March PG&A Department Performance

In the first chart (Chart 1) we see some promising numbers. Total store sales are up over last year as are gross profit margins. We also see that the parts, garments and accessories (PG&A) department represents a very significant portion of the total store gross profit. In the case of the Top 5 dealers, it makes up more than 40 percent.


The number of door swings (from door swing counters) and logged contacts have both decreased for the group and the National Norm averages. Note that both lost almost 3 percent more in working contacts than in door swings. This could indicate a lack of effort in logging contact information. However, the Top 5 are still improving on both door swings and working contacts. 


Regardless of the size of your dealership, you can compare your gross profit dollars per employee with this data. One of the biggest factors influencing this number is the quality of your staff and the level of training they receive. Good, well-trained staff can make a big difference in your bottom line. More importantly, it makes a huge difference in customer retention. It is always less expensive to keep an existing customer than it is to attract and capture a new one. 


In the Part 1 chart there is more good news: sales increased for PG&A across the board. In addition, there are strong numbers for gross profit per vehicle sold. Here is a real good example of the difference well-trained staff can make. The Top 5 dealers are selling roughly $500 more PG&A per vehicle sold than the group or National Norm average. Wouldn’t you like to make an extra $500 in gross profit per vehicle sold? Think about that the next time you catch yourself saying; “It costs too much to send them to training…”


The Top 5 are averaging 4-5 percent more on margins than the group or National Norm dealers. How do they do that? Do they inflate their prices? Not likely when today’s shoppers compare everything online. For one thing, they control discounting. A chart we use in our training sessions shows one 20 percent discount sale takes seven additional sales at full retail to get CLOSE to the original margin. They also take advantage of pre-season programs offering additional margins. Many dealers minimize suppliers to leverage purchasing power to maximize margins and program benefits.


The Top 5 are also doing a much better job of controlling personnel expenses as a percentage of department gross profit. Of course, if you are making more gross profit per person, you are also reducing your expenses as a part of department gross profit.


Part 2 shows invoice volume decreasing slightly for the group and National Norm dealers, but up 10 percent for the Top 5. Obsolescence numbers are here, but they are hard to quantify, since we don’t know how much is still “there” but written off of the inventory. Suffice it to say that the “real” percentage should be under 15 percent. 


Inventory turns are not bad (this is a 12-month number), but tracking will be more useful once we can get all the dealers on board with measuring clothing separate from accessories. 


As I have pointed out in the past, the gross profit dollars per employee is a measurement that can be compared by any size of dealer. The Top 5 are knocking it out of the park; showing $10,000 more gross profit per person than the group or National Norm dealers – and this is only through March! Look at your numbers in relation to these as an indicator of staffing levels or needed training.


Use these benchmarks to improve your operation. As always, feel free to contact me if you have questions or need assistance. Email me at [email protected]

Steve Jones, GSA senior projects manager, outlines dealership best business practices to boost margins, increase profitability and retain employees. His monthly column recaps critical measurements used by the leading 20-group dealers. GSA is recognized as the industry’s #1 authority on dealer profitability. Access to our new Voyager 5 data reporting and analysis system is available for any dealership for nominal fee. For more information on our data reporting system, management workshops, dealer 20-groups, on-site consulting or training, send me an email at [email protected] or visit www.gartsutton.com.

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