What areas of your dealership produce what percentage of the total gross? The more important question is, which departments generate what percentage of the total departmental net profit, before net additions and deductions?
Taking a look at our All-Dealer Benchmark (less Highline) and our average clients, we find the following gross and net profit results by department.
To compare yourself in these two areas, it is important you are comparing apples to apples, or in other words, that your departmental expense structure is comparable.
The following percentages indicate the departmental expense percentage as a percent of total dealership.
Now that you have compared the operating departments in your dealership to our clients, what can be determined and what actions are required?
If you are very strong in one area or department, are you vulnerable in the event of a market change? The real purpose of this comparison is to identify opportunities. A balance of departmental gross and net profit is important to your continuing success. If one department is carrying the bulk of the gross and net profit, can you be assured that it will continue?
Once you identify the departmental opportunities, sit down with your management team and draft a written plan to increase the individual departments gross and net profit contribution.
Don't forget, one part of the net profit plan should be expense management. It is important that you have a total buy-in from the management team and then consistently monitor the progress of the plan.
If, as time goes by, you discover that there are flaws in the plan, don't abandon it, but instead, make the changes necessary to make it work. By completing this total exercise, not only will you will know the complete ins and outs of each department, you will have a road map to ensure your future success.
Tony Noland is director of international operations for NCM Associates. He has 30 years of automotive retail experience.