grow strategically
DESCRIPTION
Grow Strategically. Percent of Total Store Gross Margin Contributed by Each Department 58 Dealerships, $479 million in sales, January 2010 to August 2011 Ordered by Units + F&I Departments Contribution Margin Rate. Grow Strategically by Hal Ethington ADP Lightspeed. - PowerPoint PPT PresentationTRANSCRIPT
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GrowStrategically
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0%
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% Svc
% Parts
% Units & F&I
% o
f G
M f
rom
Par
ts,
Sal
es a
nd
Ser
vice
Low Focus on Major Unit Sales--->
4% of dealers greater than 80% Sales
12% of dealers less than 10% Sales
Percent of Total Store Gross Margin Contributed by Each Department58 Dealerships, $479 million in sales, January 2010 to August 2011
Ordered by Units + F&I Departments Contribution Margin Rate
High focus on Major Unit Sales
Grow Strategically
by
Hal EthingtonADP Lightspeed
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% Units & F&I
% Svc
% Parts
% o
f G
M f
rom
Par
ts,
Sal
es a
nd
Ser
vice
Low Focus on Parts Sales--->
1 dealer at 70% of Total Margin from Parts
5 Dealers less than 14% of Total Margin from Parts
<---High Focus on Parts Sales
Percent of Total Store Gross Margin Contributed by Each Department58 Dealerships, $479 million in sales, January 2010 to July 2011
Ordered by Parts Department Contribution Margin Rate
Grow Strategically
by
Hal EthingtonADP Lightspeed
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% Units & F&I
% Parts
% Svc
% o
f G
M f
rom
Par
ts,
Sal
es a
nd
Ser
vice
Low Focus on Service Sales--->
1 dealer at 65% of Total Margin from Service
3 Dealers less than 10% of Total Margin from Service
<---High Focus on Service Sales
Percent of Total Store Gross Margin Contributed by Each Department58 Dealerships, $479 million in sales, January 2010 to July 2011
Ordered by Service Department Contribution Margin Rate
Grow Strategically
by
Hal EthingtonADP Lightspeed
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Grow Strategically
by
Hal EthingtonADP Lightspeed
Average $ Parts Counter Ticket109 Dealerships, 19 months ended July 2011
$0
$50
$100
$150
$200
$250
$300
$350
$400
$450
6% of dealers over $200 per Ticket
6 % of dealers average $58 per Ticket
48% of dealers average $81 per ticket
40% of dealers average $144 per Ticket
<------ Dealerships ranked high to low ------>
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Grow Strategically
by
Hal EthingtonADP Lightspeed
0%
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70%
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90%
10% of Dealers below 25% Gross Margin
Average Gross Margin % Parts Counter Tickets
109 Dealerships, 19 months ended July 2011
10% of Dealers above 60% Gross Margin
27% of Dealers between 40 – 60 % Gross Margin
53% of Dealers between25 – 40 % Gross Margin
<------ Dealerships ranked high to low ------>
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Recast Ticket Count Avg Sale Avg GM $ Sales $ Margin $ Margin
Per Store
Low at Low 327,000 $ 58 29% $ 18,898,000 $ 5,403,000 $ 50,000
Low at High 327,000 $ 144 54% $ 47,251,000 $ 25,318,000 $ 232,000
Difference $ 87 25% $ 28,353,000 $ 19,915,000 $ 183,000
Recast Low Group at High Group Rates for Average Parts Ticket and Gross Margin %
(What If…?)
Or, $9,600 per month per store.
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Session Title
Low stores, selling at the average rate of High stores, would (with no new customers) each produce
$9,600 More per Store Per
Month.
in Gross Margin for the 19 months.
