Every motor dealer department has been publicly scrutinised this year …
… from the perception of new cars costing more in Australia than in other parts of the world, to the thought of allowing used car imports into the country. From ASIC’s active review of F&I revenues, to the ACCC’s recent statements about log book servicing. All of this while new car volumes have declined after a number of record years.
Over the year, the landscape of the typical dealership has continued to evolve. As in previous years, the Service and F&I department are a growing contributor to overall dealership profits. However, key to their success is new car sales volumes. Despite generating marginal profits in new car sales, top 10 dealers continue to capitalise on the opportunities provided to them by their new car sales volumes. These opportunities allow dealers to service their customers in all aspects of the vehicle purchasing and ownership journey.
Our analysis shows that the most profitable dealers (that is, top 10 dealers) are increasing their focus on gross profit generation per employee in every department. In the current environment, the concept of “more from less” has needed to be adopted to ensure efficiencies are maximised.
As in previous years, the biggest challenges lie in the front end and our focus is still in working with our clients and their understanding of selling gross across the new, used & F&I departments. To this end we have expanded our Benchmark tool to include two new features!
Firstly, to assist you in comparing our benchmarks to your own performance, we have incorporated a tool that explains how to calculate a number of the pertinent ratios (not included in this pdf).
Secondly, with our continued focus on selling gross, we have included a selling gross expense allocation template that you can overlay on your internal reporting. Again, we challenge you to see what your selling gross is telling you!
Use these guidelines as a tool to identify areas of under-performance, allowing for factors such as location, size and franchise. If you would like a printed copy please contact a member of our Fordham Motor Dealer Services team .
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