Top Guns

swadminApril 21, 2003

February dealer profit improves

Overall dealer profitability, as measured by Top Gun dealers nationwide, improved in February following a weak January. Dealers posted a profit of 2.1% in February, following a loss of 1.4% for January. The 2.1% profit compares with profit margins of 1.8% in February 2002 and 5.1% in February 2001.

The strong February reversed a trend in which monthly profit trailed the previous year dating back to last summer.

Gross Profit Per Hour

To calculate Gross Profit per effort hour, take the total gross profit generated by your P&A department for a given month or pay period. Divide that number by the total number of hours worked (clock hours) for all members of the P&A team, regardless of title, for the same period. If someone works in P&A as well as another department, estimate the number of hours they worked in Parts.

Average Invoice To Walk-in P&A customers

To see how you compare, determine your total gross sales to walk-in customers. Be sure to exclude all wholesale, mail-order, service through repair orders, and P&A sold with major unit sales. Then divide your gross sales by the number of transactions to those walk-in customers.

OEM Parts Sales Compared To Accessory Sales.

If your accessory sales dollars do not equal your total OEM parts business, your customers are buying from sources other than you.

Service Effective Labor Rate

Average Gross Profit per Vehicle Financed is based on the profits from all extended service agreements, the commissions on insurance policies and 50% of service maintenance programs, sold for at least three years. Floor traffic at participating dealerships is determined by analyzing Guest Logs, information sheets filled out by visiting consumers. This represents net profit as a percentage of sales before depreciation and with all owner salaries adjusted to reflect the true value of the job performed. Rent amounts are also adjusted to reflect true market value of the facility when it is shareholder owned and leased back to a corporation.
To determine your effective labor rate, take the total Service team effort hours (techs and all support personnel, including porters) and divide that amount into your gross labor sales for the same period.