At GSA we track benchmarks through our involvement with dealer groups, such as the Best Operators Clubs. Some of the members have kindly consented to let us share their numbers from our real-time, web-based data reporting system.
Periodically, we will also include national norms data from our RPMG system. Currently, fourteen dealer groups are entering data in that system. Altogether, we now have over 200 dealers to use in our analysis and comparisons.
This month we are sharing the July numbers for the BOC-2 group.
In Chart 1 we can see that this group is holding close to the 25% benchmark for total store gross profit. However, net operating profit was a dismal 1.4%. On the bright side, at least it was a positive number. I’m still seeing way too many dealers who would be happy with this. The major culprit is selling expense, as it has been all year. Revenue is showing almost 25% down from July last year.
Chart 1
Click to Enlarge
Chart 2 is a snapshot of some of the significant figures from the other departments. New unit gross profit is still low as they continue to do what it takes to reduce inventory. You can expect that OE new unit orders for the coming year will be very light.
It appears that these dealers are also not taking advantage of the profit opportunities that exist in pre-owned units. Many dealers are holding 20% or more on used motorcycles. It is a matter of buying right and understanding market value. Aggressively pursuing purchasing from customers, taking advantage of auctions (be cautious) and seeking out repos from banks and credit unions are some of the ways this is being accomplished. Proper promotion and in-dealership marketing also enters into this.
Now, look at the flooring expense per vehicle sold (PVS). This is a real profitability killer! One of our 20-club dealers is getting local bank flooring for under 4%. You need to get out there and talk to your banks. Be prepared to switch all your accounts over if they will give you a good rate.
Chart 2
Click to Enlarge
P&A PVS sold continues to be strong as unit sales are slow while P&A sales are up. They are doing an excellent job of holding P&A margins. Are you on top of this? You need to be.
Despite the poor finance penetration, they are doing a fair job of selling F&I products. If you haven’t already, you need to increase your lending sources, but you can’t just do this over the phone. You have to suit up and start visiting every lender in your area. Bring a packet showing your customer demographics and the size of the purchases they make. Sell them on the value of your business. Credit unions have been good sources for many dealers.
Make no mistake, times will continue to be tough as we slow down this winter. Take full advantage of local shows and events. You have to stay in front of people and keep the highest profile possible while keeping your advertising budget tight. Stay on top of your expenses, take advantage of the used market and keep a positive attitude. Remember, if you have a bad day, so will your employees. You can’t afford not to have them upbeat and positive. You have fewer buyers out there. They need to feel good about being in your store before they will buy from you.
If you are not in a 20-group, we strongly encourage you to find a good group and become a member. This may the most important thing you do for your business.
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