Gross Profit - DealersEdge

Fixed Operations: 

Reading Your Financial 

Statement Like a Pro 

Brooke Samples 

President 

Profit Blueprints, LLC 

1.877.316.7418 

1 

Over the course of her career, today’s presenter, 

Brooke Samples, has analyzed over 14,000 Dealership 

financial statements. Over the past 15 years, Brooke 

Samples has coached and motivated hundreds of 

Dealership Managers in all departments across North 

America. Using her monthly financial analysis, Profit 

Blueprints, she compares Dealers’ financial statements 

to key Benchmarks. She then uses her previous 

dealership experience, plus feedback from 15 years of 

Coaching & Consulting her Clients to help Managers 

utilize over 150 Action Plans. 

Your Presenter, 

Brooke Samples, President 

Profit Blueprints,LLC 

brooke@blueprintforprofits.com 

1.866.316.7418 

By implementing customized processes her clients 

reach their full Net Profit potential. She’s proven that 

with good people, consistent training, the right plans, 

and a little good-natured "nudging", her Dealership 

clients can become very successful. 

Last year she became working with VW University, 

training their people to understand the opportunities 

hiddend in the financial statement. Before becoming a 

Consultant, she worked in Dealerships in a variety of 

upper management positions. She expanded her 

automotive knowledge while working for Lloyd Schiller’s 

Dealer Service Corporation and later as part of NCM 

Associates. 

2

LOTS OF NUMBERS! 

In this Webinar You’ll Gain the 

Following Benefits: 

Learn How to Use your 

Financial Statement to 

Make 2013 Your Best Year Yet! 


1.877.316.7418 

5 


In this Webinar You’ll Gain the 

Following Benefits: 

• Identify the key profitability accounts for 

Fixed Operations on the Financial Statement 

• Calculate your Profit Potential using 

benchmarks and simple formulas 

• Understand how some accounts may impact 

positively or negatively other accounts 


1.877.316.7418 

6


• Recognize when Too Good is Too Good 

• Determine if you are staffed for maximum 

profits and for future growth 

• Calculate the days of supply for key assets 

and actions to take when they are out of line 

• Prioritize your action plans to set record Net 

Profits 

• Create your own monthly tracking 

spreadsheet 


1.877.316.7418 

7 

FINANCIAL STATEMENT 

YOUR REPORT CARD 

Balance Sheet 

Expenses 

Sales & Gross Profits 


1.877.316.7418 

8

KEY PERFORMANCE 

INDICATORS 

• Puts the data into 

perspective 

• Targets 

(Internal/External) 

• Trends 


1.877.316.7418 

9 


INDICATORS 

Most KPIs are % 

Allows Us to Compare 

Stores of Different 

Sizes 


1.877.316.7418 

10


INDICATORS 

Some KPIs are 

Franchise Specific, 

Such as Hours per 

Repair Order or GP 

per Employee 


1.877.316.7418 

11 

AVAILABLE TARGETS 

• NADA 

• 20 Groups 

• Manufacturer Reports 

• CPAs 

• Independent Consultants 

• Dealer Group 

12


SALES AND GROSS PROFITS 

Sales 

_ 

Cost of 

Sales 

= 

Gross 

Profit 


1.877.316.7418 

13 



When you can Increase Gross 

Profit your Pay Plans will 

determine how much will 

show up in the Net Profit 


1.877.316.7418 

14



Remember how much you 

spent to increase the Gross 

Profit! 


