Fine-Tune Your New Vehicle Departments to Spot Weaknesses & Supercharge Results

Transcription

1 Fine-Tune Your New Vehicle Departments to Spot Weaknesses & Supercharge Results Brooke Samples President Profit Blueprints, LLC 1 Over the past 15 years, Brooke Samples has coached and motivated hundreds of Dealership Managers in all departments across North America. Using her monthly financial analysis, Profit Blueprints, she compares Dealers financial statements to key Benchmarks. She then uses her previous dealership experience, plus feedback from 15 years of Coaching & Consulting her Clients to help Managers utilize over 150 Action Plans. Your Presenter, Brooke Samples, President Profit Blueprints,LLC By implementing customized processes her clients reach their full Net Profit potential. She s proven that with good people, consistent training, the right plans, and a little good-natured "nudging", her Dealership clients can become very successful. Before becoming a Consultant, she worked in Dealerships in a variety of Management positions. Brooke started her career as an Office Manager at a Chrysler-Dodge-Mazda Dealership. For the next 17 years, she worked in the positions of Controller and Operations Manager for several metro Dealerships; including, at the time, the number one BMW Dealership. She expanded her automotive knowledge while working for Lloyd Schiller s Dealer Service Corporation and later as part of NCM Associates. 2

2 LOTS OF NUMBERS! $1,850 65% $ % 35 17% 45 $1,500 3 LOTS OF NUMBERS! 35 $1,850 17% 45 $ % 125 $1,500 25% 4

3 LOTS OF NUMBERS! In this Webinar You ll Gain the Following Benefits: Discover Key Performance Indicators (KPI) to improve your performance Learn what to look at in the New Vehicle Department Review best practices and how to apply them in your daily operations 5 KEY PERFORMANCE INDICATORS Benchmarks Averages Targets and Goals Trends 6

4 COMPUTER REPORTS Financial Statement DOCs (Daily Operating Control Report) Schedules 7 FINANCIAL STATEMENT YOUR REPORT CARD Page 1: Balance Sheet Page 2: Expenses Page 3/4/5 +: Sales/Gross Profit 8

5 FINANCIAL STATEMENT Sales, Gross Profit, Units Vehicle by Model Leases Fleet Finance 9 SALES & GROSS PROFIT LINE NO UNITS SALES GROSS PROFIT GROSS PROFIT PER UNIT MODEL 1 17 $549,304 $21,046 $1,238 Model A 2 33 $627,965 $47,190 $1,430 Model B 3 5 $107,112 $3,878 $776 Model C 4 1 $36,123 -$453 -$453 Model D $361,230 $150,000 $1,500 TOTAL 10

6 SALES & GROSS PROFIT LINE GROSS PER UNIT NO UNITS SALES PROFIT SOLD MODEL 1 17 $549,304 $21,046 $1,238 Model A PUT INTO PERSPECTIVE Benchmark for Gross Profit Per Unit - Model A - $1,700 Average Dealership Unit Sales for Model A - 20 $1,700 - $1,238 = $462 missed profit per unit $462 x 17 Units = $7,843 missed profit for month for Model A = 3 Units 3 x $1,238 = $3,714 OVER $11,500 in MISSED PROFIT 11 SALES & GROSS PROFIT LINE UNITS SALES GROSS PER UNIT NO PROFIT SOLD NEW VEHICLE DEPARTMENT 1 17 $549,304 $21,046 $1,238 Model A OVER $11,500 in MISSED PROFIT SIGNIFICANT OPPORTUNITY OVER $138,000 in MISSED PROFIT FOR A YEAR 12

7 FINANCE INCOME Even Though Your Financial Statement May Not Have An Account For All of The Products You Sell, You Need General Ledger Account Numbers for: Sales/Cost of Sales For ALL Products. Ex: GAP, Service Contracts, Maintenance Contracts, Etc. 13 FINANCE INCOME Even Though Your Financial Statement May Not Have An Account For All of The Products You Sell, You Need General Ledger Account Numbers for: CHARGE BACK ACCOUNT for EVERY ACCOUNT THAT CAN BE REFUNDED TO A CUSTOMER 14

