Given that dealers are relying more on online efforts to drive business, having an IT team at a dealership group can cut vendor expenses and become an income source by offering IT services to other dealers or dealer groups.
“One client actually owns its own company that does that, and that company then contracts out with smaller dealerships,” Dietrich said. “Not only have they saved the third-party cost of hiring their own vendor, they’re actually covering that cost if not making a profit on that service.”
Another dealer group does the same with title processing. “They will work typically with local used-car dealers — not the new-car dealers — but the used-car dealers who sometimes have more lean operations. And they’ll process and do all the paperwork and shuttle the titles and do all that service for them, so that a smaller company doesn’t have to pay the salary and the cost of having their own title clerk,” Dietrich said.
One other side gig starting to get attention from retailers, he said, is buying stand-alone car-wash operations that they can brand with their dealership name for marketing purposes. “It’s both a marketing concept,” he said, “and also they can use that service in their business — depending where it’s located — and also drive their brand name.”
Dietrich has also seen dealers open service centers that are separate from their dealerships and branded generically to avoid any conflicts with the automaker. The off-brand centers can market to a variety of brands since the business is separate from the franchise.
“Those are some of the larger paths that I’ve seen folks try to take to diversify some of the income stream,” he said.