1.877.316.7418 

15 

ONE TRANSACTION 

1 Hour of Labor Sold $100 

1 Hour of Tech Time $25 

Parts Sale Price $60 

Cost of Parts $35 

Shop Supplies $ 8 

Sales Tax $10 

Total Invoice $178 


1.877.316.7418 

16

LABOR GROSS PROFIT 

Labor Sale $100 

Tech Pay (COS) $25 

Gross Profit $75 


Labor Sale $100 

= 75% 


1.877.316.7418 

17 

PARTS GROSS PROFIT 

Parts Sale $60 

Parts Cost $35 



Parts Sale $60 

= 41.7% 


1.877.316.7418 

18


FINANCIAL STATEMENT SALES/GP 

Account Name 

Sales 

Gross Profit 

% GP 

CP Labor 

$100 

$75 

75.0% 

CP Parts 

$60 

$25 

41.7% 


1.877.316.7418 

19 

SERVICE TARGETS 

GROSS PROFIT % RETAINED 

RANGE 

Account Description Domestic Import Highline 

Customer Pay Labor Gross Profit 73%+ 76%+ 78%+ 

Warranty Parts Gross Profit 74%+ 78%+ 80%+ 

Internal Parts Gross Profit 74%+ 78%+ 78%+ 

NVI/PDS/Road Ready 86%+ 84%+ 84%+ 

Sublet (Combined with Warranty) 10%+ 10%+ 10%+ 


1.877.316.7418 

20

PROFIT POTENTIAL 

GROSS PROFIT TARGETS 

Gross Profit / Sale = % 

$70,000 / $100,000 = 70% (.7) 

If last month we were at 65%, then we are doing better. 

If the target is 73%, then we are worse then top 

performing Service Departments and we have 

opportunities! 


1.877.316.7418 

21 


$70,000 / $100,000 = 70% 

If the Target is 73%, how much profit are we missing? 

(Target % – Dealer %) x Sales = Profit Potential 

73% - 70% = 3% x $100,000 = $3,000 

$3,000 x 12 months = $36,000 a year 


1.877.316.7418 

22

PARTS TARGETS 

GROSS PROFIT % RETAINED 

RANGE 

Account Description Domestic Import Highline 

Customer Pay Parts Gross Profit * 38%+ 40%+ 42%+ 

Body Shop Parts Gross Profit 30%+ 30%+ 32%+ 

Warranty Parts Gross Profit * * 

Internal Parts Gross Profit 25% - 30% + 25% - 33% + 25% - 34%+ 

Counter Retail Parts Gross Profit 35% + 35% + 35% + 

Wholesale (More than $250K Sales)*** 17% 18% 20% 

Wholesale (Less than $250K Sales)*** 23%+ 22%+ 23%+ 

* Without Tires 

** If Warranty Markup is 40% 28.60% 28.60% 28.60% 

** If Warranty Markup is 60% 37.50% 37.50% 37.50% 

*** Including W/S Comp & Incentives 


1.877.316.7418 

23 


GROSS PROFIT TARGETS 

Gross Profit / Sale = % 

$35,000 / $100,000 = 35% 


If the target is 38%, then we are worse then top 

performing Parts Departments and have opportunities! 


1.877.316.7418 

24


$35,000 / $100,000 = 35% 

If the Target is 38%, how much profit are we missing? 

(Target % – Dealer %) x Sales = Profit Potential 

38% - 35% = 3% x $100,000 = $3,000 

$3,000 x 12 months = $36,000 a year 


1.877.316.7418 

25 




OR 



$75 75% 

$55 68% 


1.877.316.7418 

26

SERVICE DEPARTMENT 

68% 75% 

Increase our Selling Price or 

Reduce our Cost of Sales 


1.877.316.7418 

27 


Increase our Selling Price 

Competitive Items 

Shouldn’t go too much above 

market 


1.877.316.7418 

Price shopped in the last 6 

months? 

