourage follow-up.
Carketa Solution:
Carketa’s marketing insights help dealers track lead engagement and conversion trends, optimizing showroom visits.
Final Thoughts: Data-Driven Dealerships Win
Tracking the right car dealership KPIs is essential for maximizing efficiency and profitability. By focusing on these five overlooked metrics, dealerships can:
- Reduce reconditioning delays and sell vehicles faster.
- Improve appraisal conversion rates and source better inventory.
- Minimize aged inventory to maintain profitability.
- Increase backend revenue through F&I optimization.
- Enhance lead-to-show rates to drive more in-store traffic.
Want to optimize your dealership’s performance with real-time analytics?
