Asbury Automotive Group announced on October 29, 2009 that they were able to increase earnings by 39% in the 3rd quarter even though revenues dropped by 12%. Charles Oglesby, CEO, said, “This improved financial performance reflects what we believe is a temporary boost from the government’s Cash for Clunkers program, combined with the benefits of the dramatic expense reductions we have achieved over the past year.” More specifically, Craig Monaghan, CFO, stated that “We have delivered over $100 million of SG&A (Selling, General, and Administration) expense reductions”.
As with many dealers, Asbury saw a temporary boost from the Cash for Clunkers program, however, revenues still dropped by 12%. Common business logic suggests that to increase profits with less revenue you have to decrease your costs. Many dealers are now asking, how did Asbury Automotive reduce their costs?
Asbury’s Earnings Call and Press Release outline several cost reducing methods including relocating their headquarters, decreasing their corporate staff, and switching their DMS to DealerTrack’s Web-Based Software-as-a-Service (SaaS) DMS solution. Switching your DMS to a Web-Based solution is a cost reduction strategy that just about any dealership can implement. A Web-Based DMS can save a dealership thousands in monthly IT costs by eliminating expensive servers, costly upgrades, and hidden fees often associated with other systems.
According to Craig Monaghan, CFO, Asbury is 59% complete with the conversion of their stores to the DealerTrack DMS. Their goal is to complete the DMS conversion by next summer. Monaghan stated that he is very pleased with the “tremendous progress” that Asbury has made with their cost reduction strategies. More specifically, he is thrilled with the “speed and quality of implementation” that has been achieved.
