Financial management for dealerships: Control costs and improve profits

Running a dealership is not just about selling cars. If you don't have a good financial control, you can sell a lot... and still lose money. Many small or medium dealerships operate without a clear financial management strategy, which affects their profitability without them realizing it.

In this article, we will look at how to improve the financial management of your business, practically and adapted to the reality of used car dealerships with small structures. You don't need to be an accountant: just apply some clear routines and use appropriate tools.

1. Know your numbers: the first step to making decisions

The first common mistake is not knowing clearly how much you earn per car, how much you spend each month, and what your breakeven point is.

Key data you should monitor monthly:

• Number of cars sold.

• Average net margin per unit (revenue – actual cost).

• Fixed expenses: rent, payroll, self-employed contributions, accounting, electricity, etc.

• Variable expenses: reconditioning, commissions, insurance, etc.

• Breakeven point: how many cars do you need to sell to cover all expenses?

Practical example:

If your average margin per car is €1,000 and your fixed monthly expenses are €8,000, you need to sell at least 8 cars to start making money.

Tip: Record your income and expenses weekly. Don't leave it until the end of the month. Constant visibility allows you to react quickly.

2. Separate personal and business money

Although it seems basic, it is a very common mistake. Many small dealerships use the same account for personal and business expenses. This prevents real control and complicates accounting.

Practical actions:

• Have a bank account just for the dealership.

• Define a fixed monthly salary for yourself as a self-employed or manager.

• Do not use business money for personal expenses (or vice versa).

Additional advantage: This separation makes it easier to deal with the tax authorities, with your accountant, and allows you to secure financing more easily if you ever need it.

3. Control the actual cost of each car

It is not enough to know how much you paid to buy a car. You have to add up all the associated costs to know what real margin you have.

Unit costs you should consider:

• Purchase price.

• Transportation and registration costs.

• Reconditioning (washing, mechanics, tires, ITV).

• Warranty.

• Commissions (if applicable).

• Car advertising.

Tip: Use a spreadsheet or system like Dealcar to automatically calculate the actual cost of each car and your net profit per unit.

Mini-case: You buy a car for €5,000, invest €400 in reconditioning and €150 in paperwork and marketing. You sell it for €6,900. Your net margin is not €1,900, but €1,350.

4. Optimize your expenses without losing quality

Reducing costs does not mean slashing wildly. It means spending better. Some key expenses can be optimized through negotiation or adjusting processes.

Areas where you can save:

• Reconditioning: seek agreements with external workshops.

• Advertising: measure which portals and campaigns generate real sales.

• Insurance: compare every year.

• Financing: negotiate better terms with banks or brokers.

Additional suggestion: Review your suppliers quarterly: are there better options?, can you renegotiate terms?, are there unnecessary duplications?

5. Manage your cash flow well

Even if you sell a lot, if you don't manage collections and payments well, you could run out of liquidity. Cash management is vital for paying suppliers, buying stock, and maintaining operations.

Basic actions:

• Keep track of weekly inflows and outflows.

• Avoid paying everything in cash if you can agree on 30-day payments.

• Always have a minimum cushion to cover 1 month of fixed expenses.

Example: If you have €10,000 in cash, don't spend it all on stock. Reserve at least €3,000 for operational payments or emergencies.

6. Monthly track of your profitability

A good practice is to do a simple monthly financial close. You don't need complex accounting reports. Just review:

• Sales made.

• Net profit for the month.

• Comparison with previous months.

• Cars that yielded more margin and why.

Expected outcome: This allows you to make better-informed decisions, detect trends, and adjust strategy quickly.

Tip: Spend 1 hour at the beginning of each month reviewing numbers. With the habit, it becomes easy and very profitable.

7. Use tools that facilitate control

If you manage everything in notebooks or WhatsApp, sooner or later you will lose money. Ideally, you should use a tool designed for dealerships that allows you to have real control.

What should a good tool allow you to do?:

• Control each unit: purchase, expenses, margins, status.

• See sales and profit statistics by period.

• Manage customers and financing.

• Automate reports and reminders.

Recommendation: Dealcar allows you to do all this from a single platform, tailored to used car dealerships.

Checklist: how is your financial management going?

• [ ] Do you know your monthly breakeven point?

• [ ] Do you control the actual margin per car sold?

• [ ] Do you review your fixed expenses each month?

• [ ] Have you separated your personal and business accounts?

• [ ] Do you have a reserve fund for unexpected expenses?

• [ ] Do you use a tool to control the business?

The more brands you have, the more control you have over the financial health of your dealership.

Common mistakes in financial management of a dealership

• Not keeping real control per car.

• Not separating personal and business accounts.

• Not having a reserve for unexpected expenses.

• Relying solely on intuition, not on data.

• Not reviewing prices and expenses frequently.

• Ignoring cash flow or trusting “what's in the bank.”

Frequently Asked Questions (FAQs)

How much net margin should I have per car?

It depends on the product, but in the mid-range, a margin of €800 to €1,200 is a good target. The important thing is to know it with real data.

How can I tell if I am really making money?

By calculating your net profits monthly: income – total costs (fixed + variable). If you don't do this calculation, you're going in blind.

How often should I review my numbers?

Ideally every month. You can do it in 1 hour with a good spreadsheet or system.

Do I need an accountant to control all this?

Not necessarily. With an intuitive tool like Dealcar and good habits, you can handle much of the control yourself.

Conclusion

Good financial management is not optional: it is the foundation for your dealership to be profitable in the long term. You don't need to be an accountant or have a huge team. Just apply simple habits:

• Know what you spend and what you earn.

• Measure each unit.

• Control cash flow.

• Use tools that give you visibility.

If you don't control your numbers, your numbers control you.

Start with the basics, and in a few months you will see how your profitability and peace of mind improve.