PowerSports Business

PowerSports Business - June 15, 2015

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FINANCIAL In many dealerships, I find that the finance manager's entire job performance is graded on his or her per-vehicle-sold (PUS) average. This number is important, but it does not tell the entire story. In order to see the entire story, you must look deeper. You might be wondering why you should look deeper. Ask top MotoGP rider Valentino Rossi. If you are not turning in the lap times (PUS), you would need to know where you are losing time in order to get back on pace. The same is so for a finance manager. PER-UNIT-SOLD AVERAGE Calculation — Total dollars generated by the finance office divided by the total number of units sold. Importance — This gives you a superfi- cial indication of your performance in a sin- gle snapshot, just like Rossi and his lap time. It's a good place to start, but it shouldn't be the end of your analysis. FINANCE PENETRATION Calculation — Number of finance deals divided by the total number of units sold. Importance — This statistic could indi- cate several strengths or weaknesses. It can be affected by how well your sales process encourages your customers to finance and how good a job you (finance manager) are doing with cash conversions, if you have enough of the right banks to service your customers and several other smaller issues. PRODUCT PENETRATION Calculation — Number of (product name) sold divided by the total number of units sold. Importance — The most successful finance managers have a good product spread. Most of them sell four to seven products and have a range of penetration numbers, depending on what they are most encouraged to sell. Usually, the highest pen- etration numbers come from service contract and priority maintenance sales. Typically I see those numbers somewhere between 30 percent and 50 percent. Gap is usually between 35 percent and 70 percent. (Gap is the only statistic we measure as a percentage of finance deals alone.) The other products such as tire and wheel programs, theft deter- rents or roadside assistance usually range in the 15 percent to 25 percent range. There should be nothing you sell below the 5 per- cent mark. If you just ask every customer, close to 10 percent will say yes. If there is anything you "sell" that is below the 5 per- cent mark, learn more about it or find some- thing you believe in to sell in its place. CHARGEBACK DOLLARS PER-UNIT-SOLD Calculation — Dollars returned to custom- ers on canceled products divided by the number of units sold. Importance — This is an indicator of how well the product is being sold. There are plenty of customers who can be bullied or tricked into buying products. If you see a con- sistently high number of chargebacks, it may indicate a need for you to focus on building more value in the products you are selling. These are not all of the statistics that you could track. These are just the most important. If you do not already use a finance log that tracks all of these statistics, please download my basic finance log at tinyurl.com/finance-log. You can also download a goal-setting spreadsheet at tinyurl.com/goal-setting-sheet. PSB Steve Dodds II is a moderator, trainer and consultant for Gart Sutton and Associates with a focus on sales and finance departments. Con- tact him at info@gartsutton.com. 10 • June 15, 2015 • Powersports Business www.PowersportsBusiness.com 4 primary statistics every finance manager must track STOCK MARKET WATCH DEALER FINANCIAL SNAPSHOT JANUARY TO APRIL 2015 Same Store Sales by CDK Global Recreation dealer- ships were up 10.4 percent overall from January to April 2015. The Northeast, West and South regions all experienced increases in all four categories. The West had the highest increase overall, up 16.6 per- cent, while the Northwest had the smallest increase at 6 percent. The Northwest and Midwest were the only regions to see a decrease in parts, down 3.9 percent and 2 percent, respectively. PARTS SALES In parts, 674 dealers were up, while 744 were down. SERVICE SALES 822 dealers were up in service, and 551 down. MAJOR UNIT SALES Nationwide, 754 dealers were up, while 532 were down. NORTHWEST -3.9% Parts Department 6.2% Service Department 8.9% Major Units 6.0% Overall MIDWEST -2.0% Parts Department 8.9% Service Department 10.6% Major Units 8.0% Overall NORTHEAST 0.9% Parts Department 8.5% Service Department 10.7% Major Units 8.8% Overall SOUTH 0.2% Parts Department 10.1% Service Department 11.6% Major Units 9.9% Overall WEST 2.6% Parts Department 9.7% Service Department 20.3% Major Units 16.6% Overall UNITED STATES 0.0% Parts Department 9.1% Service Department 12.9% Major Units 10.4% Overall Stock Price Percent Company Ticker 5/22/15 Change Spy Inc. XSPY $0.90 20.0% CDK Global CDK $54.32 12.0% MarineMax, Inc. HZO $24.17 10.8% Assurant, Inc. AIZ $66.30 7.1% ArvinMeritor ARM $14.01 6.0% Honda Motor Corp. ADR HMC $34.12 -0.3% Speedway Motorsports, Inc. TRK $22.25 -0.9% Arctic Cat, Inc. ACAT $34.15 -3.7% Bridgestone Corp. ADR BRDCY $20.00 -4.0% Universal Technical Institute UTI $8.65 -8.0% POWERSPORTS BUSINESS WINNERS AND LOSERS MARKET WATCH Change 5/22/15 from 5/1 % Change Powersports Business Index 320.037 11.07 3.58% Dow Jones Index 158.579 1.81 1.15% S&P 500 Index 144.704 1.21 0.84% Source: Wells Fargo Securities LLC 50 100 150 200 250 300 350 400 10/10/14 11/7/14 12/5/14 1/2/15 1/23/15 2/20/15 3/13/15 4/10/15 5/1/15 5/22/15 PSB INDEX VALUE DOW JONES INDEXED S&P 500 INDEXED STOCK MARKET ACTIVITY FOR MORE ON THE SAME STORE SALES DATA For more information on this report and other industry data, contact: cdkrecreation.com/dataservices *The Powersports Business Index has been adjusted to reflect the addition of CDK Global (CDK) on 12/5/14. F&I SOLUTIONS In many dealerships, I find that the finance manager's STEVE DODDS

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