Know the Entire Dealership

Most dealers conduct monthly reviews of their previous month's business as soon as the financial statement is published.

Included in a typical meeting is a review of the individual department's gross, expense and net profit as well as their contribution to the total dealership.

Most meetings also incorporate a discussion of the subsequent month and address any changes which might be necessary in order to improve the bottom line. For many managers, these monthly review meetings are the only formal or informal training they receive.

Consider incorporating formal training as an agenda item in these meetings in order to take the operation to the next higher level.

While conducting literally hundreds of seminars, one of the most common requests I've had from general managers and general sales managers is their desire to gain an understanding of the fixed operations and accounting.

Since most of those managers have worked their way into their positions due to their success with sales, there has been, with a few exceptions, little if any exposure to either fixed operations or accounting.

I can tell you from the personal experience of not knowing what I didn't know, I became a more effective and successful manager when I had an understanding of how all the pieces fit together.

Most of my initial total dealership departmental education came from my peers who, from time to time, were willing to take a few minutes to explain the inter-workings of their departments.

During our General Manager's Boot Camp®, we began each class with an accounting review.

Jeff Sacks explained that our mutual goal was not to make the attendees accountants, but to help them understand that the financial statement was in part, simply a spread sheet detailing individual departmental, as well as total dealership, monthly and annual gross profit, expense and net profit results.

It was amazing to watch the lights turn on and the sense of relief when the participants gained an understanding of how the information was presented.

Moving back to your organization, would your management team not benefit from some peer training? For example, during your review, consider the benefits of having your comptroller take 30 minutes to show the managers where their departmental results were on the statement and how their numbers impacted the total dealership?

As opposed to trying to cover the entire fixed operation in a monthly review meeting, break it into sections. An example for the initial introduction is an explanation of the margins, how the margins are created and the general factors that can impact them.

Again, from a personal standpoint, once I could relate parts, body and service processes to the one involved in sales, the light went on.

For example, if my mechanical customer-pay margins are too low, it could be an indication of a pricing issue. If we often offer price discounts without having sufficient higher grosses to minimize the discounting impact, our overall margins will be below par.

It's the same with our new and used sales. Too many low-gross deals impact our overall gross profit per vehicle. This is the symptom, not the illness.

As we learn more about the symptoms, we can start diagnosing the illness. Sure we need to be competitive in the market place, but we don't have to discount each service deal or repair order. Do our results suffer from a lack of service-advisor training, or are we paying a specialist to perform work which could be performed equally well by a lesser skilled employee?

One unexpected result I've experienced from these meetings is a gradual improvement in team work and mutual support. When we understand the issues each of us are dealing with, empathy becomes prevalent and the entire organization benefits.

Good selling!

Tony Noland is a veteran auto dealership consultant. He can be reached at [email protected].

Questions or comments about this column?
Send us an e-mail at [email protected].