Last month we looked at the 2009 year-end national norm numbers. This month, we’ll explore the year-end numbers for the TBOC.
In chart 1 you can see that these dealers were getting close to 25% gross profit and actually showed over 2% net for the year. This is primarily due to the huge effort they have made to get expenses in line with benchmarks.
Chart 2 shows the effects of reducing new motorcycle inventory. Flooring expense was still high. Advertising was coming down as dealers focused on shows and events. ATVs and pre-owned sales were areas of profitability. I’ve been extolling the virtues of pre-owned in this column for some time, and these numbers show why it is important to grow this area of your business.
Chart 3 reveals P&A gross profit per vehicle sold is very strong. This is due to reduced unit sales and the focus on maximizing P&A sales. I hope this effort won’t be lost when the market returns. Surveys prove that customers who purchase more P&A at the time of the vehicle sale return higher CSI scores.
The service end of the business remains strong. Dealers are learning to concentrate on maximizing technician work time and eliminating non-producers. As a result, the gross profit is up.
F&I is weak due to poor finance approvals and credit limitations. Yet, this is an importance profit center; be sure you have the strongest performer you can find in this position — look for them now.
As you can see, it is not all "gloom and doom" out there. Dealers are making money by controlling expenses and hiring top quality employees. As I have said before, there is no reason to have "B" and "C" players when there are "A" performers looking for jobs.
Track your numbers, keep your inventory under control, hire the right people and provide exceptional customer service. These are still the keys to success.
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They’re not buying online — they’re shopping.
One of the effects of the COVID pandemic is that it sped up the evolution — and adoption — of digital retailing services. If they didn’t already before, consumers now expect to be able to research, purchase and have delivered almost everything from the convenience of a phone. Especially in light of how the automotive industry responded to the pandemic, with at-home test rides and easy online selling through sites like Carvana, whether you like it or not, consumers now expect the same of powersports dealerships.
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