7 Key KPI Metrics Dealers Must Track for Sales Growth

Car dealers always have something to track — dealership industry turnover, invoicing delays, labor rates; the list goes on. With the car dealership industry generating over $1 trillion in new vehicle sales in 2019 alone, the industry is both vast and challenging. It requires big investments but often operates with tight profit margins. It requires big investments but often operates with tight profit margins.

This is why key performance indicators (KPIs) are so important: they help car dealership owners monitor their business performance (measure marketing effectiveness, lead conversions, etc.) to maintain and raise profitability. Whether you’re new to tracking automotive metrics or a seasoned analyst, it always helps to revisit your focus and set S.M.A.R.T. goals (specific, measurable, attainable, relevant, and time-bound) around them.

Lotlinx has compiled a list of seven essential KPIs (for which Lotlinx has coined the term “metal metrics“) for automotive dealerships that should always be tracked. These KPIs provide a holistic view of where you’re winning and where you can improve.

Learn these metrics to identify strengths, uncover weaknesses, and create targeted strategies for stronger overall performance.

1. Sales Conversion Rate

Calculation: (Number of Cars Sold ÷ Number of Leads) × 100 

What it Measures: The efficiency of converting leads into sales. 

Importance: Indicates the effectiveness of your sales team and lead quality. 

Example:

\[ \text{Sales Conversion Rate} = \left( \frac{50}{200} \right) \times 100 = 25\% \]

2. Used-to-New Car Sale Ratio

Calculation: Number of Used Cars Sold ÷ Number of New Cars Sold 

What it Measures: The balance between used and new car sales. 

Importance: Helps optimize revenue streams, which is better for profit margins.

Example:

\[ \text{Used-to-New Car Sale Ratio} = \frac{500}{250} = 2:1 \]

3. Average Gross Profit per Unit

Calculation: Total Gross Profit ÷ Total Units Sold 

What it Measures: Average profit made from each vehicle sold. 

Importance: To understand per-unit profitability and identify trends over time.

Example:

\[ \text{Average Gross Profit per Unit} = \frac{\$400,000}{100} = \$4,000 \]

4. Days to Turn (Car Dealership Inventory Turnover)

Calculation: Total Number of Days in Inventory ÷ Total Units Sold 

What it Measures: Average days taken to sell inventory. 

Importance: Indicates VIN inventory management efficiency.

Example:

\[ \text{Days to Turn} = \frac{1200}{100} = 12 \text{ days} \]

5. Customer Retention Rate

Calculation: (Number of Returning Customers ÷ Total Number of Customers) × 100 

What it Measures: The percentage of customers who return to the dealership for repeat business. 

Importance: A high retention rate indicates customer satisfaction and loyalty, which means everything for long-term profitability. 

Example:

\[ \text{Customer Retention Rate} = \left( \frac{150}{500} \right) \times 100 = 30\% \]

6. Finance and Insurance (F&I) Profit per Vehicle

Calculation: Total F&I Profit ÷ Total Number of Vehicles Sold 

What it Measures: The average profit derived from finance and insurance products sold per vehicle. 

Importance: This KPI helps assess the effectiveness of the F&I department in generating more revenue streams. 

Example:

\[ \text{F&I Profit per Vehicle} = \frac{\$300,000}{200} = \$1,500 \]

7. Lead Response Time

Calculation: Total Lead Response Time ÷ Number of Leads Responded To 

What it Measures: The average time taken to respond to new leads. 

Importance: Faster responses typically stimulate higher conversion rates and improved customer satisfaction. 

Example:

\[ \text{Lead Response Time} = \frac{500 \text{ minutes}}{100} = 5 \text{ minutes} \]

Analyze Your KPIs for Dealership Success

Taking a close look at your dealership’s current metrics is a great starting point for improving your business performance. Evaluate which KPIs you’re already tracking and integrate some of the key metrics we’ve outlined.

By doing so, you’ll gain an in-depth view of your dealership’s health, helping you pinpoint areas of strength and opportunities for improvement. Focus on these essential KPIs for automotive dealerships to develop targeted strategies that drive success and enhance sales and revenue. Additionally, measuring marketing effectiveness is vital to understanding how well your advertising efforts convert leads into actual sales.

Lotlinx’s automated Sentinel platform makes it easier to manage these critical KPIs and other data analytics that form the bedrock of your dealership. The VIN View Optimizer helps you spot inventory risks, maximize your advertising budget, and get a clear picture of your digital performance. By targeting VINs that need more attention and moving your inventory, Lotlinx helps dealerships turn over stock faster and boost profitability. Interested? Sign up for a demo today to see how Lotlinx can help your dealership maximize inventory.

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