A car dealership SWOT analysis is a self-examination of store operations to help dealers determine what they do well, where they need to improve, and what strategies they need for dealing with external factors that can impact the business. This exercise is often crucial for dealerships to stay in tune with market changes and remain profitable in a volatile industry. 

This article outlines and discusses the four stages of this analysis (Strengths, Weaknesses, Opportunities, and Threats) and offers examples to consider.  

Conducting a Car Dealership SWOT Analysis  

In each of the four phases below, dealers should identify the critical data, learn how to interpret that data, and make operational adjustments accordingly. 

While performing these analyses, dealers must also recognize that strengths and weaknesses are considerations that dealers can often handle internally. At the same time, opportunities and threats are typically external factors to which dealers must react.

Strengths  

Dealers should begin a SWOT analysis by listing their dealership’s pertinent strengths compared to the area’s top competitors. 

These rival dealerships might offer identical brands brand or similar ones under differing names. The critical point is that their stores are nearby and provide a credible shopping alternative for potential customers.  

When assessing strengths, dealers should consider what they do better than the competition.  

These advantages might include: 

• Providing a more comprehensive array of fixed op services 
• Selling higher-quality new and pre-owned vehicles  
• Offering a more extensive color selection 
• Establishing a better customer service department  

Dealers should review each strength and sort them by which ones supply a more significant advantage over competitors. 

Weaknesses 

Next, dealers should list their store’s weaknesses and rate them based on potential severity (i.e., their potential to hinder business). 

These disadvantages might range from those visible to the public to internal issues of which outsiders are unaware.  

For example, competitors may know that the dealer is experiencing financial hardships because of public financial records, local news reports, or published articles. However, they may not know the current options to remedy those hardships, such as securing a bank loan. 

That perceived weakness becomes a minor issue if the bank approves a loan but a much bigger one if they do not. In either case, dealers should look to limit that public knowledge when possible. 

Other weaknesses could include: 

• Outdated technology 
• Expensive startup expenses for newer dealerships 
• Insufficient sales staff 
• Inexperienced service technicians 
  
  

Opportunities 

Dealers begin creating goals and objectives in the opportunity phase, which might start by identifying external factors such as: 

• Strong service ratings from review publications   
• Positive online customer reviews 
• Competitor price hikes 
• Competitor inventory shortages 

Each of these events provides the dealer with opportunities to attract new customers, and dealers should look to use as many of these external developments as possible to their advantage.  

For example, the marketing teams might design and distribute brochures and create digital advertisements highlighting those positive reviews. They might also feature vehicles in their inventory that competitors do not have and stress any attractive price differentials. 

Threats 

Threats are often the result of a significant weakness that competitors can exploit, which dealers should look to mitigate as much as possible to reduce their potential negative impact.  

These mitigation strategies will involve monitoring competitor actions that directly affect the dealer’s bottom line, which might include: 

• More valuable rebate offers 
• Steeper price cuts 
• Better employee pay 
• More attractive loyalty programs 
• Expanded fixed op services 

Dealers should analyze each strategy, find where they can improve to compete better, and respond with new promotions.  

Additionally, managers should remain aware of other non-competitor market activities that could constitute a danger, such as: 

• Increased digitization 
• Government legislation 
• Evolving customer preferences 
  
  

Effective SWOT Analyses Require the Best Technology 

In strategic planning, a car dealership SWOT analysis can often be critical to improving store-wide performance. Going through the above exercise to evaluate all four areas of concern and addressing pressing issues is vital to keeping pace with competitors.  

However, addressing those concerns requires a comprehensive digital dashboard that provides an end-to-end view of your daily operations to make the best decisions possible. Any analysis will only be partially effective without access to all the critical data.  

Contact us today and discover how Affinitiv’s DealerLens can help you use a SWOT analysis to devise new strategies to improve operations.