Get a watermark-free, fully customizable competition study in our business plan for a car dealership business
In the dynamic world of automotive sales, understanding the competition is not just beneficial—it's essential for driving your business forward.
This article will guide you through a systematic process for conducting a thorough competition analysis for your car dealership. We'll cover how to pinpoint your main rivals, both direct and indirect, and how to assess their strategies and performance. With these valuable insights, you can steer your dealership toward success in a market that's always shifting gears.
And, if you're looking for a ready-made competition study that's fully customizable, be sure to check out our business plan template designed specifically for car dealership ventures.
What is exactly a "competition study"? Should you make one for your car dealership business?
A competitor study in the context of a car dealership involves a detailed examination of other dealerships that you're in competition with.
This can include direct competitors, such as other dealerships in your vicinity selling similar makes and models of cars, to indirect competitors, like online car selling platforms or private sellers.
The goal is to gain insights into their sales tactics, service quality, pricing strategies, and overall market presence to pinpoint opportunities and threats for your own dealership.
Why do car dealership owners conduct competitor studies? Simply put, knowledge equates to a competitive edge.
Knowing the landscape you're operating in enables you to sharpen your dealership's unique offerings.
For example, if you find that most dealerships in your area lack a robust online presence or have limited after-sales support, these could be areas where your dealership can stand out. Or, if there's a gap in the market for electric vehicles and your competitors haven't capitalized on this trend, it might be your chance to lead the way.
The advantages of performing a comprehensive competitor analysis, similar to what you would find in our business plan template tailored for car dealerships, are numerous. It can prevent you from making the same mistakes as your competitors and help you to exploit weaknesses in their business models. It can also drive innovation in your sales approach, customer service, marketing efforts, and overall customer satisfaction.
Furthermore, a clear understanding of the competition can inform your pricing and inventory strategy, ensuring your dealership is positioned effectively within the market. It also keeps you nimble, allowing you to adapt to market changes quickly and decisively.
Should you conduct a competitor study if you're launching a new car dealership? Absolutely.
Starting a dealership without a grasp of the competitive environment is akin to driving without a roadmap. A competitor study sheds light on the route, aiding you in overcoming obstacles and capitalizing on openings. It's a crucial element of your business planning, establishing a foundation for a strategic approach that contemplates not just market entry, but sustained success.
Is a competitor study useful for you? Indeed, especially if you want to make savvy decisions that will distinguish your dealership. Whether it's carving out your niche, pricing vehicles competitively, or choosing the most impactful marketing tactics, a competitor study delivers the insights necessary to make those choices with assurance.
It's not merely about tracking what others are doing; it's about figuring out how you can do it better or in a unique way to attract and retain customers.
How to conduct a competition study for your car dealership business?
To conduct a competition study for your car dealership, start by gathering information on local competitors by looking into their vehicle inventory, pricing strategies, customer reviews, and marketing approaches.
Next, compare these elements with your own dealership to pinpoint what sets you apart and where you might need to step up your game.
We also offer a concise competition study template that you can customize with your data in our business plan for a car dealership.
To streamline the process for you, here's a 10-step action plan to create a meaningful competition study for your car dealership.
| Step | Action | Details |
|---|---|---|
| 1 | Identify your competitors | List nearby car dealerships that target a similar market demographic. |
| 2 | Examine their vehicle inventory | Compare their makes, models, and price points to your inventory. |
| 3 | Analyze their marketing strategies | Look at their advertising campaigns, promotions, and online presence. |
| 4 | Assess their customer service | Read through customer feedback and testimonials to evaluate service quality. |
| 5 | Study their dealership branding | Analyze their logo, showroom layout, and overall brand image. |
| 6 | Check their online presence | Review their website functionality, search engine optimization, and digital showroom. |
| 7 | Understand their pricing strategy | Identify how they price their vehicles, including financing options and special offers. |
| 8 | Monitor their customer engagement | Observe how they interact with customers on social media and other online platforms. |
| 9 | Identify their strengths and weaknesses | Based on your analysis, determine areas where they outperform or fall short. |
| 10 | Apply insights to enhance your dealership | Use the insights gained to improve your inventory, marketing, customer service, and more. |
What should be included in a competition study for a car dealership business?
