The Ultimate Guide to Dealership Growth in 2021

In this guide, you'll learn how to turn the auto industry's top challenges into opportunities to accelerate your revenue growth.

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Building Your Growth Plan

As 2020 began, dealers were already thinking hard about how they could plan for long-term growth. Dealing with ever-faster changes, it was hard to keep up. Of course, even the best-prepared dealers couldn't have expected how disruptive 2020 actually ended up being.

Building your growth plan

We understand — a year of difficulties and changes affected everyone and everything has radically transformed the trends driving your business, deepening some and upending others.

Maybe you've decided to commit further to a digital customer journey after a year of buyers staying home. These months may have also caused you to double-down on your efforts to retain repeat customers and secure their long-term business. At the same time, you need to keep up with internal priorities such as reducing turnover and pressing ahead with process improvement. It’s enough to make your head spin.

So then… where to start?

What are the growth opportunities that will help you not just survive but thrive? There are a ton of resources out there, and we’ve done the work to bring them together into one comprehensive guide. Here’s how you can make the most of 2021, complete with research and insights from plenty of industry experts.

Let’s dive in.

Auto Retail in the Fast Lane:
Top Industry Challenges for 2021

Here are five auto industry challenges to look out for in 2021:

1. Implementing modern retail solutions

According to Google, 63% of people will consider buying a car online, and 65% expect digital options to increase.1

2. Evolving needs in recruitment and retention

Recruitment barriers and high turnover are more than just staffing complications - a 10-point increase in turnover can cost the average dealership $7,500 in gross profit per employee per year.

3. Growing preference for used vehicles

Driven by factors such as financial constraints and a lack of dealer inventory, U.S. customers have stepped up used-car buying in 2020. In January 2021, used vehicle sales are expected to hit $3.2 million, up 1% from a year ago, and a staggering 10% from December 2020.2

4. Risk management and crisis preparedness

Dealerships have learned the importance of planning to cope with disruptions, following the 47% crash in new car sales that accompanied the first month of COVID-19 shutdowns in the U.S.3

5. Siloed revenue operations

There will be numerous opportunities to grow your revenue, focusing on areas such as fixed operations, F&I and training for your staff. Not only should your teams excel within their silos, they should understand the value of other teams and their role in overall revenue generation.

Get the solutions you need to grow your dealership today.

Turning Challenges Into Opportunities

Turning Challenges Into Opportunities

With so many factors changing so quickly, it is inevitable that some dealers will excel where others will falter. Taking proactive measures will help keep you on the winning side of the equation.

Consumers are shifting toward used vehicle purchases, and their attitudes about car ownership are changing. Digitization of the sales process is stepping up in a big way, and the road to future technologies is still not entirely clear, but remaining in compliance as the market shifts is a must. You'll also have to rethink your approach to staffing, training and retention as a new generation continues to make up more of the job market.

In 2021, just as in years past, there is a necessary shift in mindset to stay ahead and see challenges as opportunities for growth. Guiding your auto dealership to success means facing down the challenges, rather than shying away from them. Your response will set your dealership up for recovery and continued success.

To get through the difficulties, you have to face them head-on, so let’s take a deeper dive into the primary challenges you’ll need to tackle in 2021.

Implementing Modern Retail Solutions

Buying a car has, in recent years, been one of the few retail experiences that has kept its in-person flavor. People have wanted to see and feel a new vehicle for themselves before making a purchase decision, and processes such as F&I have remained resolutely face-to-face.

Implementing Modern Retail Solutions

In the past, key elements of the process were not fully digitized, but an online customer journey has emerged and is experiencing a surge in popularity in auto sales. Customers used to the one-click convenience of Amazon and other born-digital retailers had already started shopping from home when COVID-19 struck. From there, online auto sales interest took off.

In March 2020, approximately 1 in 10 U.S. car buyers purchased a vehicle online, a nearly tenfold increase from two years earlier. Now, 66% of buyers are comfortable reviewing cars' features digitally and inspecting their new cars either partially or entirely online.4


of buyers are comfortable reviewing cars' features digitally and inspecting their new cars either partially or entirely online.

While such a big shift in customer behavior can be trouble for dealerships that don't change their practices, by staying ahead of this trend, you can turn a challenge into an advantage.

