What Dealers Should Track Most

If asked to identify the No.1 question I’ve been asked during the past 20 years, it would be: “What should I check or monitor on a monthly basis?”

I prepare monthly reports for some dealerships. I measure performance in areas I consider critical. The report, created in Excel format and presented in a graph, details the total dealership and department performance for the past 13 months.

Dealers use the finished product in management meetings to review both the most recent month’s performance and its results compared with those of the previous 12 months. 

The items measured are as follows:

In addition to this, dealers should track their vehicle aging showing the percentage of new and used vehicles in the 30-, 60-, 90-, 120- and 150+ day categories.

Also worth tracking are customer satisfaction, employee turnover and month-end frozen capital.

This information will allow you to identify trends, some of which might be negative, and, if so, take corrective action. For example, if you see two months that are comparable in total gross, yet there is a substantial difference in a department’s net, your report will indicate this and allow you to do a quick analysis to determine the cause.

I realize this is a lot of information and it takes some time to prepare it, but I would ask that you weigh the time you invest in preparing these reports vs. the benefit your team will receive from getting the information and discussing it during management meetings.

“When performance is measured, performance improves,” said Thomas S. Monson, a religious leader and author. “When performance is measured and reported back, the rate of improvement accelerates.”

A quick word of caution on used vehicles:  I’ve been in this business for 44 years and learned many things. One of the more expensive lessons I learned early on was to begin getting my used-vehicle inventory in line at the end of August. 

Why? Because if you have a rule that you will not have any 60+ day inventory toward the end of the year, you will be more active in the wholesale market in late October or early November when historically prices are lower.

If you have a 75-day or 90-day aging limit, you will enter the December wholesale market as aggressive buyer, not a distressed seller. 

Through experience of doing it the wrong way, I finally learned to be “lean and mean” by November 1. Yes, conditions in the used-vehicle market have changed during the past two years, but not so much that I would unduly keep inventory heading into late fall.

Good selling!

Tony Noland of Tony Noland & Associates is a veteran dealership consultant. He can be reached at tonynolandandassociates.com.