Here is a table listing 10 elements that could be part of a competition study for a car dealership business.
| Name of the Element | Description |
|---|---|
| Market Share | Percentage of total vehicle sales in the region accounted for by competing dealerships. |
| Inventory Diversity | Variety of vehicles offered, including new, used, and certified pre-owned models, as well as the range of brands and types (e.g., sedans, SUVs, trucks). |
| Pricing Strategies | How competitors price their vehicles, including financing options, leasing deals, and any special promotions or incentives. |
| Customer Base | The demographic and psychographic characteristics of the customers who frequent the competing dealerships. |
| Location and Facility | Physical location of competitors, including the convenience of access, visibility from major roads, and the quality of the showroom and service areas. |
| Marketing and Advertising | Competitors' strategies for promoting their dealership, including traditional advertising, digital marketing, and community engagement. |
| Customer Reviews and Reputation | Online reviews and reputation of competing dealerships on platforms like Google, DealerRater, and Cars.com. |
| Service and Maintenance | Quality and range of after-sale services provided, such as regular maintenance, repairs, and warranty work. |
| Showroom Experience | The buying experience offered, including the layout of the showroom, the conduct of sales personnel, and the ease of the purchasing process. |
| Technological Advancements | Use of technology in the sales process, vehicle features, and service department, including online sales platforms and advanced diagnostic tools. |
Examples of competition studies for a car dealership business
Below are three different (very concise) examples of competition studies tailored for a Luxury Car Dealership, Family-Oriented Car Dealership, and Electric Vehicle (EV) Dealership.
If you need something more developed, go check our business plan template for a car dealership.
Luxury Car Dealership Competition Study
| Competitive Factor | Description |
|---|---|
| Brand Portfolio | Selection of high-end luxury car brands and exclusive models. |
| Price Range | Premium pricing strategy, reflecting the luxury and exclusivity of the vehicles. |
| Location | Strategically located in affluent neighborhoods or high-end shopping districts. |
| Customer Experience | Personalized service, private viewings, and bespoke customization options. |
| Showroom Ambiance | Elegant and sophisticated showroom design that enhances the prestige of the vehicles. |
| Unique Selling Proposition (USP) | Membership perks, partnerships with luxury brands, and exclusive customer events. |
Family-Oriented Car Dealership Competition Study
| Competitive Factor | Description |
|---|---|
| Vehicle Selection | A diverse range of family-friendly vehicles, including SUVs, minivans, and crossovers. |
| Price Range | Competitive pricing with a focus on value for money and financing options. |
| Location | Conveniently located near residential areas, schools, and shopping centers. |
| Customer Service | Friendly and knowledgeable staff with a focus on safety and reliability. |
| Amenities | Family-friendly facilities such as play areas for children and comfortable waiting lounges. |
| Unique Selling Proposition (USP) | Extended warranties, free maintenance packages, and child safety features. |
Electric Vehicle (EV) Dealership Competition Study
| Competitive Factor | Description |
|---|---|
| EV Range and Models | A wide selection of electric vehicles, including the latest models and technology. |
| Price Range | Varied pricing to cater to both entry-level and premium market segments. |
| Location | Accessible locations with proximity to charging stations and urban centers. |
| Eco-Friendly Practices | Commitment to sustainability, including green energy use and recycling programs. |
| Education and Support | Informative staff trained to educate customers on EV technology and benefits. |
| Unique Selling Proposition (USP) | Test drive experiences, EV charging incentives, and partnerships with clean energy providers. |
You can also read our articles about:
- how to fill a Business Model Canvas for your car dealership business
- how to segment the customers of your car dealership business
- how to elaborate a marketing strategy for your car dealership business
- how to open a car dealership (guide)