8 FINANCE INCOME CHARGE BACK REFUND SCHEDULE Track Refunds Paid to Customers For Amounts Due Back to You! Check to Customer: ($500) Charge Back SC Account: $300 Receivable from SC: $ FINANCE INCOME NAME OF ACCOUNT SALES GROSS PROFIT Per Retail Unit Sold Finance Income $34,235 $342 Finance Charge Backs -$452 Insurance Income $5,250 $5,250 $53 Insurance Charge Backs $0 Service Contracts $35,132 $23,218 $232 Contract Charge Backs -$5,787 GAP Insurance Income $24,521 $12,705 $127 GAP Charge Backs Aftermarket Income $4,932 $3,434 $34 FINANCE & INSURANCE PROFIT $72,603 $726 16

9 FINANCE INCOME N AM E OF ACCOUNT SALES GROSS PR OFIT Finance Income $34,235 $342 Finance Charge Backs -$452 Insurance Income $5,250 $5,250 $53 Insurance Charge Backs $0 Service Contracts $35,132 $23,218 $232 Contract Charge Ba cks -$5,787 GAP Insurance Income $24,521 $12,705 $127 GAP Charge Backs Per Retail Unit Sold Charge Backs 25%! Aftermarket Income $4,932 $3,434 $34 FINANCE & INSURANCE $72,603 $ FINANCE INCOME MONITOR CHARGE BACKS USING YOUR DOC 18

10 CONTRACT PENETRATION NAME OF ACCOUNT SALES GROSS Divide # of Per Retail Contracts by # of PROFIT Unit Sold Retail Units Finance Income $34,235 $342 70% Finance Charge Backs -$452 These Insurance Income $5,250 Numbers $5,250 are$53 Insurance Charge Backs Critical for Measuring $0 15% Service Contracts Performance $35,132 $23,218 and For$232 a 25% Contract Charge Backs -$5,787 GAP Insurance Income Finance $24,521 Manager s $12,705 Pay $127 50% GAP Charge Backs FINANCE INCOME Plan Aftermarket Income $4,932 $3,434 $34 21% FINANCE & INSURANCE $72,603 $ FINANCE INCOME According to NADA The Finance Penetration Rate was 77% of New Vehicles Retailed Service Contracts Penetration Between 35 and 40% of New Vehicles Retailed 20

11 FINANCE INCOME MIX Contribution to Finance Income GAP Insurance Income 17% Service Contract Income 24% Aftermarket Income 5% Finance Reserve Income 47% Insurance Income 7% Finance Income as a % of Total Continues to Fall <40% 21 FINANCE INCOME Why the Decline in Finance Reserve? Pressures from Government Regulators Increase in Number of Vehicles Being Leased Finance/Manufacturer Lender Programs, i.e. 0% -.9% Finance Pressure from Outside Sources 3 RD Party Experts AAA, TrueCar, Credit Unions, etc. Sales Managers Quoting Rates on Sales Floor 22

12 SALES & GROSS PROFIT MAKE SURE YOUR SALES SHOW UP ON THE FINANCIAL STATEMENT Use Washout/Recap Sheets Accounting vs. Business Office 23 SALES & GROSS PROFIT WASHOUT/RECAP SHEETS Ken s - $1,990 Jones - $2,650 Garcia - $1,120 Hall - $1,580 Page - $2,510 NEXT DAY S DOC Today M T D Model A $4,500 $54,278 Model B $2,650 $33,411 Model C $5,689 Model D $1,120 $1,120 Model E $1,580 $43,126 TOTAL $9,850 $137,624 = $9,850 24

13 MONTH END CHECKLIST Review Inventory Schedule Unusual Balances Units Not on Floor Plan Schedule Aging Units 25 MONTH END CHECKLIST Review Inventory Schedule STOCK # INVENTORY FLOOR PLAN 1 B $29,650 ($30,000) 2 B $23,550 ($22,750) 3 B ($24,350) 4 B $34,800 5 B $450 6 B $750 26

14 MONTH END CHECKLIST Review We Owe Schedule Controlled by Stock # Unusual Amounts Aging Amounts 27 EXPENSES Variable Expenses Personnel Expenses Semi-Fixed Fixed 28