28

ooke@blueprintforprofits.com 

1.877.316.7418 



Precision (A Skilled) Labor Rate 

20% - 30% above your Posted Rate 

Driveability/Diagnostic Repair - Electrical Wiring &Circuitry 

Internal Automatic Transmission/Transaxle Repairs 

Internal Engine Diagnostics/Repairs 

Ring and Pinion Replacements 

Supplemental Restraint System 

29 



Monitor Unauthorized 

Discounts 

Exception Reports 

Reynolds & Reynolds: 3619 Report 

ADP: REX Report 


1.877.316.7418 

30


Decrease our Cost of Sales 

Make sure the Techs are paid the 

correct amount and time per job 

The Right Tech gets the Right Job 


1.877.316.7418 

31 


Decrease our Cost of Sales 

• Use lower-paid Technicians 

• Reduce time allowances paid to 

the Technicians 

• Have a separate maintenance pay 

rate for your Technicians 

• Pay a flat amount for a job 

regardless of which Technician 

works on it. 


1.877.316.7418 

32

CLOCK HOURLY TECHNICIAN 

$14.00/Clock Hour for 

40 Clock Hours 

Completes only 20 Billable Hours 

(Flat Rate) 

Paid 40 Clock 

Hours 

$560.00 

20 FRHs 

X 

$14.00 

= $560.00 

$28.00 

Cost of Sale per Billable 

Flat Rate Hour 


1.877.316.7418 

33 

CLOCK HOURLY TECHNICIAN 

Paid 40 Clock 

Hours 

X 

$14.00 = 

$560.00 

Completes only 20 Billable Hours 

(Flat Rate) 

20 FRHs x $14 = $280 C.O.S. 

20 Clock Hours x $14 = $280 

ADJUSTED C.O.S. ! Or Unapplied Time. 

Per WEEK! 


1.877.316.7418 

34

When Too Good is 

TOO Good 

Sales = $100,000 

Gross Profit = $85,000 

GP Retention = 85% 


1.877.316.7418 

35 

When Labor GP is 

Too Good to be True 

Check Other Accounts 

Unapplied Time - Reconciliation 

Advertising – Coupons and Discounts 

Personnel – Hourly Folks 

Outside Services - ??? 


1.877.316.7418 

36

Customer Retention 

COMPARE 

Customer Pay Labor Sales 

(Including Quick Service & Factory 

Paid Maintenance) 

To 

Warranty Labor Sales 


1.877.316.7418 

37 

Customer Retention 

COMPARE 

$50,000 in CP Labor Sales 

$18,000 in Warranty Labor Sales 

$50,000/$18,000 = 2.77 

TARGET = > 3 


1.877.316.7418 

38

PARTS DEPARTMENT 

INCREASE OUR SELLING PRICE 

Monitor Unauthorized Discounts 


Reynolds & Reynolds: 2542 Report 

ADP: ROV Report 


1.877.316.7418 

39 


INCREASE OUR SELLING PRICE 

Priced Competitively 

Other Parts Accounts – too HIGH 

WHO Can Change Parts Sales Prices? 

Check for Changes in Labor Pay Type 

Tires – Track Separately 

Warranty Charge Backs 


1.877.316.7418 

40


DECREASE OUR COST OF PARTS 

If the Inventory is TOO Skinny or not 

Accurate: 

