Nationwide Dealerships Are Losing Big Due to Security Incidents—UAS Explains Why

Different facilities face different kinds of security threats and vulnerabilities. For car dealerships, stolen vehicles top the list, and the repercussions of these thefts come with an additional price tag, as well. A single break-in, vandalism incident, and even a fraudulent test drive can cost a car dealership thousands of dollars in losses and long-term consequences that affect the entire business. These added costs impact operations, raise insurance rates, and reduce employee morale and customer trust.

And while it makes sense that many dealerships focus first on preventing vehicle theft, it’s also important to consider how far-reaching the financial effects can be. Here we take a close look at the overall financial damage that can ensue. They extend far beyond the stolen asset itself and shine a bright light on why investing in robust security solutions delivers a strong ROI.

 

The Financial Impact of Stolen Vehicles & Parts

Say an SVU worth $60,000 is stolen from a dealership. But the actual cost of this theft is exponentially higher. These additional hidden costs rack up fast:

• Insurance Deductibles: Ah yes – right from the get-go the dealership pays a $5,000 to $10,000 deductible before receiving any reimbursement.
• Insurance Premium Hikes: Theft claims translate into higher premiums, increasing operational costs for years.
• Lost Sales Opportunity: That stolen SUV can no longer be sold, meaning potential revenue and commissions are lost.
• Replacement Costs: Ordering a new vehicle for inventory can take weeks or months, leaving the lot with fewer options for buyers.

GRAND TOTAL: Even one single stolen vehicle can cost a dealership over $100,000 in long-term losses due to these insurance hikes, lost sales, and replacement delays.

 

Vandalism & Property Damage: A Costly Disruption

Incidents of vandalism may seem less detrimental to car theft, but the reality is – they are expensive for dealerships to deal with, as well. Smashed windows, damaged inventory, and defaced property leave the dealership holding the bag to pay the price of repair costs, downtime, and an unsafe business environment.

A case in point – A dealership’s service bay is vandalized overnight.

• Repair costs can encompass fixing broken windows, repainting walls, or replacing damaged signs can cost thousands.
• Service downtime comes at a cost. The service department may have to close altogether while repairs are being made; this not only delays customer service appointments, leading to customer frustration, it also halts service revenue.
• Reputational damage can be done, because customers arriving at a dealership with broken windows and graffiti may question its safety and professionalism.

GRAND TOTAL: Even minor acts of vandalism can cost a dealership $10,000 to $50,000 in repairs, lost revenue, and reputation damage.

 

Fraudulent Test Drives & Identity Theft

Remember the days when you’d take a car out for a test drive with the intention of wanting to buy it? Well intentioned, but not so much anymore in the case of those asking for test drives that are actually fraudulent. Criminals are using fake IDs, stolen credit information, or phony checks to drive off vehicles that they never intend to return. While many dealerships prefer to have a salesperson accompany potential customers on test drives, some still do not, thinking that if the prospects hands over a driver’s license as a security measure, they are acting in good faith.

The risks of doing this stack up like this:

• Immediate Vehicle Loss: The dealership loses an entire vehicle, often valued at $30,000 to $80,000.
• Delayed Investigation: Police investigations may take weeks to locate the stolen car, if they recover it at all.
• Increased Insurance Costs: Like vehicle theft, fraudulent test drives lead to higher dealership insurance rates.
• Strained Resources: Staff must spend time filing reports, working with police, and handling insurance claims instead of focusing on customers.

GRAND TOTAL: Fraudulent test drives can cost a dealership tens of thousands of dollars in lost inventory and increased insurance premiums.

 

Increased Insurance Costs Due to Repeated Security Incidents

Every time a dealership files a security-related insurance claim, insurance companies classify them as a high-risk business. The more incidents that occur, the higher the premiums rise. For example, if a dealership has two vehicle thefts and one vandalism claim in a year:

• Premiums can increase by 20-30% because the insurance company sees the dealership as a high-risk location.
• Deductibles rise, so the dealership pays more out-of-pocket for future claims.
• Loss of Coverage Risks: Some insurers may even deny coverage renewal for dealerships with repeated claims.

GRAND TOTAL: Higher insurance premiums can add $20,000 to $100,000 in extra expenses annually, depending on the dealership size and past claims.

 

Damage to Reputation & Customer Trust

Security incidents don’t just affect the dealership financially, they also negatively impact customer confidence. A dealership that has had to deal with frequent incidents of theft, vandalism, or fraudulent transactions are prone to developing a bad reputation, making customers less likely to do business there.

Example: TV news coverage shows that a dealership has been the target of a high-profile theft.

• Customers may opt to do business with competitors with a better reputation for security.
• Online reviews may spread awareness of safety incidents that have impacted the dealership and negatively impact sales and brand perception.
• Employees may feel unsafe, leading to lower morale and increased turnover.

GRAND TOTAL: A damaged reputation can’t be measured in dollars and cents, but can absolutely lead to lost customers, lower sales, and difficulty attracting high-quality employees.

 

Why Dealerships Are Embracing Modern Security Solutions to Ease Financial Blows

Realizing that the financial impacts can be devastating, increasingly more dealerships are moving beyond traditional security methods and investing in proactive, technology-driven solutions. One of the most effective security upgrades is Remote Video Monitoring (RVM). The benefits are far-reaching:

AI-Powered Video Analytics: Filter out false alarms and identify real threats in real-time.
Live Security Monitoring: Trained security professionals keep watchful eyes on dealership lots around the clock, preventing crimes before they happen.

Immediate Intervention: Loudspeaker warnings and instant police dispatch deter criminals in real time. This keeps them off their lots and keeps sincere buyers on them.
Lower Insurance Costs: Verified monitoring reduces false alarms and qualifies dealerships for lower insurance rates.

Rather than reacting to security incidents after they happen, dealerships using Remote Video Monitoring can proactively prevent crime, reduce costs, and protect their assets and profits more effectively than ever before.

 

Protect Your Dealership Before It’s Too Late

Security breaches not only can lead to stolen vehicles, but they can also cause stolen profits, time, and peace of mind. By addressing hidden costs and implementing proactive security measures, dealerships can reduce financial risks, protect their reputation, and operate with confidence.

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