Issue link: http://read.dmtmag.com/i/636351
SOLUTIONS It is hard to believe that another year has come and gone. The hustle and bustle of the holidays has come to an end. It is time to prepare year- end financials and to do those dreaded taxes. Once all of that is done, you need to stop, breathe and review the last year. But not only last year, compare 2015 to 2014. Sometimes it is hard to know where to begin when reviewing data. Let's walk through a few questions and actions you should take first for 2015. But before we do, make a rating sheet, so you can rate yourself by using the questions below. Be sure to break out each profit center. Except for the first question, all of the information is based on fact, not feeling. Review the 2015 financials: How do you feel 2015 went? Knowing your business, what do you think about 2015? Did the bottom line end up as expected? That is the first question. Even if it did end up where you wanted it to be, do not stop there. Did you meet the company's goals? You are feeling good about the profit, but were your company goals met? How did each department do? Break it down by department. Company goals were met, but was there a department that did not make its goal? You will not know until you look. Interestingly enough, most dealers stop at reviewing their financials. "I set a goal and made it! Done." No, you're not done. Once you have completed the above items, do a "year-in-review." What major changes did you make that affected the bottom line? Which ones do you need to revisit? Putting new processes and procedures into place does not mean success; it means you are trying to create a flow and a better way for things to happen in the dealership. You want your dealership to be as efficient as possible. Just because a process or procedure was implemented, it does not mean that it does not need improvement or even to be dropped all together. Now that you have rated yourself, let's go back in time to 2014. Compare the data you have for 2015 to that of 2014 and break it down by department. How much better was 2015 than 2014? Hopefully you have seen growth as predicted in the industry. If you have not, now is the time for reassessing what worked and what did not. Once you have all of your data complete, it is a good idea to pull in managers. Go over the results, discuss the change of the year-over-year results and make a plan. If you already have a plan, present the plan and ask for feedback. All the managers have a piece of the plan; give them ownership of the plan. Here at CDK Global Recreation we gather data. Month after month, many of you already benefit from the data. I have gathered some data from 2014 and 2015 of metric dealers who use the Lightspeed DMS. Data in this study is from 1,519 metric dealers in the U.S. and six in Canada. I do not believe there will be many sur- prises, although growth seems to be a little slower. But it is nothing that cannot be fixed. The market is harder; competition is tough, but we still need to be able to make money to stay in business. METRIC SALES Chart A – Let's begin with new major units of the four Japanese brands. As you can see from this table, there's not much of a change from 2014, but still a slight 2 percent decline in average gross margin percentage. About 8-9 percent growth has been the norm over the last few years. Hopefully in 2016 we will see more growth. Where does your dealership come in? Where do you rate? Chart B –In pre-owned major units, I see a concern with an average gross margin per- centage of 17.34, down 4 percent from 2014. This is negative change. Ask yourself what went wrong here? Are units not being valued appropriately when taken in as trades? Are dealerships having to fix up the trade units more than expected? There are so many pos- sibilities; we may never know why. Did you have a negative change in used units? Where do you rate? PARTS Chart C –Parts had a stellar increase in profit, with an average gross margin percentage of 30.24 in 2015, up from 27.96 percent in 2014! There were 4 percent fewer tickets in 2015, with 12.1 million tickets tallied from dealers who use the Lightspeed DMS, but the tickets had higher margins. There were 12.6 million tickets in 2014 with an average gross margin of 27.96 percent. Nice job! Look at your data and rate yourself. Where do you rate? SERVICE Chart D –Hooray for the service department! The service department is picked on through- out the year, and look at them. They are begin- ning to blossom. Is your service department looking up? Where do you rate? 34 • February 15, 2016 • Powersports Business www.PowersportsBusiness.com Data shows parts, service bring metric growth FOLLOW ME PAULA CROSBIE Source: CDK Global Recreation Generated Jan 2016 Data from Metric Dealers, U.S.: 1,519 Data from Metric Dealers, Canada: 6 See Crosbie, Page 39 NEW SALES SERVICE PARTS PRE-OWNED SALES Avg. Gross Margin % 8.71 8.5 -2% New Metric 2014 2015 Change Avg. Revenue 368.45 383.25 -4% Service Cust. Pay—Metric 2014 2015 Change Avg. Revenue 459.02 493.35 7% Service Warranty—Metric 2014 2015 Change Avg. Revenue 237.40 268.35 12% Service Internal—Metric 2014 2015 Change Avg. Gross Margin % 27.96 30.24 8% Ticket Count 12,648,433 12,155,780 -4% Parts Metric 2014 2015 Change Avg. Gross Margin % 18.05 17.34 -4% Used Metric 2014 2015 Change CHART A CHART D CHART C CHART B