Implementing Modern Retail Solutions

Offering a robust digital retail experience can point directly to customer satisfaction. According to Cox Automotive, 40% of buyers who complete seven or more purchase steps online say their retail experience is better than in the past — only 29% of shoppers who do two or fewer activities online say the same.

More online steps also translates to greater satisfaction with the in-store process, 54% compared to 43%. And an improved shopping experience is always a great customer loyalty tool.5 Critically important to your online to in-store success model is having the technology in place that allows buyers to pick up where they left off online when they step into your dealership.

Committing to online retail means something different than it has in the past. Today’s consumers expect that your website is designed with a smooth, user-friendly experience that’s integrated into your sales process. But modern retail goes a few steps beyond that. With so many more options about what to digitize, now you can truly offer a fully online experience for those who want it.

In the last few years alone, there have been huge advancements in technology to assist in your transition to modern retail solutions, including from OEMs and independent digital retail platforms. With a number of options to choose from, it’s easier and more important than ever to give your customers a smooth digital experience.

Great strides in virtual F&I mean you can carry out this traditionally brick-and-mortar process via video meetings with the right combination of technology and staff expertise. By implementing modern retail solutions and letting your customers decide how far they want to go digitally vs. in person, you can satisfy customers no matter what purchase path they choose, and do so in a way that is compliant with local laws and regulations to protect your dealership, your customers and their data.



Get expert tips to improve your F&I performance. →

  • Learn how Virtual F&I can boost your bottom line.
  • Enhance customer loyalty with a robust digital to in-store experience.

Evolving Needs In Recruitment and Retention

A lot of your management’s energy - and your dollars - are spent recruiting, hiring, training and retaining your staff. But have your methods evolved with the times? The fact is that recruitment and retention are much more critical to your bottom line than many give them credit for.


Hiring the right people, and even more importantly, placing them in the right roles, is directly tied to your results and revenue. It’s not just about years of experience anymore. It’s about whether your team member has the skills and traits that make them a good match for their job. Keeping an eye on aligning your people with their role, training them to excel and tying it to performance metrics can be the key to untapped profitability across your dealership. While a strong process will take you far, profits don’t happen without people.

It’s also no surprise that the talent pool continues to change, with millennials making up a large portion of the market. Meeting their needs in the workplace is essential, as underscored by the Wall Street Journal: Almost 60% of staff hired by dealerships are millennials, but the turnover of those employees is over 50%.6 These stats are not surprising simply due to the disconnect from what millennials want from employers and the experience and culture dealerships have traditionally provided.

Many millennials who might consider entering the automotive field are turned off by what they perceive as outdated attitudes about sales. They dislike the practice of haggling, and don't envision themselves giving a traditional hard sell. The overwhelming shift to quick and convenient online buying translates directly to the way they prefer to sell.

Reaching these employees, both in hiring and retention, can be relatively straightforward. You simply need to show them that your dealership does not align with outdated practices. Making a structural change such as doing away with sales commissions can show that you are more interested in creating a friendly atmosphere than fostering hardball sales tactics.

You should set out to become the kind of employer that can attract millennial talent, train those workers and retain them until they are true experts. This has customer experience benefits, as today's shoppers come into the dealership with a lot of information accumulated from online research, and expect your staff to be as knowledgeable as they are about the vehicles. By creating a team of engaged, helpful and skilled employees, you can please your customers in every department of your dealership.



Get deeper insights into recruitment and retention. →

Used Vehicle Purchase Preferences

Before the widespread disruption of the COVID-19 pandemic, U.S. customers' interest in used vehicles was on the rise. Faced with the new challenges of 2020, among them limited financial means and interruptions in new car supply chains, that interest only deepend. Now, many dealers are having a harder time acquiring in-demand used cars. Customers expect a higher value for their trade-ins, which makes it more complicated to purchase and make money on the resale of these vehicles.

People hesitant to use ride-sharing and public transportation still need to get places, but aren't ready to pay the sticker price on a new car. Dealerships with the staff training to provide high-quality sales and support experiences for used vehicles are poised to thrive, giving these shoppers what they're looking for.

