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
November 1, 2001
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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