The Biggest Operational Challenges for Auto Dealerships in 2025

The automotive industry is undergoing a rapid transformation. Consumers are more informed, more digitally connected, and more demanding than ever before. They expect competitive pricing and an efficient, transparent, and seamless buying and service experience. In this environment, traditional dealership models are under pressure. From managing inventory delays to adopting digital communication and improving internal workflows, dealerships are facing a range of operational and strategic hurdles.

In this article, we explore the top six challenges automotive dealerships face today—and how solutions like Workflow 360°’s DMS extension can help overcome them.

The Top 6 Challenges That Automotive Dealerships Face Today

1. Adapting to Digital Transformation

Customers now begin their car-buying journey online. Virtual showrooms, direct-to-consumer models, and third-party automotive marketplaces have fundamentally shifted how vehicles are researched, compared, and even purchased. Dealerships must evolve by building digital-first strategies that support online engagement, transparency, and personalization across every touchpoint.

Embracing digital transformation isn’t just about creating an attractive website. It’s about investing in a connected platform that supports customer communication, digital estimates, remote approvals, and real-time updates that match the speed and expectations of modern car buyers.

2. Supply Chain Disruptions

Whether it’s a delay in new vehicle deliveries or a shortage of parts in the service bay, supply chain instability continues to impact dealership profitability. Missed sales, excess inventory, and extended repair times all stem from the inability to access parts and products on time.

3. Meeting Evolving Customer Expectations

Today’s customers value speed, clarity, and trust. While price remains important, the overall service experience is more important in loyalty and retention. For that reason, many successful dealerships are improving their service departments, not just their showrooms.

4. Rethinking Sales Strategy

Gone are the days of high-pressure, one-size-fits-all selling. Consumers now expect consultative sales approaches focusing on their preferences, lifestyles, and needs. Dealerships must shift from transactional to relationship-based selling.

By using digital inspection reports, centralized service communication, and integrated scheduling tools, dealerships can offer a more comprehensive and personalized experience. Customers who purchase vehicles are more likely to return for service when that workflow is convenient, transparent, and handled in one place.

5. Communicating Through the Right Channels

Email and phone calls still have their place, but text messaging is now the fastest, most effective way to reach customers. Workflow 360° includes Media 360°, which offers built-in text and SMS capabilities that allow dealerships to send appointment reminders, service updates, media files, and final approvals—all from one platform.

This streamlined communication shortens the time between diagnosis and repair and gives customers more control over their service decisions. Quicker responses mean more jobs completed, improved CSI scores, and fewer vehicles sitting in the bay.

6. Streamlining Inefficient Processes

The costliest challenge for dealerships isn’t a shortage of skilled labor or expensive equipment—it’s inefficiency. Bottlenecks in communication, fragmented systems, and manual workflows slow down productivity and eat into profits.

Boost Your Dealership’s Efficiency with a DMS Extension

A DMS extension is an essential tool for dealerships in this situation. In this article, we’ll explore how Workflow 360°’s DMS extension can significantly boost your dealership’s efficiency by enhancing your existing DMS capabilities.

What is a DMS Extension?

A DMS extension is a supplementary module designed to enhance the functionalities of your existing Dealer Management System. Unlike a standalone system, a DMS extension builds on the core capabilities of your DMS, focusing on specific areas that require additional or specialized functionalities. Whether it’s advanced analytics, improved communication tools, or seamless workflow integration, a DMS extension fills the gaps your primary system may not fully address.

Why Your Dealership Needs a DMS Extension

1. Enhanced Functionality

While your current DMS may handle the basics of dealership operations, such as sales tracking and customer relationship management, a DMS extension offers enhanced features beyond these standard functions. For example, Workflow 360°’s DMS extension enhances communication and workflow across various departments, ensuring no detail is missed and every process runs smoothly.

2. Specialization for Specific Needs

Dealerships have unique requirements depending on their size, location, and customer base. A DMS extension allows you to customize and optimize your operations based on these specific needs without a complete system overhaul. For instance, if your dealership needs more advanced reporting capabilities or better integration with third-party systems, a DMS extension can provide these specialized tools, enhancing overall operational efficiency.

3. Seamless Integration with Your Current System

One of the main advantages of a DMS extension is the capability to integrate seamlessly with your existing system. This means you can enhance your dealership’s capabilities without disrupting your current workflow or requiring extensive retraining for your staff. For example, Workflow 360°’s DMS extension integrates effortlessly with your dealership’s current DMS, making the transition smooth and straightforward.

Key Areas Impacted by a DMS Extension

Service Center

A DMS extension can significantly improve the efficiency of your service center by providing real-time reporting and tracking of every vehicle’s progress through the service cycle. This reduces bottlenecks caused by missed details and ensures every job moves forward without unnecessary delays. Enhanced communication tools, such as SMS updates for customers, further streamline the service process and improve customer satisfaction.

Parts Department

Efficient communication between the service technicians and the parts department reduces downtime and improves workflow. A DMS extension ensures technicians have accurate, up-to-date information about parts availability, prices, and order times. This level of integration can lead to a 15-27% increase in technician pay by reducing the time vehicles spend in the service cycle and minimizing costly delays.

Preowned Reconditioning Process

If not managed efficiently, the reconditioning process for preowned vehicles can be time-consuming and costly. Workflow 360°’s DMS extension provides sales managers with complete visibility into the process, allowing them to track progress, identify bottlenecks, and communicate more effectively with their team. By reducing the time it takes for a vehicle to move through reconditioning, dealerships can lower carrying costs and increase profitability in the used vehicle department.

Customer Service

Better internal communication leads to better customer service. A DMS extension ensures that all departments are aligned and have access to the same information, leading to a smoother and more efficient process. Whether through aligned route sheets, quotes, or SMS communication, responding quickly and accurately to customer inquiries greatly enhances the overall customer experience and boosts retention rates.

The Future of Dealership Management with DMS Extensions

As the automotive industry evolves, the need for more customizable and responsive management solutions will only grow. A DMS extension, like the one offered by Workflow 360°, ensures that your dealership can keep up with increasing demands, manage higher traffic, and deliver exceptional customer service. By enhancing your existing DMS, you can optimize your dealership’s operations, improve communication, and ultimately, drive more revenue.

Workflow 360°’s DMS Extension

In a competitive market, dealerships must leverage every tool to stay ahead. A DMS extension provides the enhanced functionality and specialized tools needed to fill the gaps in your current system, making your operations more efficient and your staff more productive. To boost your dealership’s efficiency and enhance customer satisfaction, Workflow 360°’s DMS extension is the solution you need. Contact us to learn how our DMS extension can transform your dealership’s operations.

The Road Ahead: Tools That Drive Dealership Success

By eliminating silos, simplifying approval workflows, and supporting real-time data sharing, Workflow 360° tackles the top six challenges that the automotive industry face today.

If you’re ready to evolve your operations, improve customer satisfaction, and get more vehicles out of the bay and back to the road faster. Contact us today to book a demo.