It’s been a crazy first half of the year with dealers experiencing a wide variety of results. What about you: How is your year looking so far? Are you on track to hit your goals and targets? If not, what’s the plan? More of the same, or have you made some adjustments? Let’s take a look.

Most dealers look at profitability first. Seems simple enough: How much have we made —  and is it enough? Is it ever enough? It’s just simple math, right? Wrong! It would be nice if it were that simple, but the truth is, it’s not.

If you weren’t profitable, the answer must be to cut expenses, right? NO; it’s very tough to cut your way to a profit. REMEMBER that an engine can’t run without enough fuel! Cutting expenses may be a short-term fix but in most cases, it will cost you money in the long run. It is ABSOLUTELY critical to keep an eye on expenses and not let them get out of control.

The first expense to cut are those that don’t produce revenue.  If the expenses are directly related to generating revenue, make sure you’re making the right cut by weighing the consequences.

What about sales volume? Is that where it needs to be?

If not, why not:

  • You’ve got enough inventory, but it’s just not selling
  • You don’t have enough inventory
  • You have the wrong inventory: too many purchases and not enough trades
  • You have the wrong mix: more than 50% are from my franchise brand.
  • Is your average cost of sale right?

Is your sales gross on target?

  • What is your average PVR (profit per retail unit)?
  • Are you selling them for too little? Are you asking too much, causing your inventory to age?
  • How is your reconditioning? Are you spending too much on it? Maybe not enough?
  • Are you pricing your inventory right from the start?
  • What is your average reconditioning cost?
  • What is your average turn time? Do you have an aging issue?
  • What is your service-to-sales turn time?
  • How are your cosmetics? Do you have a no-excuses inventory?

Make certain that you are maximizing your revenue opportunities and not just looking at your expenses. It’s very difficult to win on defense alone. This is the automotive business, not the NFL!

–Just The Fax

By Robert Grill, Carfax Director of Partner Development

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