It's Budget-Making Time
While the recession is technically over, the main economic drivers (i.e. employment and GDP), are still major concerns. I don't need to remind any one of the impact this recession has had on the auto industry. The bright spots for dealers are the steps you took to not only survive this downturn, but to grow by increasing the efficiency of and gross in your organizations. We still have a long way to
November 1, 2010
While the recession is technically over, the main economic drivers (i.e. employment and GDP), are still major concerns.
I don't need to remind any one of the impact this recession has had on the auto industry. The bright spots for dealers are the steps you took to not only survive this downturn, but to grow by increasing the efficiency of and gross in your organizations.
We still have a long way to go before our industry's challenges over, but recent sales results do appear promising.
November is the month that you, along with your management team, will begin preparing your budget for 2011. As a reminder, the definition of a budget according to Business Dictionary.com is:
“An estimate of costs, revenues, and resources over a specified period, reflecting management's reading of future financial conditions. One of the most important administrative tools, a budget serves also as a:
Plan of action for achieving quantified objectives.
Standard for measuring performance.
Device for coping with foreseeable adverse situations.
The process which seems to work best is to have a meeting with your team during which you conduct a detailed review of your year-to-date results.
After this review, set a date where you group will spend a future meeting day away from the dealership preparing the formal plan for the new year.
Begin by reviewing the day's process and disclosing the formal goals you want to accomplish during this meeting.
Local and national economic conditions and outlooks are factors you will want to review with your team and take into consideration as your management team prepares their individual 2011 plans.
Divide the group between variable and fixed where they will formulate their departmental plans. Once this step is completed, the numbers are turned into the accounting team where they will be combined along with any adds/deducts.
Then, each manager will stand in front of the group and present their detailed plan of action and performance for 2011. After these presentations and discussions, any agreed changes can be made.
As a reference for your use, the National Automobile Dealers Assn. has graciously provided a series of 2010 YTD aggregated data points compiled from their Dealer 20 Groups. (See table above.)
These are presented in four classifications: Domestic, Import, High-Line Import and All Members. Compare your dealership's performance in key areas with that of their members.
Plan your work, work your plan, maximize gross opportunities, minimize expenditures and grow your management team's level of expertise. Doing those things will help make 2011 a good year.
Good selling!
Tony Noland is a veteran auto dealership consultant. He can be reached at tonynoland@tonynolandand associates.com.
July 2010 Year-to-Date Results | All Members | Domestic | High-Line Imports | Non High-Line Imports |
New Vehicle Gross % Total Dealership Gross | 25.49% | 23.79% | 25.69% | 27.74% |
Used Vehicle Gross % Total Dealership Gross | 25.15% | 29.38% | 17.21% | 23.61% |
Service Gross % Total Dealership Gross | 27.27% | 23.23% | 33.63% | 29.43% |
P & A Gross % Total Dealership Gross | 18.02% | 18.22% | 21.21% | 16.01% |
Body Shop Gross % Total Dealership Gross | 3.81% | 4.84% | 2.25% | 3.22% |
Productive Employees % Total Employees1 | 67.72% | 69.63% | 61.96% | 67.32% |
Total Dealership Personnel Expense % Gross | 37.49% | 40.98% | 35.40% | 33.76% |
Total Dealership Gross Per Employee | $7,635 | $6,937 | $9,432 | $7,920 |
New Retail Gross PNVR | $1,382 | $1,464 | $2,121 | $1,118 |
Used Retail Gross PUVR | $1,669 | $1,707 | $2,093 | $1,478 |
Used Wholesale Gross Per Unit | $77 | $73 | $132 | $67 |
Fixed Coverage | ||||
(Svc, Pts, Body Shop Absorption %) | 54.57% | 51.29% | 64.40% | 53.85% |
New & Used Advertising % Gross | 10.34% | 9.50% | 8.06% | 12.59% |
New Net Floor Plan Interest % Gross | -1.99% | -1.76% | 1.19% | -3.89% |
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