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Business Management

Capitalize on Business Opportunities


We’ll be comparing April data from a good-performing metric 20-group with the National Norm (NN) numbers and the averages for the Top 5 dealers for this group in each category.

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Well, the total store sales figures are looking better than last month — at least for this group and for the Top 5 dealers. The NN dipped slightly. The Top 5 numbers can be a bit misleading when comparing year-over-year, since it could be a different set of dealers each year. What you can take away is that at least five dealers in this group made significant improvements in their sales over 2012.

Total store gross profit margin is up across the board, and that is a good thing. Even so, the group is a bit off the pace for the target of 25 percent gross profit. The percentage of change numbers are interesting: the Top 5 continue to lead the way when it comes to getting more folks in their stores and capturing their information.


F&I gross profit is up nicely from last year. One of the best ways to increase profits is to control overhead. Is your personnel expense as a percentage of department gross profit in the 20 percent range like the NN? If not, it could be a matter of selling more rather than reducing their compensation. Assuming you have the right person with the right aptitude and attitude, training may be the answer.

OK, here are the key numbers to watch: per vehicle sold and per vehicle financed. You should be getting more than $400 in gross profit for every unit you sell and more than $800 for every one financed. This really drives home the necessity of having a business manager (F&I person) who knows how to convert bank, credit union and cash buyers to dealership financing. It also reinforces the importance of having the sources necessary to get them financed. Part of your F&I person’s job is to become (and remain) friends with lots of finance sources.


Check the return on investment for your F&I staff by comparing your gross profit per employee through April with these figures. If you’re not getting the “bang for the buck,” consider sending your producer to a good-quality F&I class. I’m not always a fan of the “free” offerings from the F&I product suppliers. Some are good, but many spend a lot of time pushing their offerings during their training (surprise). That said, I appreciate that they do offer it. Some training is better than none. GSA offers F&I training — see our website for details.


Part two shows the status of the primary product offerings. Financing is the key to getting high gross profit in F&I. The Top 5 dealers are financing almost 70 percent of what they sell. That is one of the reasons why they are approaching $100,000 in gross profit per employee through April.

Another reason is that they sell every F&I product that they possibly can. They want to be a one-stop-shop for their customers. Many of you don’t bother with insurance. Some of you could add it fairly easily, and some need to apply and test for a state insurance license to sell these products. If you look at the numbers, you will see that around 8 percent of the Top 5 dealer-financed purchases included insurance products. This equals more gross profit.


Service contracts are still a viable product in spite of many OE “freebies.” Pre-paid maintenance (we prefer the term “priority maintenance”) is coming back. Remember, the purpose for this product is to get them to use it — to come back to your store. If you execute the program internally, you need to reserve enough to cover what you have out. There are some good external offerings you can use as well, without the need to reserve funds.

GAP has continued to grow, and it has become a real contributor to gross profit for this department. Learn about it, believe in it and offer it. Many people can benefit from this product.


Steve Jones, GSA senior projects manager, outlines dealerships’ best business practices to boost margins, increase profitability and retain employees. His monthly column recaps critical measurements used by the leading 20-group dealers. Access to the new Voyager 5 data reporting and analysis system is available to any dealership for nominal fee. For more information on GSA’s management workshops, data reporting system, dealer 20-groups, on-site consulting or training, send Steve an email at [email protected] or visit

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