At GSA we track benchmarks through our involvement with dealer groups, such as the Best Operators Club. Some of the members have kindly consented to let us share their numbers from our real-time, web-based data reporting system.
In January of 2009 we formed a new Best Operators Club group named BOC 2. While we moderate numerous groups for OEs or other 20-group companies, the Best Operators Clubs are Gart Sutton’s own groups with no particular affiliation. They consist of well-organized dealers who possess a strong drive to improve their business practices and profitability by learning from other dealers in a 20-group environment.
CY: current year
PVS: per vehicle sold
TBOC: average of the top five BOC members in this category
* Some rows and columns without data have been removed to reduce table sizes.
I thought it might be interesting to look at the Q4 numbers for the five dealers who have entered them into our system. These dealers all have good quality data. We’ll compare the members’ performance in key areas to benchmarks and the top of the BOC (TBOC) from BOC 1. Keep in mind that benchmarks are supposed to be “stretch goals,” not average performance. No one in a 20-group wants to be average.
Generally, if your dealership isn’t close to the total store gross-profit benchmark of 25 percent, it will be hard to make a profit. TBOC was at 24.7 percent. Two dealers in this group were on the money. The worst was at 18 percent. This indicates these dealers are working hard to control expenses and hold margins.
The total store net operating profit benchmark is 7 percent. TBOC was only at 4 percent. One of these dealers was at 5 percent, two were at 4 percent, one was at -1 percent, while the other was bleeding at -4 percent.
The new motorcycle gross profit benchmark is 17 percent. TBOC was 14 percent, despite year-end inventory reductions. The top two BOC 2 dealers were at 17 percent and 13 percent. The others were between 4 percent and 9 percent. One key is getting your salespeople to follow the sales process, not resort to price to close the deal. The pre-owned motorcycle gross profit benchmark is 18 percent. TBOC was at 19 percent. These dealers proved to be very sharp in this area. One dealer was at 31 percent. The remainder were between 16 and 19 percent.
The F&I gross profit per vehicle sold (not just financed) benchmark is $500. TBOC was $400. This group was consistent, but anemic. They ranged from a low of $279 to a high of only $327. I can’t over-stress the need for having a well-trained F&I person. Can you afford one? How can you afford not to have one? Good F&I people can generally be unit salespeople as well. However, few major unit salespeople make good F&I people. Also, the value of having someone on staff who knows all the compliance rules and regulations for your business is huge.
The P&A gross profit per vehicle sold benchmark is $540. TBOC was $710 (indicating the benchmark is too low). These dealers are pretty sharp in this area as well. All but one were above the benchmark. The best two were at $1,370 and $880. The lowest dealer was down at $273.
The parts margin benchmark is 39 percent; TBOC was at 36 percent. In this group, the high was 37 percent and the low was 28 percent. The accessories margin benchmark and TBOC were both 34 percent. BOC 2 had a high of 33 percent and a low of 24 percent. This reveals a need to improve business practices to increase profitability.
The service net profit per RO benchmark is $50. TBOC was a poor $2. One of the BOC 2 dealers was at $15, one at $9, while the rest were into significant negative numbers. This is an area many dealers struggle with. It is one of the reasons why our “Make Money in Your Service Department” seminars were so popular. It takes a quality service manager to understand the benchmarks and measure and manage the department correctly.
I hope these numbers prove useful to you, and that you will use this to measure your business performance and seek out the best business practices you need to implement to make it better. Now go have a great year!
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