Used Vehicle Purchase Preferences

According to Businesswire, the demand for used vehicles has led to a 17.1% increase in trade in value from just one year ago. Used vehicles were being sold in an average of 38.3 days, from 44.1 compared to June.7 By the end of Q3 2020, the hot market was locked in, with used car sales beating 2019 numbers in June, July, August and September and 26% market growth compared to Q2.8

Autotrader Executive Editor Brian Moody noted that the high demand could be seen as a negative factor: Prices are rising over time rather than falling, which may discourage bargain-hunting customers. With that said, there are plenty of ways for your dealership to reach consumers looking for pre-owned options.9

CPO programs boost a vehicle’s value to buyers and also provide the peace of mind of benefits like a factory-backed warranty and the knowledge the car has been inspected by a professional.

Quickly and profitably selling used cars can have a huge impact on your bottom line and provide an avenue for future new car sales. Offering certified pre-owned vehicles that are recent model years can be a profitable niche. Dealerships that offer a good selection and attractive F&I packages for these vehicles can appeal to shoppers who are searching for deals. CPO programs boost a vehicle’s value to buyers and also provide the peace of mind of benefits like a factory-backed warranty and the knowledge the car has been inspected by a professional.

Another way to capitalize on the popularity of the used vehicle market is through your fixed operations offerings. Transparent, reliable performance on the service drive will be critical to maintaining relationships with your used vehicle customers.

Older vehicles will require service and potentially maintenance sooner than brand-new models, and positive interactions between your service personnel and buyers can potentially lock in loyalty for years to come.



Maximize the customer lifecycle through fixed operations.

Risk Management and Crisis Preparedness

The past year has been one of the most disruptive times for the automotive industry, with many dealerships seeing a drastic reduction in sales and fixed operations services.

The health crisis grounded in-person operations to a halt, contributing to the 47% decrease in new car sales observed by McKinsey & Company in April 2020.10 While the reopening of the U.S. economy has helped OEMs and car dealers return to some level of normalcy, recovery has been slow in some regions. Despite the initial shock, the auto industry continues to improve, and many dealers have found opportunities to boost profitability even during a pandemic.

To remain competitive, dealerships are leveraging new digital sales channels and customer service pathways to provide a higher level of convenience during these uncertain times. 

Contactless and concierge-style services have lowered the barrier to entry for many customers while giving dealers the ability to earn back lost business from early 2020.

These opportunities came about only through calculated transformation efforts. Agility is your best, and sometimes only, tool in the face of long-term crisis resilience. But remember, once you offer a service to your customers, they will likely expect it to continue in the future, so make sure your changes are sustainable for your business. Temporary measures may help you stay afloat in the interim, but agility can better prepare you to withstand any market disruptions or downturns in years to come, as will alignment with partners who have the same forethought and ability to adeptly navigate change.

Instead of investing in provisional improvements, dealerships should focus on accelerating their digital transformation in ways that align with consumer trends and preferences.

As car buyers spend more time researching, comparing prices and contacting sellers online, traditional dealerships will need to scale up their digital capabilities to remain top of mind. The better prepared dealers are for future risks and global events, the easier it will be to adapt to future market conditions.



Get more insights on risk management solutions. →

Accelerating Your Revenue Growth

Modern dealerships rely on every department to drive profitability and enhance the customer experience. Your sales and F&I staff should be skilled at making handoffs during the sales process to ensure the customer's convenience. This is especially important to practice when the interaction takes place online.


In today’s fast-paced marketplace, dealerships must give equal weight to all service centers and profit drivers to maintain their competitive advantage. Service pipeline alignment can create a streamlined end-to-end buying experience, allowing F&I and fixed ops professionals to play a more active role in the sales process.

For the best results, dealerships should prioritize these five improvement areas:

Get the solutions you need to grow your dealership today.

Spotlighting the 5 Improvement Areas

By taking a closer look at the five critical revenue acceleration areas for 2021 and beyond, you can envision how they fit into your plans. The right combination of these priorities can lock in reliable revenue growth, keeping your dealership thriving.

Finance & Insurance

Finance and Insurance

F&I is such a reliable value center for auto dealerships because even among tightening margins on other products and services, finance and insurance offerings remain strong, enduring sources of revenue.11 Automotive News found that even when dealers sell F&I products at steady rates, their profits increase because of rises in new vehicle price tags. If you can improve your F&I team's performance, the revenue opportunity becomes even greater.

