Get Set for Summer Sell

It's been a challenging year, but March and April results showed promise, and things are looking good for the summer selling season. Certain economic news is encouraging, including the crude-oil price decrease resulting in real savings for consumers at the pump. This may help diminish fears about rising fuel prices. Interest rates, as they relate to the consumer, currently appear to be a non-issue.

Tony Noland

June 1, 2005

2 Min Read
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It's been a challenging year, but March and April results showed promise, and things are looking good for the summer selling season.

Certain economic news is encouraging, including the crude-oil price decrease resulting in real savings for consumers at the pump. This may help diminish fears about rising fuel prices.

Interest rates, as they relate to the consumer, currently appear to be a non-issue. It seems the pieces are falling into place and business and sales should be good for the industry this summer.

The chart at right represents selected information gathered from the NCM client database. It represents average dealership performance categorized by segment in the first quarter of 2005. There is space for you to insert and compare your individual performance with the NCM average.

But first review the chart below as it relates to sales, gross and expenses this year compared with the same period in 2004.

There are so many pressures on us from an expense standpoint (i.e., interest, employment costs such as health care, worker compensation and wages), we must identify efficiencies and install processes that allow us the returns we desire. An industry executive tells me, “We must become experts at managing our costs.” If maximize gross, expense percentages must first fall in line.

Category — NCM Average Dealer

Domestic

Import

High-Line

Our Dealership

Total Dealership Dollar Sales

-3.1%

4.7%

4.0%

%

Total Dealership Gross Change

-1.3%

5.4%

1.1%

%

Total Dealership Expense Change

1.8%

5.3%

8.3%

%

As we all know, the first quarter is typically not the most robust, but it can set the stage for the following three quarters.

Take a hard look at each individual expense while identifying methods which will allow you to maximize your gross in each department. We have the best selling months in front of us, but position your operation now to take full advantage of those better times to come.

Good selling!

Tony Noland is the president and CEO of NCM Associates Inc. He's at [email protected].

NCM Associates Key Category / 1st Quarter, 2005

Dom.

Our Dlrshp

Import

Our Dlrshp

High-Line

Our Dlrshp

Net Profit As % Total Sales

1.9%

2.7%

3.5%

Departmental Gross % Dealership Total

New-Vehicle Department

28.2%

33.6%

35.1%

Used-Vehicle Department

26.8%

24.7%

14.7%

Mechanical Service Dept.

22.7%

24.1%

29.9%

Body Shop/Collision Repair

9.0%

10.1%

6.6%

Parts Department

17.2%

15.6%

19.1%

Departmental Profit % Dealership Total

New-Vehicle Department

-44.5%

27.1%

35.2%

Used-Vehicle Department

45.0%

21.7%

4.5%

Mechanical Service Dept.

16.3%

33.2%

23.9%

Body Shop/Collision Repair

1.2%

3.0%

0.1%

Parts Department

80.7%

37.4%

37.5%

Key Expenses % Total Dealership Gross

Employee Expense

39.5%

36.7%

34.1%

Advertising/Promotion

8.7%

8.7%

5.5%

Total Interest

2.3%

1.4%

1.0%

Expense Category As % Total Expenses

Selling

26.2%

26.3%

22.8%

Employment

42.5%

41.3%

41.4%

Other Overhead

14.1%

15.3%

18.3%

Occupancy

17.1%

16.6%

17.6%

Employee Measurements

Gross Per Employee Average Month

$6652

$7620

$9982

Productive Employees % Total Employees

53.8%

56.3%

50.9%

Techs (Body + Mech) % Total Employees

23.9%

21.0%

23.1%

New & Used Veh. Sales Pers. % Ttl. Emp.

20.9%

23.6%

17.4%

Managers % Total Employees

14.5%

13.7%

10.3%

Clerical % Total Employees

12.5%

12.3%

13.0%

Asset Management: March Month End

New Car $ Days Supply

80

63

42

New Truck $ Days Supply

91

50

46

Used Car $ Days Supply

58

51

50

Used Truck $ Days Supply

55

49

54

Parts Inventory

55

53

49

Used Vehicle Performance

Inventory Turn — Cars

.5

.6

.6

Inventory Turn — Trucks

.6

.6

.6

% Total Used Car Inv'y 61 Days + (Units)

10.4%

6.1%

1.6%

% Total Used Trk Inv'y 61 Days + (Units)

10.8%

15.4%

3.7%

Read more about:

2005

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