DealerLAB: October earnings triple 2012 figures

Publish Date: 
Jan 13, 2014
By Joe Delmont

It’s harder to do, but if you sell a vehicle for a bit more you can double what goes to your bottom line, says Bill Shenk

The gang at Destination Powersports kept the pedal to the metal in October, racking up strong earnings gains. For the month, the dealership reported earnings of $25,670 on total revenues of $452,478, and a Gross Profit of $119,118. That’s an earnings gain of $16,675 -- or more than 185 percent vs. October 2012.

For the first 10 months of 2013, earnings were more than double those for the same period last in 2012, and total revenues were up about 109 percent. Year-to-date (YTD) earnings through October were $260,087, up from $124,688 YTD 2012, and revenues were $5,006,219, compared to $4,689,712.

Gross Profit for the month and year as a percentage of revenue is slightly ahead of the average for Top Gun dealers*.

 

PARTS DOWN, BUT SERVICE, ACCESSORIES UP

Parts revenue for the month was off from October 2012, slipping to $22,061 from $40,662. However, accessories and service posted revenue gains: accessories jumped to $36,163 from $30,844, and service revenues hit $30,640, climbing 45 percent from $21,116 in October 2012.

 “We had a couple [of] big Sea-Doo warranty engine repairs last year that created an extra high parts-to-labor ratio but no gross profit,” explains owner Bill Shenk. “Parts-to-service last year was $17,650 greater but margin on all that work was only $2,832. This year, we only did half the dollars in parts on [repair orders]. But without Sea-Doo, the margin doubled to $4,896 on less than half the work. Much better business.”

Customer traffic, write-ups and closings were up in October compared to the same month in 2012. The dealership wrote up 56 of 106 opportunities and closed on 44 of those. During the same month in 2012, the dealership closed 32 of 45 write-ups from 79 customers. 

Shenk says the strong improvement in traffic and conversions can be tied to better management.  “I have always said the toughest position in the dealership to fill is the sales manager position. Most dealers end up with either a SALES manager or a sales MANAGER. We have a strong SALES manager -- as in strong on sales ability but weak on people management in the coaching, training, mentoring areas.

“I’m confident that the number of sales relationship-building opportunities was double what our team recorded,” Shenk continues. “That means the number of opportunities, closes [and] deliveries is correct as to what our manager was able to collect, but not correct as in to what really happened on our showroom floor.”