Monthly Archives: March 2011

EOM and Service Absorption

At the end of this month are you having a conversation with your Service Manager or Service and Parts Director about Service Absorption?

Does it sound like this?


The 7 Measurables and the Financial Statement

There are 7 Measurable and Improvable Key Performance Indicators that every Fixed Operations Director/Service Manager needs to be aware of.

They are RO Count, HPRO, Labor Gross Margin, Parts Gross Margin, EFL (Effective Labor Rate), Total Gross Profit and Total Net Profit.

When you have a constant update on these measurables and a mandate to improve their numbers you can have a really impressive Financial Statement at the end of the month.

Think about what a 10% increase in RO Count would mean to your Advisors, or a .3 increase in HPRO. What would that translate to in real dollars and cents at the end of the month?

If you are the average store in America and you are at the average labor rate you can expect to have a $5400.00 increase in Gross Sales per Advisor for every 10% increase in RO count. Is that a number to get your attention?

How about a .3 increase in HPRO? That equates to an additional $10,800.00 in Gross Sales per Advisor. Can you see why that would be an important measurable?

How about the Gross Profit Margins? If you decrease unauthorized discounts by just 10% in your store you can expect to have a $1600.00 per Advisor recapture of Lost Profit. (or more)

Effective Labor Rate is not only a matter of proper Labor Rate billing it also a direct reflection of unauthorized discounts as well.

And finally, if you are working your numbers, and want an increase in RO Count, HPRO, EFL, Labor and Parts Gross to translate into higher overall Gross Profit, all you have to do is start measuring daily and start holding personnel accountable for performance.

In theory, it sounds easy, doesn’t it?

 In practice, it is one of the most difficult things to do on earth if there is not a clear plan of action backed up by a firm resolve to see it through.

And if you are interested in Net Profit, then you have to know your expenses inside and out. Some easy questions to ask are “What are we spending in Policy Adjustment compared to Marketing?”

So the real question Mr. or Ms. Dealer, are you happy with your Financial Statement and if not, what are you going to do about it?

How Many Dealerships Would Still Be In Business If They Had 100% Service Absorption?


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Automotive Dealer Associations Looking for Speakers

If you are an Automotive Dealer Association President or Manager and you need a Speaker at your next Dealer meeting, we need to connect.

Don Reed has been a Top 10 NADA Convention Speaker 4 years running. He just completed a Dealers Association meeting for the Detroit Auto Dealers Association where he received stellar reviews.

21 of the attendees completed an evaluation with 20 of them rating the Workshop Content as “Excellent” the highest rating possible. And 21 out of 21 rated Dons Presentation and Subject Knowledge as “Excellent” as well. 

You can find a lot of speakers who know something about a Dealership.

It is a lot more difficult to find someone who not only knows the Dealership, they  can tell you how to make it Profitable. Consistently.

Send me an email. or call the home office at 888-553-0100 and let’s get you on the schedule.

Or you can have “something else” at your next Association meeting.