30 guidelines to manage successful dealerships

Nothing succeeds like success.

The head honchos of the 17-dealership Keffer Management Co. chain put it another way:

"Nothing succeeds like our 30 guides to success."

Chairman Richard W. Keffer Jr., and President Bonnie L. Hunter developed the 30 guidelines over the past 12 years of owning, managing and selling dealerships in the Carolinas, Florida and Georgia.

Now based in Charlotte, NC, Mr. Keffer and Ms. Hunter began in their home town of York, PA, in 1966 at the former M and R Smith Chevrolet store.

"We relocated to a Pontiac dealership in Charlotte in 1974, then to Wilmington, NC, and finally came back to Charlotte to start Keffer Management," says Ms. Hunter.

She adds, "We fine-tuned the 30 guidelines over all those years and it has served us as a successful tool for the five dealerships we own in Charlotte and the 12 others we manage."

Ms. Hunter says Keffer Management is unique in not being a consolidator but a finder of stores for managers who share an equity as principals.

"We have had as many as 25 dealerships in the portfolio, but sheer growth is not our basic goal as much as profitable management. We do get a lot of phone calls, that's for sure," she says.

Keffer Management's Charlotte-owned stores are Dick Keffer Pontiac-GMC, Liberty Pontiac-GMC, Keffer Dodge, Keffer Chrysler-Jeep and the Keffer Auto Village used-vehicle outlet.

1. Market share new-vehicle sales must equal or exceed national penetration

2. Used- and new-vehicle sales ratio: 1-1

3. CSI: 100% of zone or national 12-month average

4. Net profit to sales: 5%

5. Net profit to gross: 35%

6. Compensation for salesmen as % of front-end gross: 20

7. Supervision expense as % of total gross: 12

8. Other salary & wages expense as % of total gross: 7

9. Clerical expense as % of total gross: 2

10. Total personnel expense as % of total gross: 27

11. Total expense to sales: 9%

12. Advertising cost as % of total gross: 10

13. Office supply costs as % of total gross: 0.6

14. Other supply costs (service-related) as % of total gross: 2.5

15. Policy work - parts & service as % of total gross: 1

16. Outside services costs (excluding management company) as % of total gross: 2.5

17. Interest expense: 0

18. F&I gross income: $600 per retail unit

19. F&I chargebacks: 15% of gross

20. Finance penetration: 75% of sales

21. Life insurance penetration: 20% of finance sales

22. A&H penetration: 15% of finance sales

23. Service-contract penetration: 50% of retail sales

24. Dealership gross per employee: $7,500

25. Parts sales per parts employee: $32,000

26. New-car inventory: 45 days' supply

27. Used-car inventory: 30 days at retail

28. Parts inventory 60 days supply at cost

29. Warranty outstanding: Less than advance

30. Accounts Receivable outstanding: 50% of fixed sales, excluding internal & warranty