Dec. 5, 2005 – Keep score to earn more
December 5, 2005
Filed under Features
The latest addition to the widely used Lightspeed DataBack suite of reports is the one-page SCORECARD, which recaps key margin figures at a glance, and quickly spotlights either sub-standard performance, or a job well done.
The SCORECARD, shown below, works like this: We choose seven areas in the dealership that produce gross margin dollars through sales. We then measure these seven areas against the average of all reporting dealers (about 130 from all across the country), and compute the benefit or cost to the dealership in gross margin dollars.
Here are the areas:
1. In our example above (a real dealership, September 2005) dealer shows average margin dollars for parts sold on deals as $93. He is below national average for Non-Harley dealers by $48 per deal, so fell $3,600 (number of units sold x $48 x 45% margin) below average. Dealer loses.
2. Dealer is getting $149 per deal in F&I. National is $256, so he is falling behind by $106 per deal. This, times the number of units sold, creates a margin difference of $9,700. Dealer loses.
3/4. Dealer’s margin on new units is low by 2.9%. Translation: $13,200 left on the table. Dealer loses.
5. The parts department shows a margin of 44.9%. Everybody else has managed an average of just 38.3% this month, so this extra 6.6% nets the dealer an additional $8,900 in margin. Dealer wins.
6. The parts counter has an average ticket of $60. Everybody else in the country is getting around $77, or $17 more. Dealer is handling about 1,300 tickets per month, so (1,300 x $17 x 44.9% margin) put another $9,700 in the loss column. Dealer loses.
7. Guys in the shop may think they are doing great, but they’re not. Parts and labor on RO's are running only $162, or $96 below national average. With over 225 RO's this month, put $12,300 in margin on the down side. Dealer loses.
Add them all up, and the one bright spot (Parts Gross Margin %) is simply not enough to offset 6 areas that are all substantially below national average. This dealer is leaving a net of $39,600 on the table this month alone!
I wasn’t there when the dealer whose store this is first saw this chart. But it was reported to me that when he saw it, he said something like “Damn! There’s my new truck!”
Get on it. These are your dollars. Start measuring, and get behind the wheel — both in the store and on the road! psb
Hal Ethington has been associated with the powersports industry for more than 30 years, and he brings to this column his experience as owner, accountant, financial analyst, and computer program developer. For the paast 10 years, he has been a ProQuest classroom instructor.