Hmm…
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0
5
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20
25
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43.9
9.6
4.2 2.5 1.4
Av
era
ge
Ho
urs
pe
r R
O
7 Coastal Dealers, Ocean-going Vessels Avg 23.8 hrs/ro
15 inland dealers, top per-formers. Avg 6.1 hrs/RO
40 Mid-range inland dealers. Avg 3.3 hrs/RO 21 dealers at
2.2 hrs/RO
Average Hours per Repair Order84 Dealers, 132,000 Repair Orders, $82 million in Sales
January 2010 - August 2011
Grow Strategically
by
Hal EthingtonADP Lightspeed
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RO Count Hrs/RO Lab Sales Lab $ GM $ GM/Store
Low at Low 37,327 2.2 $12,300,000 $6,745,000 $80,300
Low at High 37,327 6.1 $34,000,000 $18,700,000 $223,000
Difference 3.9 $21,739,000 $12,000,000 $142,000
Recast Low Group at High Group Rates for Average Hours sold per Repair Order
(What If…?)
Or, $7,500 per month per store.
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Grow Strategically
by
Hal Ethington ADP Lightspeed
-
0.5
1.0
1.5
2.0
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3.0
0.6
2.5
1.2
0.7
0.4
Ra
tio
of
Pa
rts
to
La
bo
r
Oce
an G
oing
Dea
lers
20 top Dlrs avg ratio 1.7 : 1
36 Mid Dlrsavg ratio 1:1
20 Low Dlrsavg
ratio .59:1
Marine Dealers Parts to Labor Ratio84 Dealers, 132,000 RO’s, $82 million in Sales
January 2010 to August 2011
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RatioPts to Lab
Lab Sales Parts SalesParts
MarginPts MarginPer Dealer
Low at Low .59 to 1 $10,500,000 $6,200,000 $2,500,000 $ 29,400
Low at High 1.7 to 1 $10,500,000 $17,900,000 $9,700,000 $ 115,000
Difference $11,700,000 $7,200,000 $ 85,700
Recast Low Group at High Group Rates for Parts to Labor Ratio on Repair Orders
(What if…?)
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Session Title
Low Stores are currently selling 59¢ in parts for each $1 in labor. High stores are
selling $1.70 in parts for each Labor dollar.
If Low stores can improve to the High Store rate, they will sell $11.7 million more
in parts, and earn $7.2 million more in margin.
That’s $85,700 in 19 months per store, or $4,500
in margin per month.
Hmm.
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0.434
0.167
0.108
Ne
w U
nit
Gro
ss M
arg
in P
ct
Mid Group31 dlrs, avg 13% GM
Low Group28 dlrs, avg 8% GM
<--- Dealership GM % from High to Low --->
Top Group20 Dlrs, Avg 23% GM
New Major Unit Gross Margin %94 Dealers, $365 million in Sales
January 2010 to August 2011
Grow Strategically
by
Hal EthingtonADP Lightspeed
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Unit Count
Tot Sales Tot CGS Tot Margin GM %
Low at Low 7,653 $98,200,000 $90,600,000 $7,600,000 7.8%
Low at High 7,653 $118,300,000 $90,600,000 $27,700,000 23.4%
Difference $20,100,000 $20,100,000
Recast Low Group at High Group Rates for New Major Unit Gross Margin
(What if…?)
Per Dealership Gross Margin up $11,200 per Month
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Low stores, selling at the average rate of High stores, would (with no new customers) each produce
$11,200 More per
Store
in Gross Margin each month.
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Session Title
Do the math…
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In Parts, from improvement in Average Ticket and Gross Margin %, you get
$9,600 more Margin
Per month
Grow Strategically
by
Hal EthingtonADP Lightspeed
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Grow Strategically
by
Hal EthingtonADP Lightspeed
In Service, from improvement in Hours per RO and Parts to Labor ratio, you get
$4,500 more Margin
Per month
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Grow Strategically
by
Hal EthingtonADP Lightspeed
In Major Units, from improvement in Gross Margin %, you get
$11,200 more Margin
Per month
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Grow Strategically
by
Hal EthingtonADP Lightspeed
Do The Math:
Parts $ 9,600Service 4,500Unit Sales 11,200
Total Store: $ 25,300
In additional Gross Margin per Month.
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Session Title
…and take it home.Do the math,