Reducing operational expenses is a critical strategy for powersports dealerships - motorcycles, ATVs, UTVs, side-by-sides, and more, to protect profit margins in a competitive and often seasonal market. With rising costs tied to inventory flooring, staffing, parts, and marketing, many dealers feel pressure to cut expenses without sacrificing sales volume or customer experience.
The good news: smart cost management doesn’t require drastic changes. It focuses on high-impact areas where regular review, accountability, and negotiation can produce meaningful results quickly. Below are practical steps, starting with two core examples that you can implement right away.
Why Focus on Operational Expenses Now?
Advertising is often one of the largest variable expenses for powersports dealerships, typically running 2.5 - 5% of available income or gross, depending on performance benchmarks and market conditions. At the same time, other variable costs, such as auction fees, transportation, and outsourced services—can quietly erode margins if left unchecked.
By auditing these expenses on a regular cadence (for example, reviewing the last 90 days), dealers can identify waste, renegotiate terms, and reallocate spend more effectively, often improving profitability without impacting sales momentum.
Example 1: Review and Optimize Monthly Advertising Spend
Advertising is essential for driving showroom traffic and online leads, but spend can easily creep up without delivering proportional results. Many dealerships work with a mix of digital agencies, Google Ads, social platforms, OEM programs, Online marketplaces and traditional media reps.
Action steps:
Additonal considerations:
Regular ad reviews often uncover 20% or more in savings without reducing lead flow - especially when underperforming campaigns linger during slower seasons.
Example 2: Evaluate Fees Paid to Outside Service Providers
Sourcing used inventory through auctions or relying on third-party services for transport, inspections, or reconditioning, is common, but these costs add up quickly through buyer premiums, per-unit fees, and add-ons.
Action steps:
Even modest improvements (for example, $50 - $100 per unit) compound quickly across dozens of units per year and can materially improve margins.
Additional Quick Wins for Expense Reduction
Beyond advertising and sourcing costs, consider these complementary strategies:
• Audit fixed expenses such as utilities, insurance, and facility maintenance to ensure pricing remains competitive.
• Improve inventory turn to reduce flooring interest and carrying costs top performers consistently outpace average turn benchmarks.
• Leverage your DMS and technology tools to eliminate administrative inefficiencies and manual work.
• Increase parts and service absorption to cover a greater share of fixed overhead organically.
Build the Habit, Not Just the Fix
The biggest gains come from consistency. Monthly advertising reviews and quarterly fee negotiations create a culture of proactive cost control rather than reactive cuts.
By trimming unnecessary expenses today and managing co-op and variable costs with intention, you position your dealership for stronger performance in any market cycle.
If you’d like help expanding this framework into other departments (parts, service, F&I, or inventory strategy), let your Herohub Coach know - we're happy to help you dig in.
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