Now is the time for dealers to compare how they’re doing in key areas.
May is a good time for dealers to review year-to-date performance and compare it with the same period last year. Also compare it with peers using 20-Group composites or reports available from automakers.
There are a few specific areas you might check, which not only will give you a feel for your YTD performance, but also provide some insight into what lies ahead.
In the variable operation, how does your new- and used-car retail volume compare with 2013 and your peer group this year to date?
Are your retail grosses per new and used in line? What about F&I per-vehicle retailed, finance penetration and aftermarket-product penetration levels? How does average retail sales per salesperson compare?
There are several areas to check in fixed operation. First, how does the gross this year compare with the past period? How about fixed coverage or absorption?
In the mechanical service department, how does your customer-pay repair order count compare with the same period in 2013? What about sales per repair order? I ask this because often repair orders may be increasing, but sales per repair order may be decreasing.
How do hours-per-repair-order compare? To look into this more deeply, review each service adviser’s performance and compare and rank them in terms of volume of repair orders written, sales per RO and effective labor rates.
Create a monthly service adviser performance list and post it in a prominent location, just as you do for retail-sales personnel. In most cases, you will find their performance levels increase.
Compare individual departmental profits and sales with last year and with your peer group. When doing an in-depth review of individual departments, look at each expense account’s percentage of the gross.
Looking only at the dollars can mislead. If spend is comparable to a previous period but the gross profit is less, the expense percentage will be higher. Conversely, if our dollar spend is the same and our gross is higher, the expense as a percentage of gross decreases.
Sub-accounts are helpful. For example, the departmental policy account is, most often, a total of several items. So if we only look at this total, we are unable to identify the individual items that create the account.
We can schedule items such as customer accommodation and lot damage not taken into account when a deal is booked. I have learned from experience that expenses are more easily managed if you know the items included. Sub-accounts will help there.
The last item is asset management. In many cases, our days’ supply level of new vehicles is higher than at this time in 2013. This is a good time to remind your management to keep an eye on aging units and not allow them to sit on the lot beyond 90 days.
Ensure they don’t get buried behind newer inventory as it arrives. Publish a weekly new-vehicle inventory schedule and see that each sales manager has it close at hand when working deals.
In many cases, such as bad weather, dealers have elected to allow some used vehicles to remain in inventory past the 60-day-and-out period. Now that we are into the prime selling season, ensure that any aged used unit is disposed of and reinstate your traditional aging policy.
The outlook for 2014 is good. Take time to compare and review how you did in key areas. You will be rewarded with improved performance.
Tony Noland of Tony Noland & Associates is a veteran dealership consultant. He can be reached at tonynolandandassociates.com.