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July 28, 2003 – New Unit Profit Margins Slip

July 28, 2003
Filed under Features

Profit margins on new machines slipped for Top Gun dealers in May, the latest month for which figures are available.

The gross profit on new motorcycles was $1,098 per unit in May, the lowest since January, when the margin was $1,007. It was off slightly from the $1,169 figure posted in May last year.

Margins on used motorcycles climbed to $919 from $888 in April, but down from $1,132 in May 2002.

PWC margins were solid at $1,240.

Gross Profit Per Hour

To calculate Gross Profit per effort hour, take the total gross profit generated by your P&A department for a given month or pay period. Divide that number by the total number of hours worked (clock hours) for all members of the P&A team, regardless of title, for the same period. If someone works in P&A as well as another department, estimate the number of hours they worked in Parts.

Average Invoice To Walk-in P&A customers

To see how you compare, determine your total gross sales to walk-in customers. Be sure to exclude all wholesale, mail-order, service through repair orders, and P&A sold with major unit sales. Then divide your gross sales by the number of transactions to those walk-in customers.

OEM Parts Sales Compared To Accessory Sales.

If your accessory sales dollars do not equal your total OEM parts business, your customers are buying from sources other than you.

Service Effective Labor Rate

                                                                                                                                                                                                                                                               To see how you compare with the PowerHouse Top Gun averages take the Base sale price of the vehicle sold plus any freight, prep, and handling charges. Then subtract the cost of the vehicle after holdback and any OEM to dealership sales incentives also deduct the cost of freight, prep, handling<br />
and reconditioning.
To determine your effective labor rate, take the total Service team effort hours (techs and all support personnel, including porters) and divide that amount into your gross labor sales for the same period.

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