TOO Many Outside Purchases from 

Like-Franchised Dealers 

Factory Programs for Bulk Purchases 


1.877.316.7418 

41 

When Parts GP is 

Too Good to be True 

Check Other Accounts 

Other Parts Accounts – too Low 

Advertising – Coupons and Discounts 

Wrong Cost Amount – Check 



1.877.316.7418 

42

HOURS BILLED PER RO 

Labor Rate $100 

# RO SALES GROSS 

PROFIT 

G.P.% 

Mech. Labor 190 $36,480 $25,530 70% 

($36,480 / 190) / $100 = 1.92 Billed Hours Per RO 

Different from DMS Report 


1.877.316.7418 

43 

HOURS BILLED PER RO 

Avg. 2011 Avg. 2013 

CP Labor Sales $31,000 $36,480 

# CP Repair Orders 190 190 

Labor Sales per CP 

Repair Order 

$163.16 $192.00 

Posted Labor Rate $85 $100 

Hours Per Repair Order 1.92 1.92 


1.877.316.7418 

44

Calculate Gross Profit 

Per Hour Billed 

Total Labor Sales 

Posted Labor Rate* 

= 

$100,000 

= 1,000 Billed Hours 46 

$100 


1.877.316.7418 

*Use Repair Rate or Warranty Rate 

Effective Labor Rate 

45 

Calculate Gross Profit 


Total Labor Gross Profit 

Billed Hours 

= 

$65,000 

1,000 

= 

$65 Labor Gross 

Profit Per Billed 

Hour 


1.877.316.7418



During 1 Week Each 

Technician Wastes an Hour 

-Holding for Authorization 

-Looking for a Vehicle/Tools 

-Waiting For Parts 

$65 

Labor 



Per 

Billed 

Hour 


1.877.316.7418 

47 



10 Techs x $65 = $650 

X 52 Weeks = $33,800 

Parts Gross Profit = $35 

X 52 Weeks = $18,200 

Annual Potential Gross Profit = 


1.877.316.7418 

$52,000 

48




_ 

EXPENSES 

= 


1.877.316.7418 

NET PROFIT 

SELLING GROSS PROFIT 

DEPARTMENTAL PROFIT 

49 

DIFFERENT FINANCIAL 

STATEMENTS 

Net Profit 

After ALL DEPARTMENT EXPENSES 

GM and IMPORTS 

Selling Gross Profit (Ford) 

(Department) Net Profit (Chrysler) 

After Most CONTROLLABLE EXPENSES 


1.877.316.7418 

50


EXPENSES 

Listed from most 

controllable to the least 

controllable 


1.877.316.7418 

51 


EXPENSES 

• Personnel Expenses 

• Semi-Fixed – You have 

some control 

• Fixed 


1.877.316.7418 

52


EXPENSES 

When you can reduce an 

Expense, most of the 

reduction will show up in the 

Net Profit 


1.877.316.7418 

53 


EXPENSE TARGETS 

Shown as a % of the 

Department’s Gross Profit 

Expense / Gross Profit x 100% 

= Expense % 


1.877.316.7418 

54




Parts Sale Price $60 

Cost of Parts $35 

Shop Supplies $ 8 

Sales Tax $10 

Total Invoice $178 


1.877.316.7418 

55 



FINANCIAL STATEMENT EXPENSE 

Account Name 

% GP 

Service Gross Profit $75 

Supply Expense ($8) -10.7% 


1.877.316.7418 

56

SERVICE TARGETS 

KEY EXPENSES 

RANGE 

Account Description Domestic/Imports Ford/Chrysler 

Personnel/Employment 50% - 

30% - 

Advertising Expense * 

3% - 

3% - 

Policy Expense 

2% - 

2% - 

Supply Expense (net) 

1% - 

1% - 

Domestic/Imports Highline 

Company Vehicle ** 

2% - 

6% - 

* If used only for true advertising - not discounts 


1.877.316.7418 

57 

PARTS TARGETS 

Account Description 

Personnel/Employment 

Advertising Expense * 

Policy Expense 

Supply Expense (net) 

Company Vehicle ** 

KEY EXPENSES 

1% - 

Domestic/Imports 

2% - 

* If used only for true advertising - not discounts 

** If not a big Wholesaler 


1.877.316.7418 

40% - 

2% - 

1% - 

RANGE 

Domestic/Imports 

Ford/Chrysler 

25% - 

2% - 

1% - 

1% - 

Highline 

6% - 

58

ooke@blueprintforprofits.com 

1.877.316.7418 


EXPENSE TARGETS 

Policy Expense / Gross Profit = % 

($3,300 / $100,000) x100% = 3.3% 


If the target is 2%, then our policy expense is worse 

then top performing departments and we should 

examine it closely. 

59 


$3,300 / $100,000 = 3.3% 

If the Target is 2%, how much is our excess policy 

costing us? 

