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Excel year after year regardless of market economics

17 Aug 2010 EasyCars

It is not totally that their personnel are any better than any other.

True, human resource management must be addressed as part of any dealer’s profit improvement process; and, you must have professional and dedicated personnel. But what’s more important is how your people perform and execute the plan. What seems to be the answer is the environment in which the personnel operate.

Most dealers operate in markets where there is competition from several same-franchise dealers as well as competitive dealers with other franchises. Long gone are the days when customers only supported their “local” dealer.

So how is it that some dealers can be so successful when many of their competitors are having issues?

Most of them are hands-on and pro-active dealers. Without exception, successful dealers have processes and plans in place that everyone in their dealerships must follow, and all employees are accountable for their area of responsibility.

One example is the inventory-management standards with regard to unit-count, aging and model composition that have been established, and on which there is no compromise. The successful dealer insists that no used vehicle remain in inventory past 60 days, if that is his aging standard.

He also insists that used vehicles meet the dealership’s inventory profile. If a vehicle doesn’t, it goes to auction or is wholesaled sooner rather than later so that capital and space is freed up for a vehicle that has historically sold well.

The successful dealer monitors his monthly new-vehicle sales rate by individual model and knows by month what the average sales have been. If he sees a change in the market, he adjusts the selling price to avert any inventory and turn-rate stagnations.

If he senses an opportunity to gain market share in an area, he creates a plan in advance of ordering the vehicles. There is a written plan to sell these vehicles that includes the advertising message and campaign.

In his fixed operations, the same types of plans are created as well as game plans outlining the required execution. He knows, for example, his car parc and monitors the penetration of certain types of mechanical services such as menu-related items.

Obviously, service department and technician productivity and efficiency are monitored daily, as well as individual service advisor performance in areas such as hours per-repair order, effective labour rate and parts-to-labour ratio. He prints a list of open RO’s each day and meets with his service manager to go over each one and finds out why it is still open.
He monitors his gross and true turn of parts, plus his day’s supply level and his level of service to ensure the department operates at the highest level.

Accounts receivable are reviewed monthly to ensure that customer credit limits are appropriate. Overdue accounts are investigated and cut off if necessary until the account is brought back to current.

Non-parts-department employees are used for doing bin counts on a regular basis and they submit a written report to the dealer.

The successful dealer holds manager meetings daily to review the previous day’s performance as well as the dealership’s month-to-date results compared with the business plan.

And more importantly, the successful dealer is passionate about his business. When you realise what it takes to be successful and refuse to relax your standards, you too can achieve the results that successful dealers are achieving.

Important: This is not advice. Clients should not act solely on the basis of the material contained in this bulletin. Items herein are general comments only and do not constitute or convey advice per se.
Also changes in legislation may occur quickly. We therefore recommend that Asides’ formal advice be sought before acting in any of the areas. This bulletin is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without prior approval.