The car dealership industry has been known to ebb and flow with the economy. These days, when it comes to the economic environment, we’re seeing higher interest rates, lower gross profit per car sold, a slowdown in active buyers, and the potential for a recession.


According to Cox Automotive, “U.S. automobile dealer sentiment in the fourth quarter of 2022 dropped to the lowest level since the start of the COVID-19 pandemic, according to the Cox Automotive Dealer Sentiment Index (CADSI). At 43, the current market index is below the threshold of 50, indicating that more dealers view the current auto market as weak than strong. The index is down 6 points quarter over quarter, down 17 points year over year, and well below the pre-pandemic average of 48.”


As a car dealership owner or leader, you may be feeling overwhelmed or uncertain about what steps to take next. Let’s break down how to prepare your car dealership for any downturn that may come.



Overreaction Is Not the Answer

The first step is avoiding overreaction. The most important thing you can do is not panic in times of economic distress. Managing your reaction as a leader will set the tone for your team and help to maintain stability during a difficult time.


It’s also important to remember that cost cutting measures are necessary but if done too quickly or without proper consideration they can have serious consequences – like reducing your workforce and increasing operating costs while decreasing total sales gross profit.


When times are tough and money is tight, it can be easy to panic.


Instead of making drastic changes right away, take some time to consider what new strategies you can implement that will keep your business afloat while still helping you reach your sales goals.



Hire the Right People

Another key factor is having the right people in place managing your used car operations. During times of economic downturn, used car operations become increasingly more profitable – so having experienced managers in place ensures that you’re getting the most out of this aspect of the business.


Additionally, it’s essential that you focus on follow-up with customers – gaining more market share means taking some away from the competition, so make sure that your follow-up process is stronger than theirs!



Focus on Used Car Operations

Used cars offer a great opportunity for dealership owners during an economic downturn because they cost less than new cars and still bring in steady profits with comparatively low overhead costs.


Focusing on used car operations will help boost sales while minimizing losses due to chargebacks of finance products or additional taxes on vehicles purchased from other dealerships.



Optimize Your Sales

It goes without saying that competition is fierce in any industry—and especially so in the car dealership business!


In order to stay ahead of the competition during an economic downturn, it is important that you not only work harder but smarter as well. Try to focus on getting more out of every sale by offering upsells and add-ons where appropriate, creating loyalty programs for customers or streamlining processes wherever possible so that fewer resources are wasted along the way.




By leading well, focusing on used car operations, hiring the right people, and doubling down on follow-up efforts with customers, you can ensure that your car dealership stays successful during an economic downturn.


While there may be difficult times ahead, these tips should help provide some stability throughout any recessionary period so that you can continue providing quality services while keeping your business profitable over time.


So when you’re ready to have the recruitment team at Autopeople in your corner, give us a call at 1-800-659-9501, visit our website at or email us to discuss what Autopeople can do for you.