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I asked the GM what they had done to achieve such an increase in profit margins for P&A. Did they change their process for counter sales? Did they install or improve a customer path process? What?

The answer was really pretty basic. He explained that the first thing they looked at was removing or reducing discounts. Any non-coded discount at the counter now requires an approval by the parts manager. Discounts to wholesales accounts (such as out of area repair facilities) were revised from cost plus 10 or 15 percent to cost plus 20 or 25 percent. They also reviewed and modified the parts price escalators in their point-of-sale software. “Don’t believe that you can’t charge what you need to make,” encourages the GM. “If you provide good service, they don’t question the price.”

The GM also said that a big improvement in profitability came from paying more attention to purchasing P&A. They re-focused on learning and using the OE and aftermarket suppliers’ programs and taking advantage of special buys. This is no small task for a dealership that carries all the major brands and stocks accessories from multiple aftermarket suppliers.

Paying attention to details in your P&A department can help you increase sales and profits. It may mean the difference between making good money and having to lay off a key staffer. Provide exceptional service, eliminate or reduce discounting, charge the prices necessary to achieve the margins you need, and use your suppliers’ programs to buy right.