Modern Strategies to Combat Declining Profitability
Independent dealers are facing a slew of new challenges as they head into the second half of the year—tight inventory, shrinking margins, and affordability concerns that are reshaping how consumers shop. While used vehicle sales are forecasted to be up this year, compared to last year, the path to profitability is anything but straightforward.
That’s why all eyes are on the upcoming NIADA conference, where Chrisey O’Hara, VP of Dealer Sales, and Bethany Johnson, Director of Strategic Planning at Cox Automotive, will take the stage to share a proven framework for success. Their session, “Modern Strategies to Combat Declining Profitability,” will spotlight five key strategies that can help dealers overcome profitability pressures.
In this article, we’ll preview five pillars of profitability—acquisition, pricing, merchandising, retailing, and affordability—and explore how dealers can apply them to unlock greater performance and profit potential.
Three Reasons Independent Dealers Are Feeling the Pressure
Recent structural shifts in today’s market are squeezing margins and complicating decision-making. Understanding these top three pressure points is the first step to overcoming them.
Here are the three key forces driving today’s profitability pressure:
1. Inventory Acquisition Challenges
Dealers are struggling to find the right vehicles through traditional sourcing channels. The competition for in-demand inventory is fierce, and many are forced to pay top-dollar just to keep their lots stocked.
2. Margin Compression
Acquisition costs are rising, and profit margins are shrinking. Vehicles are sitting longer, floor plan expenses are increasing, and pricing strategies are often inconsistent, leading to missed opportunities and lost revenue.
3. Affordability Concerns
Consumers are feeling the pinch of high interest rates and elevated vehicle prices. This makes it harder to close deals and requires dealers to be more strategic in how they present value and financing options.
By focusing on five key strategies, dealers can regain control of their profit potential and build a more resilient business model.
Strategy 1: Smarter Inventory Acquisition Starts with Smarter Insights
Dealers can’t sell what they don’t have—and in today’s market, finding the right vehicles is half the battle. Many still rely on gut instinct or whatever’s available, but that approach leaves too much to chance.
Instead, high-performing dealers are using data to guide every acquisition decision. This means understanding which vehicles are moving fast in their market, which ones are sitting too long, and where inventory gaps exist. Solutions like vAuto’s Provision® provide real-time insights that help dealers stock and price smarter.
Sourcing should also be diversified. Auctions are just one piece of the puzzle. Dealers find success by tapping into private party listings, trade-ins, service lanes, and equity mining to uncover hidden opportunities. The more channels explored, the better the chances of securing the right car for the right customer—at the right price.
Strategy 2: Consistent, Data-Informed Pricing Drives Better Margins
Once the right vehicles are on the lot, pricing becomes the next critical lever for profitability. But too often, pricing decisions vary from one team member to another—leading to inconsistencies that chip away at gross profit.
Dealers are finding success by aligning their teams around a shared pricing strategy. That starts at the appraisal. When everyone understands how far to stretch based on vehicle condition, market demand, and acquisition cost, pricing becomes more predictable—and more profitable.
Advanced dealership software now makes it easier to price with confidence. These tools analyze historical performance, local market trends, and vehicle-specific data to recommend pricing ranges. While human judgment still plays a role, having a consistent starting point helps dealers reduce guesswork and improve outcomes across the board.
Strategy 3: Transparent and Targeted Merchandising Builds Buyer Confidence
Once inventory is priced, the next step is making sure it’s presented in a way that earns trust and drives action. Today’s car shoppers are more informed than ever—and they expect transparency.
Dealers who lead with honesty during the trade-in process see stronger customer relationships and faster turn times. That means clearly communicating vehicle condition, being upfront about defects, and helping customers understand the true value of their trade.
Merchandising also plays a critical role in how quickly vehicles move. Listings should be complete, photo-rich, and front-line ready. Incomplete or poorly presented listings can cause even the best-priced vehicles to be overlooked.
To stand out, many dealers are now using vehicle-specific stories and personalized content on their VDPs. These enhancements help shoppers connect with the car—and the dealership—on a deeper level, making it easier for them to say “yes.”
Strategy 4: Connected Retailing Experiences Meet Buyers Where They Are
Today’s car buyers expect flexibility. Whether they start their journey online or walk into the showroom, they want a seamless experience that fits their lifestyle.
Dealers who offer connected retailing—where online and in-store processes work together—are better positioned to meet these expectations. From digital trade-in evaluations to online financing tools, every touchpoint should feel consistent and convenient.
This shift isn’t just about convenience—it’s about reach. Consumers are now willing to travel farther than ever to find the right vehicle. Expanding digital visibility and offering a frictionless path to purchase can help dealers tap into a broader buyer base and close more deals.
Strategy 5: Addressing Affordability with Flexibility
Affordability is one of the biggest hurdles facing today’s car buyers. With high interest rates and elevated vehicle prices, many shoppers are stretching their budgets further than ever before.
Dealers who acknowledge this reality—and adapt to it—are better positioned to close deals. That means offering flexible financing options, clearly communicating value, and helping customers understand how a vehicle fits their financial situation.
It also means being transparent about trade-in values and monthly payment estimates early in the process. When customers feel informed and supported, they’re more likely to move forward with confidence—even in a high-cost environment.
Profitability Starts with a Plan
In a market defined by uncertainty, dealers who take a strategic, data-driven approach are the ones best positioned to succeed. By focusing on five key areas—acquisition, pricing, merchandising, retailing, and affordability—dealers can turn today’s pressure points into opportunities for growth.
Each strategy builds on the next, creating a more resilient and profitable operation. Whether it’s sourcing smarter, pricing with consistency, or delivering a seamless customer experience, the path to stronger margins starts with intentional action.
The tools are available. The insights are clear. Now is the time for dealers to take the next step—and unlock the full profit potential of every vehicle on the lot.
Reclaim Profitability at NIADA
Join Chrisey O’Hara, VP of Dealer Sales, and Bethany Johnson, Director of Strategic Planning at Cox Automotive, at NIADA 2025 for their must-attend session: “Modern Strategies to Combat Declining Profitability.” Discover five actionable strategies to overcome today’s toughest challenges—from inventory acquisition to affordability.
Visit https://www.coxautoinc.com/niada/ to secure your seat and unlock your dealership’s full profit potential.