15 EXPENSES Look at Sales Expenses As a % of Gross Profit As Per Unit Commissions Delivery Expense Advertising 29 EXPENSES % OF % OF NET SALES 1,787,332 SALES 6,478,510 SALES GROSS PROFIT/INCOME 136, % 565, % EXPENSES NEW VEHICLE DEPT. MONTH % GRS PROFIT YEAR-TO-DATE % GRS PROFIT SLSPLE COMP 29, % 123, % DELIVERY EXPENSE 3, % 10, % POLICY 1, % 6, % 30

16 EXPENSES 2012 YTD Avg. JAN FEB MAR APR Delivery Expense $2,628 $934 $3,009 $2,995 $3,573 % Gross Profit (Target = 1%-) 1.86% 0.84% 1.70% 2.13% 2.61% Per Unit Sold $37 $13 $38 $47 $49 31 VARIABLE EXPENSES Sales People s Comp < 18% 15% - 18% of Gross Profit Policy Expense < 1% of Gross Profit Demo Expense < 1% of Gross Profit 32

17 VARIABLE EXPENSES Finance Compensation Managers < 17% of Net Finance Income TOTAL paid on Finance < 20% 33 VARIABLE/SEMI-FIXED Advertising 34

18 VARIABLE/SEMI-FIXED Advertising 35 VARIABLE/SEMI-FIXED VS 36

19 VARIABLE/SEMI-FIXED Advertising Target < 10% 10% - 15% Create Sub-Accounts for Each Type of Advertising Expense 65 I for Internet 65 N for Newspaper 65 R for Radio How Do You Compare to the NADA Breakdown? 65 T for Television 37 VARIABLE/SEMI-FIXED Floor Plan According to NADA Dealers Running a Credit in this Account YTD and for April ($68) PNVR Thanks to Floor Plan Assistance KNOW WHEN YOUR FLOOR PLAN SOURCE WANTS THE VEHICLE PAID OFF 38

20 ORIG INT DATE VARIABLE/SEMI-FIXED Floor Plan TOTAL AMOUNT DUE O/S BALANCE INTEREST DUE INS DUE ACCUM. AMOUNT 2/10/2011 $58,748 $ $41.42 $ $3, /6/2011 $28,061 $90.61 $19.78 $ $1, /19/2012 $37,121 $ $28.50 $ $ /30/2012 $37,981 $ $29.16 $ $ # OF DAYS O/S Average daily cost $5 to Floor Plan & Insure a Vehicle 39 VARIABLE/SEMI-FIXED Floor Plan Average daily cost $5 to Floor Plan & Insure a Vehicle 100 Vehicles a Month 2 Extra Days to Pay Off the Vehicle 2 x 100 x $5 = $1,000 $12,000 a Year LESS NET PROFIT 40

21 PERSONNEL EXPENSES Managers Clerical Other Porters/BDC Detailers 41 PERSONNEL EXPENSES BENEFITS (Last Page for Ford & Chrysler Financial Statement) Payroll Taxes Insurances Health/Comp Profit Sharing 42

22 PERSONNEL EXPENSES TOTAL PAYROLL EXPENSE (Includes Benefits and Allocations) (Does Not Include Sales Commissions) <25% of Gross Profit 43 NET PROFIT 44

23 NET PROFIT AS A % OF GROSS PROFIT NET PROFIT > 20% TOTAL EXPENSES < 80% 45 TOTAL EXPENSES TOTAL EXPENSES < 80% PERSONNEL < 25% VARIABLE < 20% ADVERTISING <10% FLOOR PLAN <= 0% SEMI-FIXED & FIXED < 25% 46

