At GSA we track benchmarks through our involvement with dealer 20-groups. Some of the members have kindly consented to let us share their numbers. The TBOC data comes from our real-time, web-based data reporting system. The national norms are compiled in our former-RPMG data system. Altogether, these numbers represent the data collected from over 200 high-quality dealers.
In Chart 1 we see that the national norms (NN) are very close to the TBOC in total store gross profit and net operating profit. This is actually surprising given that the administrative and personnel expenses are slightly higher. It appears that the national norms dealers have done a better job of controlling selling expenses. I say "appears" because there are some slight differences in how these are calculated by the two systems. Selling expense includes expenses necessary to make a sale, but is not a part of the cost of goods sold. This would include: commission, demo expense, policy expense, flooring costs, advertising (media), and marketing (non-media expenses). It is also noteworthy that national norm dealer revenue has not dropped as much as the TBOC since ’08.
Chart 2 shows more things that the national norm dealers are doing well. They are trying hard to control expenses across sales personnel, flooring and marketing. Total new unit margins are .5% better than the TBOC and preowned units are a full 2% better. This is still anemic compared with what we see in the better preowned dealers. 20% margins are not unusual. In these tough times you really need to get involved in the preowned business. Fall and winter are the times to buy these units right for sales next spring.
The last chart shows the TBOC holding a better labor margin and P&A gross profit per vehicle sold. The tires number is also significant, as we consider that a measure of overall sales success. The TBOC is doing a much better job in the F&I department. If you are not hitting $300 to $400 in gross profit per vehicle in your F&I department, you need to get on board. Are you one of the dealers who says; "I can’t afford an F&I person?" Wake up — this is a commission-based sales position. If they don’t sell, they don’t cost you anything. Besides, how can you afford not to be picking up that $300 to $400 extra profit on each unit sale? Would that be significant to your bottom line?
If you haven’t already, it is time to dive deep into every department. Get a grip on every expense. Grow your sales of profitable products. Push your sales staff to increase your margins. Require them to be salespeople, not just order-takers.
Destination Dealership: Southland Powersports
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While it might not look like it on first glance, Southland Powersports might be one of the best situated powersports dealerships in Tennessee. Located in the small town of Lexington with a population of only 8,000 people, it not only serve its small community but also the neighboring metropolitan areas. Lexington is only 30 miles east of Jackson and smack dab in the center of Nashville and Memphis — approximately an hour and 40 minutes east or west to each city.
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