What is the Dealership management system?

January 6, 2020

DMS is another dealership management system that focuses on measuring, reports, and controls the functions within the dealership. They store the function in a bunch and specifically designed for the automotive industry and car dealerships such as General Motors, Ford, Honda dealerships, etc.

 

This system contains all the needs of the dealership in terms of finance, sales, parts, inventory, and administration work to commence the business and run the dealerships. On the other hand, online shopping tools can be an addition and also monitoring analytics on deals and offers. These systems have a comprehensive set of controls, measurements, and reports that gives a clear insight into the dealership.

 

This tool and software ease the work of the dealership it provides real-time information, automation of tasks and turning the collected data for the growth of dealership at a single platform.

What are the features of DMS?

The dealer Management system has different and distinctive features that vary from system to system but some of the features remain intact such as CRM, inventory management, the structure of deals, printing of contracts and documents. Dealerships also deal in the finance segment too for the buy here, pay here dealerships, rent, and leasing, etc. they have designed systems for the same.

Deal Structure

Managing a deal is the main function of DMS and focuses on structuring the deal which has the inclusion of different tools to make the deal more profitable by comparing the data present. Deal management focuses on processing credit applications to different lenders for financing purposes. 

Inventory Management

Vehicle management tools keep the track of inventory also focuses on managing the existing inventory of dealers. The mobile application is a great source of inventory management.

Customer Relationship Management

The best tool to increase your business and work on the leads generated through website and online promotions. It enables the dealers to take follow-up with customers and deals via calling, automated emails, etc.

How does the dealership work?

The working of a dealership has different criteria according to consumer’s perspectives. The mindset we hold of the dealership is a bit different from how the dealership actually works. The way car dealerships offer you discounts, deals, aware you about finance offers and other related things, etc. and even after they are attaining growth and profits leaves you surprised. 

 

In order to understand how the dealership process their work requires doing some homework and learning their set of terminology to attain the maximum benefits. If

you consider buying a car from a dealership let’s gain an insight into how this works. 

Sales and Management

Management runs by the person who owns the dealership but there are slight chances the person owns more than one dealership. In order to manage the dealership, the requirement for General Manager is necessary who overlooks the operation on a daily basis. 

 

In order to acquire the designation of GM you have to put some amount of buy-in as a minority partner. The dealership also some sort of commission and incentives on the finalization of the deal. The bonus amount is paid to the people for attaining a high profit on the sale of the car.

Finance and Insurance Department

This department is entirely dedicated to the customers which look after the customer and arranges to finance for customers. Dealerships have a tie-up with the banks, money lender and also offers financing option from Ford Motor Credit, GMAC, etc. 

 

The finance and insurance department retains money through the dealer reserve in which the dealer rises the interest rate of the loan and the difference is counted as profit. 

 

Additionally, they sell third party insurance and extended warranties to make the commission. They deal with all the paperwork that is associated with the purchase of the vehicle and this department takes the follow up till the deal finishes.

Negotiation of Price and retaining incentives

Dealers hardly negotiate any price with the buyer but sometimes they have to follow the guidelines from manufacturers or suppliers. Dealers retain the profit in the form of dealer holdback from the manufacturer almost 2-3% on the invoice price when the vehicle is sold to the buyer. Dealer rebates and incentives act as a form of encouraging sales. 

 

In the case of used cars, the dealer begins the pricing with what they have paid for the cars also adds the cost of reconditioning. They also get some amount of money on administrative cost and dealer fee which are the same as the dealer holdback.

Additional accessories and car services

Dealerships also deal in providing services, parts every dealership has these dedicated departments which help in increasing revenue as well as interaction with customers too. At the time of sale, the dealership doesn’t acquire a huge amount of profit but at the selling accessories, additional customization and services grant them more money. 

Vehicle Storage

Dealer’s acquired the floor plan financing to pay for their share of inventory. Floor plan financing is considered as a line of credit that is secured by their own inventory and used vehicles are acquired through purchases or trade-ins. 

 

Every car which sits in the dealer’s lot and bought through using the floor plan, the dealer is entitled to pay the interest for the time car remains in the lot. We’ll see the offer and discounts ongoing on vehicles every now and then in order to get rid of older inventory which is costing him more money as a source of interest.

FAQ
Can I buy a vehicle directly from manufacturers?

No, you cannot acquire the vehicle from manufacturer as it terms illegal in some countries. Manufacturers sell their inventory to the dealer which they can sell to the general public. Franchise dealerships are bounded by the dealers to buy the inventory every now and then in order to update the new models that show an automobile company can sell back their cars to dealers if the public is not buying the cars.