FORECASTING IS MORE ESSENTIAL NOW

Helping good dealers become better has been NCM Associates' mission for more than 54 years. We want to assist you in planning and operating your business in a most proficient manner. With the following information, you should have a point of reference in constructing your 2002 plan. When a tragedy such as the Sept. 11 terrorists' attacks occurs, it creates certain reluctance on the part of the consumer

Tony Noland

November 1, 2001

3 Min Read
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Helping good dealers become better has been NCM Associates' mission for more than 54 years. We want to assist you in planning and operating your business in a most proficient manner. With the following information, you should have a point of reference in constructing your 2002 plan.

When a tragedy such as the Sept. 11 terrorists' attacks occurs, it creates certain reluctance on the part of the consumer to spend freely. Considering the economic climate that exists today, forecasting is especially important. A forecast coupled with a sound business plan will help you attain the available level of profit.

The accompanying chart shows selected NCM client averages and benchmarks to assist you in formulating your 2002 forecast. Remember that many of these numbers are stated as a percentage of gross profit. If the gross isn't in line, the expense percentages naturally will be out-of-line.

A few important words about the planning and forecasting process:

Involve your management personnel. Get away from the dealership and the everyday business concerns.

Look at your business objectively but realistically. Incorporate and establish best practices that will help you succeed and reach the available profit level. When you have this meeting, there can be “no sacred cows” or agendas other than what is best for the overall dealership and its personnel.

Look at each individual expense item and your required personnel needs. This also is a time for a concentrated effort on asset management by everyone. When this forecasting and planning meeting adjourns, you should not only have a plan that everyone has bought into, but one that can be accomplished.

Should you have any questions regarding any of the information provided in this article, please feel free as always to contact me at NCM Associates.

A special note:

Everyone in our nation and our many international friends has been impacted by the events of and subsequent to Sept. 11. The thoughts and prayers of our entire staff at NCM are with those directly impacted, for our nation and those that serve to protect our freedoms.

Tony Noland is director of international operations for NCM Associates. He has 30 years of automotive retail experience.

TOTAL DEALERSHIP

Avg.

Benchmark

Avg.

Benchmark

Avg.

Benchmark

Net Profit (Pre-tax & Owner Comp) as % Oper. Gross

18.6%

25.6%

21.3%

28.0%

32.4%

39.2%

Net Profit (Pre-tax & Owner Comp) as % Total Sales

2.4%

3.3%

2.9%

3.8%

4.5%

5.4%

Ratio Used Vehicles to New Vehicles

.79:1

.77:1

.60:1

.57:1

.40:1

.38:1

Fixed Coverage

66.6%

66.9%

66.4%

67.7%

80.7%

81.6%

Gross Per Employee - Average Month

$6,492

$6,890

$7,612

$8,125

$11,192

$11,900

Departmental Net Profit as % Dept. Operating Gross

New Vehicle Department

0.6%

13.8%

8.0%

19.8%

41.6%

47.7%

Used Vehicle Department

17.8%

28.2%

16.7%

26.6%

2.6%

16.9%

Parts Department

35.9%

46.1%

26.3%

33.0%

38.6%

49.5%

Service Department

8.2%

17.0%

17.8%

23.6%

15.1%

23.1%

Body Shop

2.4%

6.4%

15.7%

16.9%

11.3%

14.6%

Selected Departmental Benchmarks

New Vehicle Department

Net Profit % Total Dealership Departmental Net

1.4%

15.1%

19.8%

27.7%

67.9%

67.4%

Gross Per New Car Retail

$1,335

$1,631

$1,129

$1,528

$4,379

$5,559

Gross Per New Truck Retail

$1,444

$1,737

$1,771

$2,257

$2,714

$3,514

Net F&I (Pre-Comp) PNVR

$491

$655

$492

$710

$575

$791

Sales Comp (Incl F&I) % Departmental Gross

24.4%

22.4%

23.7%

22.2%

18.4%

17.9%

Total Employment Expense % Total N/Vehicle Gross

26.9%

23.6%

26.7%

23.5%

16.5%

14.5%

Floor Plan Interest % New Vehicle Departmental Gross

11.80%

7.2%

8.5%

7.1%

4.0%

1.8%

Net Advertising % New Vehicle Departmental Gross

16.5%

12.1%

15.4%

10.9%

6.6%

5.1%

Used Vehicle Department

Net Profit % Total Dealership Departmental Net

36.6%

35.6%

27.6%

27.0%

1.1%

3.1%

Gross Per Used Car Retail

$1,525

$1,667

$1,458

$1,559

$2,279

$2,596

Gross Per Used Truck Retail

$1,581

$1,724

$1,600

$1,993

$2,529

$2,490

Net F&I (Pre-Comp) PUVR

$545

$710

$581

$826

$588

$817

Sales Comp (Incl F&I) % Departmental Gross

24.1%

22.3%

23.5%

22.2%

25.6%

24.0%

Total Employment Expense % Total U/Vehicle Gross

22.5%

19.1%

24.8%

21.4%

30.7%

26.5%

Parts Department

Net Profit % Total Dealership Departmental Net

46.0%

32.6%

24.8%

19.3%

19.2%

17.9%

Total Gross Profit % Total Department Sales

30.5%

35.6%

31.1%

34.6%

33.4%

35.8%

Total Employment Expense % Total Parts Gross

38.1%

31.0%

42.0%

37.1%

35.6%

27.3%

Parts Level of Service

85.4%

85.8%

87.6%

87.6%

82.1%

86.7%

Departmental Sales (Avg. Mo.) Per Parts Employee

$31,021

$33,547

$32,550

$33,681

$49,203

$53,827

Service Department

Net Profit % Total Dealership Departmental Net

13.1%

13.0%

24.8%

23.4%

11.1%

10.7%

Gross Profit % Total Labor Sales

69.4%

72.0%

72.8%

75.7%

73.6%

76.7%

Hours per Customer RO Excluding Quick Lube

2.15

2.13

1.88

1.88

2.56

2.58

Total Employment Expense % Total Service Gross

54.2%

47.8%

49.6%

44.0%

48.7%

44.2%

Departmental Gross (Avg. Mo.) Per Service Empl.

$3,993

$4,470

$4,527

$5,055

$5,812

$6,379

Body Shop

Net Profit % Total Dealership Departmental Net

2.4%

3.3%

3.1%

2.7%

0.8%

0.9%

Gross Profit % Total Labor Sales

61.1%

62.8%

60.1%

60.2%

61.5%

61.6%

Total Employment Expense % Total Body Shop Gross

51.6%

48.9%

48.1%

47.7%

53.8%

52.5%

Departmental Gross (Avg. Mo.) Per Body Shop Empl.

$4,084

$4,412

$4,775

$5,466

$4,439

$6,246

Paint & Materials Gross Profit %

35.6%

36.5%

38.0%

38.0%

41.5%

41.5%

Asset Management Performance

New Car Days Supply

59

45

45

38

37

33

New Truck Days Supply

69

53

46

15

47

43

Used Car Days Supply

51

46

40

35

44

34

Used Truck Days Supply

48

45

59

51

79

73

Parts & Accessories Days Supply

64

60

57

49

53

48

For information to obtain a complete analysis of your financial operation in comparison with Best Practices benchmarks, fax a written request to (913) 649-7429.

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