It's been a challenging year, but March and April results showed promise, and things are looking good for the summer selling season.

Certain economic news is encouraging, including the crude-oil price decrease resulting in real savings for consumers at the pump. This may help diminish fears about rising fuel prices.

Interest rates, as they relate to the consumer, currently appear to be a non-issue. It seems the pieces are falling into place and business and sales should be good for the industry this summer.

The chart at right represents selected information gathered from the NCM client database. It represents average dealership performance categorized by segment in the first quarter of 2005. There is space for you to insert and compare your individual performance with the NCM average.

But first review the chart below as it relates to sales, gross and expenses this year compared with the same period in 2004.

There are so many pressures on us from an expense standpoint (i.e., interest, employment costs such as health care, worker compensation and wages), we must identify efficiencies and install processes that allow us the returns we desire. An industry executive tells me, “We must become experts at managing our costs.” If maximize gross, expense percentages must first fall in line.

Category — NCM Average Dealer Domestic Import High-Line Our Dealership
Total Dealership Dollar Sales -3.1% 4.7% 4.0% %
Total Dealership Gross Change -1.3% 5.4% 1.1% %
Total Dealership Expense Change 1.8% 5.3% 8.3% %

As we all know, the first quarter is typically not the most robust, but it can set the stage for the following three quarters.

Take a hard look at each individual expense while identifying methods which will allow you to maximize your gross in each department. We have the best selling months in front of us, but position your operation now to take full advantage of those better times to come.

Good selling!

Tony Noland is the president and CEO of NCM Associates Inc. He's at tnoland@ncm20.com.

NCM Associates Key Category / 1st Quarter, 2005 Dom. Our Dlrshp Import Our Dlrshp High-Line Our Dlrshp
Net Profit As % Total Sales 1.9% 2.7% 3.5%
Departmental Gross % Dealership Total
New-Vehicle Department 28.2% 33.6% 35.1%
Used-Vehicle Department 26.8% 24.7% 14.7%
Mechanical Service Dept. 22.7% 24.1% 29.9%
Body Shop/Collision Repair 9.0% 10.1% 6.6%
Parts Department 17.2% 15.6% 19.1%
Departmental Profit % Dealership Total
New-Vehicle Department -44.5% 27.1% 35.2%
Used-Vehicle Department 45.0% 21.7% 4.5%
Mechanical Service Dept. 16.3% 33.2% 23.9%
Body Shop/Collision Repair 1.2% 3.0% 0.1%
Parts Department 80.7% 37.4% 37.5%
Key Expenses % Total Dealership Gross
Employee Expense 39.5% 36.7% 34.1%
Advertising/Promotion 8.7% 8.7% 5.5%
Total Interest 2.3% 1.4% 1.0%
Expense Category As % Total Expenses
Selling 26.2% 26.3% 22.8%
Employment 42.5% 41.3% 41.4%
Other Overhead 14.1% 15.3% 18.3%
Occupancy 17.1% 16.6% 17.6%
Employee Measurements
Gross Per Employee Average Month $6652 $7620 $9982
Productive Employees % Total Employees 53.8% 56.3% 50.9%
Techs (Body + Mech) % Total Employees 23.9% 21.0% 23.1%
New & Used Veh. Sales Pers. % Ttl. Emp. 20.9% 23.6% 17.4%
Managers % Total Employees 14.5% 13.7% 10.3%
Clerical % Total Employees 12.5% 12.3% 13.0%
Asset Management: March Month End
New Car $ Days Supply 80 63 42
New Truck $ Days Supply 91 50 46
Used Car $ Days Supply 58 51 50
Used Truck $ Days Supply 55 49 54
Parts Inventory 55 53 49
Used Vehicle Performance
Inventory Turn — Cars .5 .6 .6
Inventory Turn — Trucks .6 .6 .6
% Total Used Car Inv'y 61 Days + (Units) 10.4% 6.1% 1.6%
% Total Used Trk Inv'y 61 Days + (Units) 10.8% 15.4% 3.7%