Motorcycle & Powersports News November 2010 : Page 35
tion to the total store gross profit margin. Negative num-bers are not acceptable. Notice the upswing in working con-tacts. This is interesting when you consider that door swings went down. Part of this is training and accountability, as they have to be tracking these people. Notice the 23.5 percent in-crease in preowned unit sales as well as the 8.6 inventory turns! This is where the money is. Preowned sales will grow faster as units get more scarce. In Chart 3, we see a 15.3 percent increase in F&I gross profit from last year. Their fi-nance penetration is fairly good at 46 percent, up almost 60 percent over last year. This is really significant — they are CHART 4 GROUP PARTS & ACCESSORIES DEPT PG&A Contribution to Total Store Gross Profit PG&A Sales Change from Prior Year Total PG&A Gross Profit Per Vehicle Sold Parts Margin Parts Inventory Turns Accessories Margin Accessories Inventory Turns Obsolete Inventory Personnel Expense as a Percent of Gross Profit getting customers financed. If you are not in this range, you need to look at your processes and perhaps your F&I staff. This is not regional — we are seeing this type of penetration across the country. Chart 4 shows a slight in-crease in PG&A sales, but somewhat low parts margins — TBOC is at 38 percent. Turns are good. You need to maxi-AVERAGE 27.2% 6.4% $673 34.7% 4.26 28.4% 2.30 28.1% 34.3% measures speed and can re-veal management, training or tracking issues. Productivity (actual hours divided by avail-able hours) measures the service manager’s ability to keep work flowing through the department. It should be closer to 85 percent. Profi-ciency (billed labor hours di-vided by available hours) suffers because of this — it should be around 85 percent mize stocking of inventory that turns four-plus times a year and reduce the slow movers. However, if you start seeing six-plus turns a year, you may not be stocking enough and could lose business in the long run. Accessories turns are poor, and the obsolescence (12 months with no sale) is bad. The goal here is to keep it under 20 percent (lower if pos-sible). The service stats in Chart 5 show lower gross and net prof-its and fewer billed hours. This group’s average margin is too low — it should be around 70 percent (revenue-tech com-pensation not including bene-fits = gross profit). TBOC is at 73 percent. Tech efficiency (billed labor hours divided by actual hours worked) should be 100 percent-plus — this CHART 5 Service Contribution to Total Store Gross Profit Change from Last Year’s Gross Profit Net Operating as a Percent of Dealership Gross Profit Labor Margin Effective Labor Rate Parts Sold to Repair Order Ratio Billed Hours Change from Previous Year Billed Hours per Repair Order Labor Sales per Repair Order Dept. Productivity Tech. Efficiency Dept. Proficiency Personnel Expense as a Percent of Gross Profit as well. Notes: Availability should be the hours the tech is sched-uled to work — not when they show up. Some folks reverse the definitions of productivity and proficiency. Either method is acceptable. I hope you have found this information useful and that you’ll use it to compare your dealership’s performance. It’s important to your survival to know what is going on in your business and to have reference points for comparison. t SERVICE DEPT AVERAGE 17.6% -3.2% -2.4% 66.0% $27 0.90 -1.1% 1.62 $120 78.3% 98.5% 76.2% 57.6% At GSA, we track benchmarks through our involvement with dealer 20-groups. The TBOC data comes from the groups that are in the a real-time, web-based data reporting system. National Norms are compiled from the groups that report in the former-RPM data system. Steve Jones, GSA senior proj-ects manager, outlines dealer-ship best business practices to boost margins, increase prof-itability and retain employees. His monthly column recaps critical measurements used by the lead-ing 20-group dealers. GSA is rec-ognized as the industry’s #1 authority on dealer profitability. GROUP NOTICE: GSA, MPN and SEMA are joining forces to bring you an exceptional training opportunity. November 1-2, we will be presenting our 2010 Dealer UpdateWorkshops at the SEMA automotive and powersports convention in Las Vegas. These workshops are open to all dealers and con-sist of 14 training sessions covering 10 topics presented over two days. Registration includes two keynote lunch-eons and an industry panel discussion. The cost is only $99 per person for the workshops, plus $25 SEMA registration if you register early. For more information, go to: www.SEMAShow.com/PowersportsDealerUpdate. motorcycleproductnews.com November 2010 35
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