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5- PROFIT CENTER MANAGEMENTHow to Divide & Conquer
Your Departments for Maximum Profitability
By Gart Sutton
WORKSHOP TAKE-AWAYSIn this workshop you will learn:1. Strategic-thinking that will ensure greater profitability. 2. Benchmarks you need to provide direction and focus. 3. Best practices and must-dos you need in order to make
it happen.
FUNDAMENTAL #1: MEASUREMENTS
You must maintain an overall dealership 25-30% gross margin so you can pay the bills and drive something to the bottom-line.
OVERALL DEALERSHIP
GROSS PROFIT BENCHMARK
Sales Cost-of Sales 25-30% Gross Margin
FUNDAMENTAL #2: ACCOUNTABILITY
What department is helping you and what department is hurting you in achieving your 25-30% overall gross margin goal?
HELPING OR HURTING YOU?
NEW UNIT SALES DEPARTMENT GROSS PROFIT BENCHMARK
*Price
reductions,
trade over-
allowances, free
accessories &
free apparel
Sales minus Cost-of Sales minus Concessions* equals New Unit Gross Profit
HELPING OR HURTING YOU?
PRE-OWNED SALES DEPARTMENT GROSS PROFIT BENCHMARK
*Price
reductions,
trade over-
allowances, free
accessories &
free apparel
Sales minus Cost-of Sales minus Concessions* equals Pre-Owned Gross Profit
HELPING OR HURTING YOU?
FINANCE & INSURANCE DEPARTMENT GROSS PROFIT BENCHMARK
F&I Gross Profit divided by Total New/Used Units equals F&I Per Vehicle Sold
$450 to $1,000 PVS
HELPING OR HURTING YOU?
PARTS, ACCESSORIES & APPAREL DEPTGROSS PROFIT BENCHMARK
Sales minus Cost-of Sales minus Concessions* equals Parts Gross Profit
*Price reductions, clearance, giveaways
30% to 35%Sales minus Cost-of Sales minus Concessions* equals Accessory Gross Profit
34% to 38%
*Price reductions, clearance, giveaways
HELPING OR HURTING YOU?
SERVICE DEPARTMENT GROSS PROFIT BENCHMARK
Labor Sales minus Tech Pay equals Service Gross Profit
70%
QUESTIONS & ANSWERS
5- PROFIT CENTER MANAGEMENTHow to Divide & Conquer
Your Departments for Maximum Profitability