(Target % – Dealer %) x Gross Profit = 

How much we should Reduce our Policy Expense 

2% - 3.3% = -1.3% x $100,000 = -$1,300 

$1,300 x 12 months = $15,600 a year 


1.877.316.7418 

60

EXPENSES 

MONTH 

YTD 

NET SALES $ 100,000 % of Sales $ 550,000 % of Sales 

GROSS PROFIT $ 65,000 65.0% $ 350,000 63.6% 

EXPENSES 

% of Gross 


% of Gross Profit 

Personnel/Employment $ 29,250 45.0% $ 165,400 47.3% 

Advertising $ 2,300 3.5% $ 25,000 7.1% 

Supplies $ 1,500 2.3% $ (450) -0.1% 


1.877.316.7418 

61 

Personnel Expense Too High? 

1. Get Payroll Detail of Department. 

a. Are these people in the correct 

Department? b. Is their PAY being 

calculated correctly? 

2. How Paid, on Sales, Gross Profit, 

Production? Weekly or… 

3. Performance Measurement and 

Information…Standards 

4. Recruiting, Screening, Hiring 

5. Can you offset with increased 

Gross Profit? 

62

SEMI-FIXED 

Create Sub-Accounts 

Example: Policy Expense 

•Comebacks 

•Lot Damage 

•Missed Estimates 

•Service Contract Deductibles not Collected 


1.877.316.7418 

63 

EXPENSE CONTROLS FOR 

SHOP SUPPLIES 

Shop Supplies 

1. Get rid of those Service 

Department Shop Supplies R.O.’s 

2. Weekly Individual Technician 

Counter Tickets 

3. Control and Measurement 

4. Customers’ Portion 


1.877.316.7418 

64


Page 1 – Balance Sheet 

Assets 

_ 

Liabilities 

Bills 


1.877.316.7418 

= 

NET WORTH 

65 


(S) Labor Sale Acct. ($100) 

(S) Cost of Labor (COS) $25 

(B) Work in Process ($25) 

(S) Parts Sale Acct. ($60) 

(S) Cost of Part (COS) $35 

(B) Parts Inventory ($35) 

(E) Supply Expense ($ 8) 

(B) Sales Tax Payable ($10) 

(B) Cash paid by Customer _______ $178 

($233) $233 


1.877.316.7418 

66


BALANCE SHEET 

Account Name ASSETS LIABILITIES 

Cash $178 

Parts Inventory ($35) 

Work in Process ($25) 

Sales Tax Payable $10 

Net Worth (Profit) $108 

Totals $118 $118 


1.877.316.7418 

67 


(E) Service Advisor Comm. $8 

(E) Counter Person Comm. $3 

(E) Management Comm. $2 

(E) Payroll Taxes $1 

(E) Credit Card Fees $3 

(B) Accounts Payable ($10) (Supply) 

(B) Payroll/Taxes Payable ($14) 

(B) Credit Card Fees Payable ($3) 


1.877.316.7418 

68


BALANCE SHEET 


Cash $178 

Accounts Payable $10 

Comm./Taxes Payable $13 

Credit Card Fees Payable $3 

Parts Inventory ($35) 

Work in Process ($25) 



Totals $118 $118 


1.877.316.7418 

69 


BALANCE SHEET 


Cash $82 

Accounts Payable $0 

Comm./Taxes Payable $0 

Credit Card Fees Payable $0 

Parts Inventory $0 

Work in Process $0 



Totals $82 $82 


1.877.316.7418 

70

DAYS SUPPLY 

Calculate the Cost of Sales 

Sale – Gross Profit = Cost of Sales 

GL Inventory Balance / Cost of Sales 

x 30 = Days Supply 


1.877.316.7418 

71 

DAYS SUPPLY TARGETS 

SCHEDULED ACCOUNTS 

SERVICE/PARTS/BS RECEIVABLES = 15 

WARRANTY RECEIVABLES = 7 – 15 

WORK IN PROCESS = 3 – 10 (with BS) 