How to improve your performance:

One way to lock in value in the F&I department is optimizing the mixture of products available through your dealership. When your people are selling F&I products that deliver clear advantages for the customer, they are not only increasing revenue, they are building those buyers' satisfaction and loyalty, which is a long-term path to value.

Your F&I team can reach new levels of success by integrating customer-friendly innovations such as Virtual F&I into their workflows. With the technology and processes in place to support VFI meetings, your F&I Managers can give customers a smooth, digitally enabled buying experience that may lower their stress and encourage them to buy.

Enhancing the way you track F&I sales can have a big impact as well. More data means you can focus closely on both individual performance to develop improvement plans tailored to each employee, as well as determine which products are your most reliable sources of revenue. Experts can assist your team in both these avenues using daily progress reports to get an extremely granular look at your F&I department’s performance and potential.

Focusing on F&I can and should also mean putting increased emphasis on compliance. Especially in the age of connected data, it’s critical that you and your dealership staff are aware of the laws and regulations that impact you and especially your customers. The best way to protect your business and reduce your risk is through comprehensive training and employee development courses.

Check out our resources on offsetting margin compression and VFI best practices to change your F&I performance for the better.

Fixed Operations

Fixed Operations

When looking for sources of revenue to enhance your bottom line in 2021, fixed operations is a clear choice. Service and maintenance offerings made up 12.5% of dealer sales in 2020, providing a lifeline when vehicle sales numbers fluctuated. New-vehicle dealerships earned an average of $3.74 million in fixed operations revenue across the first half of a very tumultuous 2020.12 But it still represents a huge area of growth for many dealers, with untapped profitability opportunities.

How to improve your performance:

Rethinking the workflows behind the service lane and other fixed operations centers is the best way to solidify your revenue from these functions. At their heart, these roles are about customer service and creating a positive experience. Creating key performance indicators and implementing coaching programs based on creating great customer care is therefore a good fixed operations tactic.

It pays to have specialized plans in place for developing service department leadership. These supervisors will set the tone for process improvement in fixed operations, and having their buy-in allows progress to take hold. When the day-to-day leaders of a department are agents of positive change, that's when transformation becomes permanent and sustainable.

A revamped fixed operations department will sport transparent policies that build trust and loyalty among customers. With people eager to engage with service departments at the dealership of purchase — especially for more technologically advanced new cars — you have a readymade audience for the fixed operations personnel to serve. With a new workflow in place, these shoppers will stay with your dealership for the long haul, as 74% of buyers who receive service where they bought their cars say they're likely to buy their next car there.13 

Not only should fixed operations procedures be designed with customer comfort in mind, they should also be standardized, quantified and repeatable. You should take a scientific and exacting approach to process improvement in the service lane. The results, in the form of solid ongoing revenue, make the effort worthwhile.

Learn much more in our Fixed Operations Guide.

Recruitment and Retention

Recruitment and Retention

While the costs associated with recruitment and retention can be significant, there is one asset even more valuable to consider ‒ your time. The average manager spends 26% of their time on people.14 Turnover is unfortunately common in the automotive retail space, which provides an opportunity for you to buck the trend. If you can recruit promising employees, align them in the right roles and retain them over time, you can focus on enhancing time spent with your people and generate next-level results.

How to improve your performance:

Every step of the talent pipeline is ripe for optimization. This starts at the very beginning with searching for ideal candidates. Your talent searching strategy should be closely aligned with your dealership's overall business goals to ensure the people coming in for interviews have skills and backgrounds that match your specific objectives regarding sales processes and the customer experience.

Of course, no employee comes to a company fully formed. Building skill and productivity over time can be a matter of personalized coaching, with processes designed to match the team's needs regarding onboarding, team building, personal development and long-term retention.

A modern approach to talent development is based in science and numbers, no hunches required. By calculating key performance indicators relevant to employee contributions, you can make sure your personnel have opportunities to grow and to stay engaged with their work. As their skills develop and their value to the team increases, you can watch that ROI grow.

A great employee is someone who comes into the team ready to contribute yet gets better over time through a mix of training, development and collaborating with teammates across departments. By bringing out the best in your talent and holding onto top performers for years, you boost the bottom line through their contributions and eliminate the cost center of constant talent searching.

