June 13, 2011 – Non-current inventory takes up costly floor space

GartSuttonJune 15, 2011

These articles recap some of the opportunities uncovered by our GSA Powersports Consultants during actual consulting visits. These are followed by recommended actions that address these opportunities. Our goal is to provide ideas to help improve your dealership.

Part 1: Our GSA Consultants report on their analysis of the overall dealership.

DEALERSHIP
After working in this dealership, the current owner purchased the operation in the late 1980s. He has three major product lines. The dealer principal is an enthusiast who raced bikes. He has a powersports technical school degree and worked in dealerships prior to buying this one.

The population drawing area is approximately 70,000. The dealership has a wide variety of economic support in this area. This has allowed business to remain fairly stable through economic downturns.

Although located well away from the freeway, the dealership is visible from a major highway. This is an older facility that could stand some renovation on the outside. There is not a lot of parking available. The service department is located in an unattached steel building. Another steel building is used for cold storage of crates and some unit assembly.

Inside, we found a low ceiling and a showroom packed with units and displays. The few windows are mostly blocked by POP. These could be utilized to create highlighted “theme” displays to attract evening traffic. The parts department has a lot of space that could be better utilized. There are non-supporting walls that could be removed to expand the showroom. An option might be to relocate the offices from the showroom to this area.

The dealership does not have job descriptions for any employees. These were provided, and the need for them was discussed. It is very difficult to hold employees accountable without providing them with written job descriptions. There is no organizational chart. The importance of having a written chain-of-command document was discussed.

They do not have a general manager. The owner primarily covers these tasks, with some help from the sales manager. This is a smaller dealership that operates under a typical entrepreneurial management system. The owners take an active role in all departments.

OTHER COMMENTS
There are a significant number of units still on dealer-pay OE flooring dating back several years. Every effort must be made to reduce this inventory and/or get these units flipped over to less expensive flooring.

The customer waiting area for sales and service leaves a bit to be desired. The chairs are less than comfortable, and there is no view of the showroom and accessory displays. They do have excellent access to refreshments in this area and a TV for videos (although no videos were playing). This should be treated as a sales display area and redone accordingly. Comfortable people make purchases more often than uncomfortable ones.

ACTION ITEMS

Develop an organization chart with a chain-of-command. Enforce it.

Create job descriptions for all positions. Have staff read and initial and hold them accountable.

Put all processes and procedures in writing. Assemble these into an employee handbook, and provide a copy to each employee.

Keep employee and completed deals files locked when the office is not occupied. This is required by federal privacy protection regulations.

Develop the necessary reports to track essential performance measurements for the dealership. Most will come from the DMS, but some will have to come from the dealership’s accountant.

Reduce non-current unit inventory. Work with the OEs, other dealers or send auction. These units are costing you a huge amount of money and will only decrease in value in the future.

Find and nurture alternative sources for unit flooring. Transfer inventory to these sources when OE programs end to take advantage of lower rates.

Reduce the POP blocking the windows and develop lighted “theme” displays for this area to attract additional customer traffic.

Paint the primary dealership sign to improve the dealership’s professional image.

Gart Sutton has been a leading provider of on-site dealer consulting, dealer 20-groups, online financial composites, accounting rescue services, and OEM and dealership training solutions for more than 30 years. For additional information on these services, visit www.gartsutton.com.

GartSuttonJune 15, 2011