SUBLET IN PROCESS = 5 


1.877.316.7418 

15 = HALF A MONTH 

72

DAYS SUPPLY TARGETS 

PARTS INVENTORY = 40 – 55 

(Do not include discounts/adjustments) 

Tires/Oil Separate Accounts 


1.877.316.7418 

73 

Where to Start 

GRADE THE SERVICE DEPARTMENT 

C B A 

Net Profit Profit % 

GM and Import < 10% > 15% > 20% 

Department / Selling Gross 

Ford or Chrysler < 35% > 40% > 50% 


1.877.316.7418 

74

Where to Start 

GRADE THE PARTS DEPARTMENT 

C B A 

Net Profit Profit % 

GM and Import < 20% > 30% > 40% 

Department / Selling Gross 

Ford or Chrysler < 35% > 40% > 50% 


1.877.316.7418 

75 

Grade Your Department 

C = Examine Your Expenses 

B = Yield Per Customer 

A = Growth 


1.877.316.7418 

76

Your Opportunities 

EXPENSES 

Compare Your Net Profit Retention to Target 

Look at Key Expenses to Targets 

Calculate Excess Expense 

(Target % - Dealer %) x Gross Profit 

What can be reduced? 


1.877.316.7418 

77 

GROSS PROFIT 

Your Opportunities 

Compare Your Gross Profit Retention to 

Targets 

Calculate Profit Potential of Accounts 

Below Target 

(Target % - Dealer %) x Sale 

Where are the Opportunities? 


1.877.316.7418 

78

END OF MONTH 

BEFORE FINANCIAL IS PRINTED 

• Review Key Expenses Accounts – 

Advertising, Policy, Loaner Vehicle, Supplies 

• Reconcile GL Work-in-Process & Sublet 

Schedule. (Open Repair Order Report) 

• Review Receivables Schedules 

• Reconcile GL Parts Inventories against DMS 

Parts Inventory 


1.877.316.7418 

79 

PLANNING FOR NEXT 

MONTH 

$65 Labor Gross Profit Per Billed Hour 

Plus Parts Gross Profit for CP = 

$35 Per Billed Hour 

$100 Gross Profit per Hour Billed 


1.877.316.7418 

80

PLANNING FOR NEXT 

MONTH 

Target Net Profit = $ 20,000/mo. 

Average Expenses = $ 80,000/mo. 

Need Gross Profit = $100,000/mo. 

Need $100,000 in Gross Profit to 

Reach $20,000 Net Profit 


1.877.316.7418 

81 

Gross Profit Per Billed 

Flat Rate Hour = $65.00 

$100,000 Gross Profit /Mo. 

$ 65.00 Gross Profit/ FRH = 1,538 FRHs 

1,538 FRHs 

160 FRH’s/Tech 

1,538 FRHs 

200 FRH’s/Tech 

= 9.6 Techs @ 100% 

Or 

= 7.7 Techs @ 125% 


1.877.316.7418 

82

EMPLOYEE PRODUCTIVITY 

Number of Repair Orders per Service Advisors 

Customer Pay and Warranty RO’s per day: 10 - 14 

– Time to handle Customers = Write-up (?) Follow-up (?) 

Delivery (?) 30 minutes? 

– At the most 15 Customers can get good service. 

– Steps may be "dropped" including - Greeting, Listening, 

Questioning, Selling, Follow-up, Follow-through, Active 

Delivery, etc. 


1.877.316.7418 

83 


Technicians to Service Advisors 

3 – 4 Techs to 1 Service Advisor 

– Each Tech flags 10 hours a day. 

– 3 Techs x 10 hrs a day = 40 hours. 

– Number of hours per Repair Order = 2 

– 30 hours /2 hours per Repair Order = 15 Repair 

Orders a day. 