24 BALANCE SHEET C CASH ON HAND ASSETS AMOUNT LIABILITIES AMOUNT A CASH IN BANK C INFORMATION CAPTURES ONE POINT OF TIME ONE JUST ONE DAY S CONTRACTS IN TRANSIT 1,000,000 U H SECURITIES R TOTAL CASH AND CONTRACTS E FLOOR PLAN 6,500,000 R VEHICLE RECEIVABLES 350,000 E E SERVICE RECEIVABLES N C FACTORY RECEIVABLES - REBATES 45,000 T E FACTORY RECEIVABLES - INCENTIVES 85,000 I FACTORY HOLDBACK 250,000 V DUE FROM FINANCE COMPANIES 50,000 A WARRANTY CLAIMS INVENTORIES NEW CARS 75 2,500,000 NEW TRUCKS 100 3,500, BALANCE SHEET ASSETS AMOUNT LIABILITIES AMOUNT C CASH ON HAND CONTRACTS IN TRANSIT A CASH IN BANK C Money Due From S CONTRACTS IN TRANSIT 1,000,000 U FINANCE SOURCES on H SECURITIES R Deals That Have Been TOTAL CASH AND CONTRACTS E FLOOR PLAN 6,500,000 Processed In the Office, R VEHICLE RECEIVABLES 350,000 E But We Have Not E SERVICE RECEIVABLES N Deposited the Funds C FACTORY RECEIVABLES - REBATES 45,000 T Before the Financial E FACTORY RECEIVABLES - INCENTIVES 85,000 Statement was Finalized. I FACTORY HOLDBACK 250,000 V DUE FROM FINANCE COMPANIES 50,000 A WARRANTY CLAIMS INVENTORIES NEW CARS 75 2,500,000 NEW TRUCKS 100 3,500,000 48

25 BALANCE SHEET ASSETS AMOUNT LIABILITIES AMOUNT C CASH ON HAND VEHICLE RECEIVABLES A CASH IN BANK C Money Due From S CONTRACTS IN TRANSIT 1,000,000 U Customers on Deals That H SECURITIES R Have Been Processed In TOTAL CASH AND CONTRACTS E FLOOR PLAN 6,500,000 the Office, But We Have R VEHICLE RECEIVABLES 350,000 E Not Deposited the Funds E SERVICE RECEIVABLES N Before the Financial C FACTORY RECEIVABLES - REBATES 45,000 T Statement was Finalized. E FACTORY RECEIVABLES - INCENTIVES 85,000 I FACTORY HOLDBACK 250,000 V DUE FROM FINANCE COMPANIES 50,000 A WARRANTY CLAIMS INVENTORIES NEW CARS 75 2,500,000 NEW TRUCKS 100 3,500, BALANCE SHEET Dealership A Dealership B NEW VEHICLE SALES $3,400,000 $3,400,000 Contracts In Transit $750,000 $1,000,000 Vehicle Receivables $100,000 $350,000 TOTAL RECEIVABLES $850,000 $1,350,000 Receivables % of Sales 25% 40% Days Worth of Receivables (% x 30) 50

26 Why Could Dealership B Have a Higher % of Receivables? Turning Deals in Last Day of the Month Slow Payment from Finance Co. or Customer Deals Not Complete Enough to Send to Finance Source Aging Receivables BALANCE SHEET 51 C CASH ON HAND BALANCE SHEET FACTORY RECEIVABLES ASSETS AMOUNT LIABILITIES AMOUNT A CASH IN BANK C S CONTRACTS IN TRANSIT 1,000,000 U H SECURITIES R TOTAL CASH AND CONTRACTS E FLOOR PLAN 6,500,000 R VEHICLE RECEIVABLES 350,000 E E SERVICE RECEIVABLES N FACTORY CUSTOMER REBATES C FACTORY RECEIVABLES - REBATES 45,000 T E FACTORY RECEIVABLES - INCENTIVES 85,000 I FACTORY HOLDBACK 250,000 V DUE FROM FINANCE COMPANIES 50,000 A WARRANTY CLAIMS INVENTORIES NEW CARS 75 2,500,000 NEW TRUCKS 100 3,500,000 Your Financial Statement may not have different lines for the many Factory Receivables, but you can still have many different accounts and schedules. The Factory has made it easier to make sure you are applying for the correct rebate for the Customer, but you still have to have the paper work complete. 52

