How you can run a “greener” dealership

Posted by Danni Douglas, Staff II, Tax Services on Mar 22, 2017

There is an increasing emphasis on how business activities effect the environment throughout many different industries. Automobile dealership operations can leave a heavy carbon footprint, so this industry has many opportunities for change.

As a result, many dealers are looking to operate their business in a more Earth-friendly way. Dealerships may enjoy a host of benefits by operating “greener,” as well as gain a competitive advantage against those that have not begun practicing sustainability.

Manufacturer initiatives

General Motors (“GM”) is demonstrating its recognition of the benefits of environmental stewardship by launching its Green Dealer Recognition program, which encourages each dealership to implement green changes.

About 10% of GM’s dealer network, or more than 400 dealerships, are currently participating in the program. Nearly 40 dealerships have received GM’s Green Dealer certification, which recognizes superior sustainability performance. These dealerships have taken a number of steps to operate in a more environmentally friendly way, such as:

  • Using renewable energy sources such as wind, solar and landfill gas instead of carbon-based electricity,
  • Implementing water conservation practices — for example, installing low-flow toilets and capturing runoff rainwater,
  • Replacing roofs with white light-reflecting surfaces and installing skylights in roofs to provide natural interior lighting,
  • Switching to light-emitting diode (LED) lighting both inside the dealership and in the parking lot,
  • Making it easy for employees to recycle paper, soft drink cans and other recyclable items while at work, and
  • Conducting community outreach efforts to help educate customers and others about the importance of environmental sustainability, and what they can do to help.

In another manufacturer initiative, Ford Motor Company is expanding its “Go Green” Dealer Sustainability Program. This program encourages dealerships to implement energy efficiency improvements in the areas of lighting, HVAC, building envelope, water usage, and renewable energy applications. Dealers that wish to participate in the program will undergo a Go Green assessment that identifies opportunities to increase utility efficiency, lower energy costs, and reduce their carbon footprints.

Benefits to consider

Here are a few of the benefits your dealership could realize by implementing sustainability practices:

Greater customer satisfaction and loyalty. Many buyers are keenly aware of environmental issues. Not only do they want to drive more fuel-efficient vehicles, but they want to buy vehicles from green dealerships. Thus, operating more sustainably can give you a competitive edge.

Boosted employee morale. Similarly, many employees today are environmentally aware and want to work for companies that practice sustainability. These employees will likely be proud of the steps your dealership takes to operate in a more environmentally friendly manner, which will increase their morale.

Improved reputation in the community. It’s not just your customers and employees who value environmental stewardship: Society at large also puts a strong emphasis on sustainability. By going as green as possible, you’ll likely boost your local reputation and possibly even generate positive PR for your dealership.

Reduced expenses. Implementing sustainability practices may reduce your dealership’s energy costs, which could increase your bottom line. For example, switching to LED lighting could lower your overall energy costs by up to 75%, according to the U.S. Energy Department.

Steps to success

The first step in becoming a greener dealership is to discuss with your managers what you can do to operate in a more environmentally sustainable way, and begin implementing some of the ideas listed above.

Also ask your employees for their ideas about sustainable practices. They work on the front lines of your business, so they may be able to see opportunities that you never thought about. Consider hosting an employee lunch ’n learn where you open the floor for everyone to share their ideas. Then create a sustainability committee that’s responsible for researching the ideas and coming back to management with a detailed plan for how the most feasible ideas can be implemented.

More important now

Environmental sustainability is more important than it ever has been, so start thinking about specific, financially realistic ways you can operate your dealership in a better way. 

Sidebar: A tax break for going green

Your dealership may be able to reap tax benefits by going green. One of these tax breaks is the Business Energy Investment Tax Credit (“ITC”), which provides up to a 30% federal tax credit for the installation of commercial solar systems.

Your dealership may receive a dollar-for-dollar tax credit for eligible solar energy systems on which construction is started before the end of 2023. Qualifying property includes equipment that uses solar energy to generate electricity, provide heating or cooling, or provide solar-process heat. Hybrid solar lighting systems also are eligible for the credit.

The amount of the ITC phases out gradually between now and 2023 — from 30% for solar systems installed before the end of 2019 down to 10% for systems installed in 2022.

Ask your our professionals about this tax incentive and other tax-saving opportunities related to going green that may arise.

Contact one of our financial professionals TODAY to learn more about how we can take you to the next step.


Topics: Auto, Accounting Tips, Tax