DONNA HARRIS

What's in a name? Apparently fatter profits

Donna Harris covers automotive retailing Automotive News
Though some dealers continue to trumpet that they offer the lowest prices, others are de-emphasizing price and building a dealership brand -- and it's paying off.

The dealers involved in brand marketing want to be known, for example, for their integrity, their longtime employees, their efficiency or their excellent customer service.

There's evidence they can make more money that way than if they remain locked in a price war. Forget what the low-ballers say about making it up in volume.

The research on branding comes from Brandtailers, an Irvine, Calif., advertising agency that performs marketing services for car dealers. Brandtailers surveys every customer who buys a car from one of its dealer clients.

In a recent study based on thousands of responses, it found that the dealerships with a very positive brand image earned an average gross profit of about $3,000 per new vehicle sold -- roughly double that of the dealerships that had little or no brand recognition.

Meanwhile, data from the National Automobile Dealers Association show dealer profit margins on new vehicles continue to shrink. The shift to brand marketing is looking good. 

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