27 BALANCE SHEET C CASH ON HAND ASSETS AMOUNT LIABILITIES AMOUNT A CASH IN BANK C S CONTRACTS IN TRANSIT 1,000,000 U H SECURITIES R TOTAL CASH AND CONTRACTS E FLOOR PLAN 6,500,000 R VEHICLE RECEIVABLES 350,000 E E SERVICE RECEIVABLES N C FACTORY RECEIVABLES - REBATES 45,000 T E FACTORY RECEIVABLES - INCENTIVES 85,000 I FACTORY HOLDBACK 250,000 V DUE FROM FINANCE COMPANIES 50,000 A WARRANTY CLAIMS INVENTORIES NEW CARS 75 2,500,000 NEW TRUCKS 100 3,500,000 FACTORY INCENTIVES Keep a Spreadsheet or Log of Incentive Programs and Stair Steps for Hitting Different Levels of Payment. 53 BALANCE SHEET Keep A Log of Deals With Factory Incentives June 1 - June 30 VIN Paid Date Submitted Customer's Name Value TOTAL 91 xxxxxxxxxxxx June 13 Weimer $ xxxxxxxxxxxx June 14 Jones $ xxxxxxxxxxxx June 16 Hall $ xxxxxxxxxxxx June 16 Garcia $ xxxxxxxxxxxx June 16 Peterhans $ xxxxxxxxxxxx June 16 Lacey $ xxxxxxxxxxxx June 20 Ken's Pool $ xxxxxxxxxxxx June 26 Bowers $ xxxxxxxxxxxx June 30 Page $ xxxxxxxxxxxx June 30 Hayes $200 $20,000 Make Sure YOU Know How to Report a Vehicle Sold! 54

28 C CASH ON HAND BALANCE SHEET FACTORY HOLDBACK ASSETS AMOUNT LIABILITIES AMOUNT A CASH IN BANK C S CONTRACTS IN TRANSIT 1,000,000 U H SECURITIES R TOTAL CASH AND CONTRACTS E FLOOR PLAN 6,500,000 R VEHICLE RECEIVABLES 350,000 E E SERVICE RECEIVABLES N C FACTORY RECEIVABLES - REBATES 45,000 T E FACTORY RECEIVABLES - INCENTIVES 85,000 I FACTORY HOLDBACK 250,000 V DUE FROM FINANCE COMPANIES 50,000 A WARRANTY CLAIMS INVENTORIES NEW CARS 75 2,500,000 NEW TRUCKS 100 3,500,000 Factory Holdback is Typically Paid Quarterly. This Account Should be on a Detail Schedule and Should Be Reviewed as Soon as the Payment is Received. 55 C CASH ON HAND BALANCE SHEET FINANCE RESERVE ASSETS AMOUNT LIABILITIES AMOUNT A CASH IN BANK C S CONTRACTS IN TRANSIT 1,000,000 U H SECURITIES R TOTAL CASH AND CONTRACTS E FLOOR PLAN 6,500,000 R VEHICLE RECEIVABLES 350,000 E E SERVICE RECEIVABLES N C FACTORY RECEIVABLES - REBATES 45,000 T E FACTORY RECEIVABLES - INCENTIVES 85,000 I FACTORY HOLDBACK 250,000 V DUE FROM FINANCE COMPANIES 50,000 A WARRANTY CLAIMS INVENTORIES NEW CARS 75 2,500,000 NEW TRUCKS 100 3,500,000 Income from Your Financing Sources Should Always Be Scheduled. There is No Reason for a Balance Greater Than 2 Months Worth of Finance Income. 56

29 BALANCE SHEET C CASH ON HAND ASSETS AMOUNT LIABILITIES AMOUNT A CASH IN BANK C S CONTRACTS IN TRANSIT 1,000,000 U H SECURITIES R TOTAL CASH AND CONTRACTS E FLOOR PLAN 6,500,000 R VEHICLE RECEIVABLES 350,000 E FLOOR PLAN E SERVICE RECEIVABLES N C FACTORY RECEIVABLES - REBATES 45,000 T E FACTORY RECEIVABLES - INCENTIVES 85,000 I FACTORY HOLDBACK 250,000 V DUE FROM FINANCE COMPANIES 50,000 A WARRANTY CLAIMS INVENTORIES NEW CARS 75 2,500,000 NEW TRUCKS 100 3,500,000 Amount Due to The Floor Plan Lender VEHICLE INVENTORY # Of Units Value of Inventory 57 BALANCE SHEET INVENTORY VERSUS FLOOR PLAN PAYABLE Dealership A Dealership B NEW CAR & TRUCK INV. $6,000,000 $7,500,000 FLOOR PLAN PAYABLE $6,500,000 $8,700,000 Due To Floor Plan Source -$500,000 -$1,200,000 TOTAL RECEIVABLES $850,000 $1,350,000 58

