Check Out These Five Profit-Enhancement Opportunities for Auto Dealers

Jayson Kincaid sees five profit-enhancement opportunities for auto dealers. They are personnel, financing, insurance, advertising and computer systems, Kincaid of the Crowe Horwath accounting firm in South Bend, IN, says at a conference for the Michigan Assn. of Certified Public Accountants. Here is a rundown of those with Kincaid's recommendations: Personnel. Employ one accounting person for every

Jayson Kincaid sees five profit-enhancement opportunities for auto dealers.

They are personnel, financing, insurance, advertising and computer systems, Kincaid of the Crowe Horwath accounting firm in South Bend, IN, says at a conference for the Michigan Assn. of Certified Public Accountants.

Here is a rundown of those with Kincaid's recommendations:

Personnel. Employ one accounting person for every 12 to 15 employes; one service writer for every four to five technicians; a review of underperforming personnel, replacement of which can cost $10,000 to $15,000 per hire; salesperson spiffs directly correlated to specific goals, and a game plan to get rid of the need for spiffs.

Insurance. Fully insured health and worker compensation insurance, plus a review of employee classifications and billings for accuracy. With property and casualty insurance, don't be afraid of deductibles but understand them. Reduce commercial insurance costs.

Computer-system invoices. Preferably monthly, they should contain all contracted services and prices, with contracts signed only by authorized personnel and contract dates the same for all vendors.

Financing. No exceptions. New units: 60-day inventory for domestics and 45-day for imports. Used units: 40 days with 60-day age cap. Finance and insurance-to-accounting in two days. Contracts funded by lenders in two to five days, hinging on special financing.

Advertising. Establish monthly goals and monitor actual spends; cutting-edge placements and themes.

Kincaid recommends urging managers to:

  • Create strategy for cutting departmental costs by 2.5% to 7.5%.
  • Establish intermediary goals to bridge the gap from where you are to where you want to be.
  • Monitor progress month-by-month or quarter-by-quarter, whichever is most effective.
  • Align employees with dealership's financial goals in compensation plans.
  • Evaluate all vendors, reducing their numbers while standardizing processes and analyzing expenses with respect to industry guidelines and the dealer's goals.

“And remember, the seemingly small items will add up to big savings,” he says.

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