leadership solution
maybe it is time to change your bodyshop financial statement
Never a day goes by when I do not get a call from a dealer wanting to discuss financial performance of the bodyshop. We often discuss the obligatory labor sales and grosses. We touch on the paint and materials account. Eventually, we discuss parts sales through the bodyshop. The fact that the dealer rarely thinks to tell me about parts sales and resultant gross is the problem. It shows the dealer fails to understand that his statement format is, oftentimes, the problem. Parts Impact on Profit
I know a popular 20 Group cliché is to “make money on labor alone.” A few dealers actually do make money on labor alone. The net number is pretty fickle, because it is so dependent on arbitrary and subjective allocations of costs. If the dealer beats the bodyshop up too badly with rent and other allocated costs, they sabotage any real opportunity for a net profit. The wise dealer understands the value of parts sales through the bodyshop. The bodyshop manager has great flexibility with the decision to replace rather than repair collision parts. The dealer often pays the bodyshop manager on labor alone, thereby killing the manager’s desire to sell parts. Our analysis shows that gross profit dollars per actual hour are increased dramatically when parts are replaced rather than repaired. The dealer may have foolishly reasoned that it does not matter where parts profit shows up on a statement, since it all belongs to him anyway. The problem is that if the bodyshop does not receive adequate recognition for parts sales, the parts will never be sold. I just had a great conversation with Brad Sather of Gateway Chevrolet in Fargo, North Dakota about this very subject. Brad agreed that the bodyshop should buy the parts from the parts department for the same price the parts department would sell them to a competitor at wholesale. He was quick to see the wisdom of not shooting himself in the foot over this issue. A parts manager will occasionally protest because it will effect his statement. The net result of changing the statement is very beneficial to the bodyshop, and the dealership overall profit picture.
Check For Yourself
I recommend that parts sales be equal to labor sales in the dealer world. Check your statement. Most dealers underperform in selling parts when compared to independent shops. If you are selling equal amounts of parts and labor, you are doing well in the bodyshop and are probably profitable. If you are like most dealers, you will see parts at about 30 to 35 percent of total sales and labor greater than 50 percent of total sales. If you are selling parts at less than 35 percent of total sales, you are probably also struggling to make money in the paint and material department, as they are inextricably tied together. That is a separate article or conversation. Reformat Your Statement
Gerry Enders runs three dealer-affiliated shops in Southern California. Gerry learned a long time ago that the statement can be customized. I don’t care how you do it, just do it. Start giving your bodyshop appropriate recognition of parts sales and profits and you will start winning big. You will realize how important parts sales are to bodyshop profits. Call me for a free 15-minute consult on this or any subject related to your bodyshop. Dave Dunn is the founder of Masters School of Autobody Management. He can be contacted at 866.386.0042, or by e-mail at ddunn@autosuccessonline.com.
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DaveDunn
TomKain
marketing solution
CRaigslist has rules
In recent months I have seen an increased amount of interest from dealers wanting to learn more about posting used inventory on craigslist, and rightfully so. Craigslist is an incredible vehicle for generating leads, if you play by the rules. If you do not, you might as well not even show up to the party, because the craigslist police are going to take you down.
Dealers are not the only people at the party, either. Showing up are a number of companies, a few that are ethical and, unfortunately, some who are just trying to make a fast buck. Like drug dealers trying to sell a “dime bag,” they are promising dealers an incredible high; some even go as far as telling dealers they can post 100 percent of their used inventory to craigslist every day. I am telling you right here, right now, this cannot be done, so like your momma told you, “Just Say No.” Like many of the other marketing platforms available today, craigslist has rules. They
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are not hard to follow, but if your dealership, or the company you put your trust in to post your inventory breaks the rules, the end result is predictable and inevitable — your vehicle posts get “ghosted.” For those unfamiliar, “ghosting” is the term applied when you make a post on craigslist, and the system tells you that your post has been published; however, your post never appears in a craigslist search. There are two main actions that cause vehicle posts to get ghosted. The first is would be “flagging.” This is done by end users, and it’s something you cannot control. However, this is not the norm and really nothing to be concerned with. The second is “over posting.” This is when your vehicles are being posted far too often or by posting the same vehicles in multiple locations. Over posting will get you ghosted so fast it’ll be over before you know what’s happened, and once your IP address is marked for ghosting, the only option you have to start posting again is to setup a new account with a new IP address. Who wants to deal with that? As I mentioned in the beginning, craigslist is an incredible vehicle for generating leads, if you play by the rules. If you are using an in-house posting solution and have a dedicated staff to handle the posts, make sure they know the rules. A good rule of thumb is to post your vehicles in a four-day rotation and always delete the older posts before posting the new ones, because you want to avoid having any duplicate posts. If you are using a vendor, make sure they are following the rules, and also go to craigslist and do a search yourself to make sure your vehicles are being posted.
Tom Kain is the president of AutoDealerTarget. He can be contacted at 866.647.0469, or by e-mail at tkain@autosuccessonline.com.