Nov. 29, 2010 – Becoming profitable with a small unit sales volume
November 29, 2010
Filed under Archives
These articles recap some of the opportunities uncovered by GSA powersports consultants during actual consulting visits. These are followed by recommended actions that address these opportunities. Our goal is to provide you with ideas to help improve your dealership.
In this first part of a series on this dealership, GSA consultants provide an analysis on the overall dealership.
The owner recently purchased this dealership and was approved for the two major product lines they carried. The original dealership had no computers and no financials. They were underperforming and held very poor market share for this area. They also had a poor reputation with the local customers. The new owner feels there is a good potential for growth due to the dealership’s past history. Since they acquired this dealership, they have increased the market share by more than 60 percent for one of the lines. However, most of their unit sales have been for very low margins as they have had to clean out noncurrent inventory (some up to six years old).
The local town has only about 10,000 people. However, the market area has a population of more than 300,000. They have purchased a new facility with frontage on a major highway. It is currently under remodeling construction. They plan to move in the next few months.
The owner’s background is in agri-business and wholesale distribution. He has considerable business experience and is well capitalized. Although he has a passion for the sport, he plans to be an absentee owner with little involvement in day-to-day dealership operations.
They have a lot of work to do in order to make this into a profitable dealership. Their sales volume is small (well below 300 units). There are poor or negative margins in nearly all departments, no inventory management and no personnel management structure. It is recommended that the owner assume the GM duties until a suitable replacement can be found. Other highlights:
Note: Due to the impending move to another facility, most issues with the existing facility are not addressed in these action Items.
Gart Sutton has been a leading provider of on-site dealer consulting, dealer 20-groups, online financial composites, accounting rescue services, and OEM and dealership training solutions for more than 30 years. For additional information on these services, visit www.gartsutton.com