fbpx

May Sales Department Performance

 This article contains actual dealer data obtained from GSA’s 20-group reporting system. 20-groups consist of dealers from non-competing markets who meet 3 times a year to share financial and best practice information. Their goal is to grow and improve their businesses profitably.

In Chart 1, total store gross margins are still light for this group while the Top 5 and National Norm dealers are hitting the benchmark of 25 percent. That said, the group’s margin is much better than last year at this time. The National Norm represents the average for all the dealers in the 20-group.

The contribution numbers are interesting. Overall, the group is getting about 40 percent of its gross profit from unit sales, which means the rest is coming from finance & insurance (F&I), parts & accessories (P&A) and service. The National Norm average is around 44 percent.

One of the facts we know is that during a recession, dealers who have a higher percentage of their gross profit coming in from P&A and service, suffer less impact. This is because they can still pay the bills even when unit sales are down. Something to keep in mind – don’t spend all your time focused on selling units only.

The Top 5 are making a lot of profit with preowned. If you doubt this, look at the preowned vs. new margins in the next set of numbers.

Part 1 shows decent increases in unit sales for the group, but not so much for the National Norm dealers (Chart 2). In margins, it looks like this group has some discounters in new units and both they and the National Norm dealers are leaving money on the table in their preowned deals. I was just in a store with a 1.7 preowned-to new ratio. They are very aggressive about buying bikes from the local riders, car dealers and auctions and they hold over 25 percent gross margins on these units. This is a real-world example of how to make good money in unit sales.

Turns are a critical measurement as well. You’ve got to buy the right product for your market and get it out the door quickly to hold down flooring and free up cash flow.

In Part 2 we find that the group is paying the most to employees to get their units sold (Chart 3). The Top 5 are paying less, and getting more ROI for it.

It would be interesting to explore the media each of these categories is using for promoting their businesses. The National Norm dealers are spending far more per unit than the stingy Top 5 or even the group dealers. According to all the statistical evidence, most of the traditional media is not working well except in a few selected market areas. In general, local events, social media, websites and emails are having a far more positive return.

Flooring costs are pretty high for the group and National Norm dealers, but keep in mind that many of the Top 5 dealers may pay cash for their inventory. They also turn it at a good rate. Both factors influence their flooring expenses.

As usual, there is quite a difference in the productivity of the staff for these dealer groups. The Top 5 pull in significantly more gross profit per employee. This indicates they probably have better quality salespeople and provide them with ongoing training.

So where do you stand in comparison to these figures? 

Steve Jones, GSA senior projects manager, recaps critical measurements used by the leading 20-group dealers. Access to GSA’s Voyager 5 data analysis & comparison system is available for any dealership for a nominal fee. For more information on Voyager, management workshops, dealer 20-groups, on-site consulting or training, send an email to [email protected] or visit www.gartsutton.com.

You May Also Like

The Future of Buying: Navigating Powersport Consumer Trends

Insights into a study on the future of powersport shopping.

Future of Buying Study

In late summer/early fall of 2023, Rollick conducted a "Future of Buying" study to understand consumer shopping behaviors in the outdoor recreation space, receiving feedback from nearly 27,000 participants. 

The study, which had an impressive response rate of up to 30% in some cases, was enabled through collaboration with 27 Rollick clients across the powersports, RV and marine industries. The findings aim to communicate how consumers interact with brands and dealers and the technologies utilized during their shopping experience.

Racer and Dealer Sponsorship Must Be a Two-Way Street

You’re better to have no racers than the wrong racers.

How to Respond to Digital Leads

Timing, presence and tools are all critical.

Digital leads
How to Attract, Retain and Develop Talent

This recorded AIMExpo education track features a panel of dealers discussing their hiring and retention practices.

MPN talent panel, AIMExpo 2024
How to Grow and Excel in Digital Retailing

This recorded AIMExpo education track discusses the world of digital retailing and why you need to be there.

MPN Digital retailing panel, AIMExpo 2024

Other Posts

NPA Pre-Owned Market Update: February 2024

Average wholesale prices continue to improve, reflecting dealer sentiment and demand for pre-owned.

National Powersport Auctions, NPA, Market Report
Establishing the Right Pay Plan for Your Dealership’s F&I Team

In an industry where skilled F&I professionals are in high demand, an attractive, fair and equitable pay plan becomes a key tool.

Motorcycle dealership F&I
Maximize Every Sale With F&I and PG&A

This recorded AIMExpo education track discusses how the bike is just the start of the sale.

MPN F&I panel, AIMExpo 2024
Elevating Your Sales Game Through Parts Packaging

Breaking down the art and science of a well-designed, customer-focused, profit-friendly parts package.