How to maximise margins and move away from discounting

These are challenging times for the motor trade industry, with the financial uncertainty caused by Brexit negotiations affecting both finance available for buyers and possible hikes in the cost of imported vehicles.

How to maximise margins and move away from discounting

Add to this the Financial Conduct Authority’s review of motor finance published in March, and it’s clear traders will have to address their business models sooner rather than later.


With finance squeezed, no one will want to get into a price war and be caught in a discounting spiral, so how can margins be tweaked to impact the bottom line?

One area that can be improved is the add-ons offering alongside the sale. This might involve free extras, extended warranties, free servicing or GAP insurance. All the added products represent their own profit stream, and when staff are involved in a sale, it is vital they have a clear understanding of the packages they can offer to the client.

How to maximise margins and move away from discounting

Any new FCA rules will mean dealers have to be careful how these add-ons are sold. Ensuring staff are properly trained and not under sales pressure will mean customers do not have inappropriate deals forced on them. Sales teams should not necessarily target add-ons as this goes against FCA policy; instead, they should tailor the package to suit the client.

Although the latest industry figures suggest new car sales are struggling, even in new registration months, used car sales are holding up well, possibly reflecting the financial climate. By offering good trade-in deals, you will be able to build up a solid stock of used cars to add to your inventory and take advantage of this market.


This replenishment of stock will mean you have to keep an eye on your motor trade insurance policy and possibly change suppliers for the best deal. Even the most experienced dealer will ask where can I find a quote for motor trade insurance, and it is important to check online for the best deal that suits your business.

The habits of customers are also changing, and their own first port of call may be an online search rather than a day spent visiting dealers’ plots. To improve sales and margins, ensuring you are marketing your stock digitally is essential, and a well-designed site available to desktop and mobile devices is essential.

Time to meet the challenges with changes!