30 BALANCE SHEET Why Could Dealership B Have a Higher Variance? Payoff Checks Written in Next Month Cash Flow - Waiting for Contracts to be Cashed 59 BALANCE SHEET INVENTORY STOCKED versus INVENTORY SOLD Dealership A Dealership B NEW CAR & TRUCK INV. $6,000,000 $7,500,000 Number of Units in Inventory Average Cost of Inventory $34,286 $37,500 Average Cost of Unit Sold $32,000 $32,000 Variance $2,286 $5,500 % of Units Sold 7% 17% 60

31 BALANCE SHEET DAYS SUPPLY OF INVENTORY CURRENT MONTH Number of Units in Inventory 175 Units Sold Previous Month 90 Days Supply 58 (Inventory/Sold)*30 175/90 = 1.94 MONTHS SUPPLY x 30 DAYS = 58 DAYS SUPPLY NADA GUIDE = 45 days or 8 TURNS a Year 61 BALANCE SHEET UNITS INSTOCK UNITS IN TRANSIT POTENTIAL INVENTORY UNITS SOLD DAYS SUPPLY Model A Model B Model C Model D

32 END OF MONTH INVENTORY Verify Unit Count is Correct (manually adjusted each month) Reconcile the MSO/CO to the Vehicle Inventory Schedule Side-by-Side Schedule with Vehicle Inventory and Floor Plan Amount 63 GETTING STARTED Evaluate Your Finance Mix Evaluate Your Advertising Expense Mix Calculate Days Supply of Each Model Look at a Floor Plan Statement 64

33 CONCLUSION! Brooke Samples, President Profit Blueprints,LLC Profit Blueprints, LLC Dealership-Proven Plans for Net Profit Improvement 65 ACCOUNTS YOU NEED FINANCE PRODUCTS SALES/COST OF SALES AND CHARGEBACK DIFFERENT ADVERTISING EXPENSE ACCOUNTS FOR DIFFERENT SOURCES OF ADVERTISING, ALONG WITH AN ACCOUNT FOR CREDITS Profit Blueprints, LLC Dealership-Proven Plans for Net Profit Improvement 66

34 SCHEDULES: REPORTS YOU NEED INVENTORY & FLOOR PLAN WE OWE RECEIVABLES FOR DIFFERENT ACCOUNTS (Including Finance Product Refunds/Charge Backs) Profit Blueprints, LLC Dealership-Proven Plans for Net Profit Improvement 67 DATA NADA DATA AVAILABLE AT: Profit Blueprints, LLC Dealership-Proven Plans for Net Profit Improvement 68

35 KPI Definitions Benchmarks Benchmarking is the process of comparing your numbers to the best performers. Benchmarks are usually derived by averaging numbers from the top 50% to the top 25% performers of a given account or matrix. Benchmarks stand alone. Ex: The Dealerships in the top 50% of vehicles sold may not be the Dealerships in the top 50% of Gross Per Unit. 69 Average KPI Definitions Averages are derived by averaging numbers from All Dealerships in the sample. Keep in mind that when looking at an average number, half of the Dealerships are better than the average number and half are worse than the average number. 70

36 KPI Definitions Targets or Goals By familiarizing yourself with Industry Benchmarks and Averages you can create your own Targets or Goals, based on your operation. Your Targets should be obtainable, but not impossible to reach. 71 KPI Definitions Trends Once you ve established a Target, you ll want to monitor it either daily/weekly/monthly to make sure you are moving the numbers towards the Target. Your goal should be to always be improving. 72