The National Automobile Dealers Association (NADA) gathered in New Orleans this year and I was honored to be one of the guest speakers. Curt Monhart, our VP of Sales and Marketing, was also present and he attended a session entitled “Seven Habits of Highly profitable Dealers”. Not one of those habits included how to become more energy efficient. That’s hard to understand when energy is the third highest expense in the typical auto dealership operation. This fact alone makes energy a prime target for “good habits” when profitability is being considered.
Reduced energy expense = increased cash flow
When speaking to the audience of auto dealership owners, I always began by asking a couple of questions. The first question was this: “Are you interested in learning how to generate more cash flow?” Of course everyone is excited about that but when I ask: “How many of you believe you can reduce your energy usage, as well as improve your cash flow, and not spend a single dollar of your hard earned income?” At that point the room falls silent and nobody ever raises their hand. I tell them it’s a coincidence that we are in the Big Easy because new technology makes achieving those three points truly easy!
I then used a case study to get them to understand how achieving energy efficiency can be easy as well as affordable.
In the example I detailed how one dealership replaced 50 display lot metal halide light fixtures that were drawing 1100 Watts of electricity each. The lights were replaced with 50 LED fixtures that use less than one fourth of that energy (total 250 Watts each) and give off an even better light. Averaging 10 hours of operation each day, and at a national average cost for electricity of $0.11 KWH, they will reduce their annual lighting expense from $22,082 down to just $5,018. That’s a net savings of $17,064 per year!
The installation cost of the LED fixtures is around $60,000. In our home state of Michigan, a dealership would qualify for the Michigan Saves financing program. This program offers 4% interest on a 60 month loan. For a 100% financed light technology upgrade, the $60,000 loan would carry an annual cost of $13,260. Using the energy cost savings of $17,064 per year to pay for the loans $13,260 expense would yield a net positive cash flow of $3,804 each year for the first 5 years alone! This does not even take into consideration the utility and tax incentives that this type of purchase qualifies for. When the audience hears that, I have the attention of everyone in the room!
Understanding the cost of not becoming green!
I was recently asked to provide an energy audit on an auto dealership that had just spent 2 million dollars renovating their show room. The showroom was stunning and will wow every customer that enters the front door. Just beyond that showroom, however, was an expensive remnant of a dealership that had been built in the early 70s when energy was abundant and cheap (see picture below).
A dealerships number one utility expense is lighting. This dealership’s service area contained many of the energy hungry light fixtures that had been installed when the facility was first built. It was overdue for an upgrade!
Some of the fixtures could no longer be produced due to their inefficiency! 80% of the lighting technology in the US was installed before 1986 and most dealerships are using metal halide lighting technology that is 40 years old when new LED lighting technology can reduce operational costs by as much as 75%.
Not upgrading to energy efficient options is costing auto dealerships money that could be going to an improved bottom line.
Improve Cash Flow and Profits with Green Initiatives
There are many options available for upgrading an auto dealership, as well as many other businesses, in order to reduce energy consumption and improve the bottom line. I’ll be detailing many of the options in an upcoming article. For now I’m happy to report that, in New Orleans, a growing number of auto dealers are looking at green technology as a way to cut energy usage and increase profitability!
“A ‘green’ dealership / business operates in a way that has significantly less negative impact on the environment.”
If you’re considering a “Green Renovation” the Energy Alliance Group has compiled a free report titled Ten Questions to Ask Before an Energy Efficiency Upgrade! The report details the most important information you should consider for a successful project launch. If you would like a copy of the report just send an e-mail to firstname.lastname@example.org with “10 Should Ask Questions” in the subject and your name and e-mail address in the message.