Learn about our data-backed approach to creating and growing a high-performing team.

Insurance and Risk Management

Insurance and Risk Management

The right mix of insurance and risk management programs can decrease the strain of a number of challenges auto dealerships face. Taking a close look at your options can have a significant and positive effect on your risk management efforts as well as employee retention.

How to improve your performance:

Your dealership has a few specialized insurance and risk management requirements that go beyond those of other businesses outside of the automotive sector. This means you should find a specialized coverage provider that can provide the insurance plans and products reflecting your operations.

A great first step to improving your insurance and risk posture is to assess your needs. A comprehensive examination of your business will reveal opportunities to reduce your risk and defend the bottom line, whether that means purchasing a garage liability policy for vehicles on your lot or revising the way you hire, manage and train talent.

From 401Ks to health, dental, life and optional coverage plans such as 529 College Plans, you can build a mix that appeals to your workers.

Some of the most impactful insurance products for your dealership are the plans you offer your employees. Dealing with turnover is one of the most common problems facing the auto sector, and it has been for years. One way to secure loyalty is to offer affordable, flexible benefits packages that will make people want to stay. From 401Ks to health, dental, life and optional coverage plans such as 529 College Plans, you can build a mix that appeals to your workers.

Insurance and risk management have the potential to go overlooked in dealership improvement strategies, but this shouldn't be the case. If you put extra effort into creating the perfect mix of products for your business, you can build a more secure and reliable operation, one with appeal to its employees and resilience against potential problems.

Training and Development

Training and Development

When you take a more deliberate, advanced and hands-on approach to employee skills development, you're investing in the people who are the lifeblood of your dealership. The correlation between training and per-vehicle revenue can be direct and impressive. At JM&A Group’s Performance Development Center, the average increase in PVR is $169.

How to improve your performance:

Whether you're engaging in full instructor-led training courses, online learning modules or a hybrid program, you should make sure your materials of choice are tailored by function, or even by individual. No two people are the same, even if they hold the exact same job description. By investing in employee education that is highly personalized, you can unlock extra value.

Your salespeople play a vital role in your dealership’s profitability and financial growth, so investing in their success and developing their skills is key. And we’re not talking about the standardized materials of the past. Effective training solutions have stepped into the modern world, offering both in-person and virtual courses that are customized to your needs to ensure their effectiveness in the short- and long-term.

Your team members shouldn't just train, they should cross-train. While it's important for every staff member to know the ins and outs of their own department, it's not good to develop tunnel vision. If employees in each department know how their own products and services fit into the overall sales cycle, exciting new revenue opportunities open up:

  • Salespeople should understand F&I to ensure they are seeding potential upsells early in the buyer's journey.
  • Fixed Operations staff should understand how vehicles are being sold to provide consistent messaging in the service lane.
  • F&I managers can better convince customers of the value available in fixed operations if they have been cross-trained.

One of the main ways your dealership can present a unique value proposition is to provide a great experience for your customers. Despite the rise of digitization, automotive sales, financing and service are still person-to-person experiences. If your staff have been better trained and prepared than competitors' teams, that will be reflected in the way your customers perceive the dealership.

Read our Modern Dealership’s Training Playbook to find out how this can work for you.

Growing with Dealership Revenue Acceleration

It's clear that there are dozens of forces impacting the auto industry at any time, some helpful and some damaging. By keeping an eye on the trends shaping the industry, we can prepare to adapt to the diverse and complex nature of our business and continue to grow together.


By seizing the opportunities that come with changing conditions, you can thrive.

The key to growth in challenging and fast-moving times is revenue acceleration. Every department provides chances for new and strengthened revenue streams. By partnering with the right people, products and processes, you can implement flexible and forward-looking new processes across departments.

What many of these changes share is focusing on one steady goal, no matter what changes come down the pipeline: creating an outstanding customer experience. When treating your customers well guides your decisions, it's a positive differentiator for your dealership, one you can take pride in.

Reach out today to learn how you can prepare for the industry challenges ahead →

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We've always relied on JM&A for training and recruiting. They have been very helpful over the years by partnering with us to implement whatever strategies we've needed to grow our personnel and our business.

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