A review of dealership financial statements shows an amazing difference in philosophies.
Each month’s seasonally adjusted sales rate increases the probability that 2013 will end with light-vehicle sales of 15.3 million to 15.5 million units.
The Consumer Confidence Index also has been up. The index of 81.4 in June is the highest level we’ve seen since January of 2008.
“Consumers are considerably more positive about current business and labor market conditions than they were at the beginning of the year,” says the Conference Board, a business research organization.
“Expectations have also improved considerably over the past several months, suggesting that the pace of growth is unlikely to slow in the short-term, and may even moderately pick up,” the board says.
Add to that the moderating unemployment rate, and near-term outlook is a real positive for the auto industry.
I am a big sports fan and, like many of you, recently watched the National Basketball Assn. championship series. I’m not sure what it is about basketball, but I’ve learned that invariably no team’s lead is too big in the second half.
How many times do we find a team that is down significantly stage a comeback? Why does this happen? Does the team that’s leading let up, or does the team behind improve the execution of its game plan?
We are now firmly into the second half of the year and looking forward to a strong finish that may very well provide strong sales and healthy profits.
Using the example of the basketball tournaments, which position do you find yourself in as a dealer? At halftime, were you leading, or are you now playing from behind and trying to catch up?
If behind, what specific issues are preventing you from starting your comeback or executing your game plan? Identifying and isolating an area of concern is the first corrective step.
First, compare your gross-profit production compared with your previous year’s results. Most manufacturers produce reports which will allow you to compare your year-to-date results with those of peers in your region.
If you are a 20 Group member, your monthly composite will allow you to quickly identify any out-of-line area, whether it be gross profit or expenses as a percentage of gross. Once you’ve identified any issues, implement processes to improve results.
On a monthly basis, I review several dealership financial statements. I am amazed at the differing management styles and philosophies. In terms of personnel count, I want to share two examples.
At dealership A, 2013 is the best sales and net-profit year the store has seen in a while. It is on track to end the year with an all-time record. The personnel count is the same as in 2012, there is almost no turnover and gross per employee is above the benchmark.
Dealership B also has increased sales and net profit marginally, but it has added personnel, experienced turnover and had its gross per employee lower than at this time last year.
Let’s hope the successes we are enjoying as an industry will continue through the end of the year and your organization will benefit from that. Your chances of closing the year out on a strong note will improve if you compare your progress to that of your peers and then, most importantly, take the appropriate actions necessary to ensure your success.
Tony Noland of Tony Noland & Associates is a veteran dealership consultant. He can be reached at tonynolandandassociates.com.