1.877.316.7418 

84


RED LOBSTER 

Reversed its July 2012 policy of 

wait staff ratio from 

4 Customers to 1 Waiter/ress to 


1.877.316.7418 

3 Customers to 1 

Waiter/Waitress 

85 

Tracking Your Opportunities 

A B C D E F 

1 2013 

2 YTD Avg. January February FORMULA 

3 

4 # Customer Pay Repair Orders 215 200 230 

5 Customer Labor Sales $41,873 $39,128 $44,618 

6 Gross Profit Target $29,579 $27,400 $31,758 

7 Percent Retained 73% 30.06% 70.03% 71.18% +E7/E6 

8 Missed Opportunities $1,163 $813 +($B7-E7)*E5 

9 Labor Sales Per Repair Order $195 $196 $194 +E5/E4 

Enter # from Financial Statement in White Cells, 

Targets in Orange Cells, Formulas in Yellow and Green Cells 


1.877.316.7418 

86

Tracking Your Opportunities 

A B C D E F 

1 2013 

2 YTD Avg. January February FORMULA 

3 

4 TOTAL PARTS SALES $114,300 $124,500 $104,100 

5 Total Gross Profit $34,915 $37,350 $32,479 

6 EXPENSES Target 

7 Other Personnel Expense $12,882 $13,452 $12,312 

8 Personnel as a % of GP 35% 36.0% 37.9% +E7/E5 

9 Excess Expense (Shown in Red) ($380) ($12,312) +($B8-E8)*E5 

10 Supplies $858 $213 $1,502 

11 Supplies as a % of GP 1% 0.6% 4.6% +E10/E5 

12 Excess Expense (Shown in Red) $161 ($1,502) +($B12-E12)*E5 

Enter # from Financial Statement in White Cells, 

Targets in Orange Cells, Formulas in Yellow and Green Cells 


1.877.316.7418 

87 

The Future 

If you focus on one 

underperforming account 

each month, at the end of the 

year you will have improved 

8 accounts! 


1.877.316.7418 

88

The Future 

“If I Don’t Change the 

Processes Affecting this 

Account 

WHAT WILL IT LOOK LIKE 

6 MONTHS FROM NOW?” 


1.877.316.7418 

89 

CONCLUSION! 

Brooke Samples, President 

Profit Blueprints,LLC 


1.866.316.7418 

www.blueprintforprofits.com 

Profit Blueprints, LLC 

Dealership-Proven Plans for 

Net Profit Improvement 

90

Plan Like a Pro 

If Service Expenses High: 

Thought Starters 

 

 

 

 

 

 

Confirm expenses are posted to the correct department. 

Service Direct Personnel Expenses (without allocations or benefits) should be 30% or 

less. 

Are employee bonuses calculated correctly? 

Are pay plans based on productivity? Service Advisor pay plans should not be paid on 

Labor Sales—as Labor Rates increase Service Advisors get automatic pay raises. 

Service Advisors should be paid the same time period as Techs—not a draw, but the 

commission earned. 

Use sub-accounts to track expenses like advertising or policy. Ex: Advertising discounts, 

If Labor Gross Profit Retention Percentages are Low: 

 

 

 

 

 

 

Run daily exception report to confirm staff is not overriding the established prices. 

Paying Techs too much time for maintenance work that is sold at a lower rate. 

Solution to higher paid Techs doing low skilled work —pay a flat amount for certain jobs 

regardless of the skill level. 

Establish a precision labor rate 20% - 30% above door rate for work requiring highly 

skilled Techs. 

Dispatch the right work to the right Techs 

Any hourly or salaried Techs? How much are they really costing the Dealer per flag 

hour? 

If Sales per Repair Order are Low: 

 

 

 

Analyze the repair orders for vehicle age and mileage. If below 5 years or 75,000 miles 

the Dealership should focus on Customer retention. Higher mileage vehicles = higher dollar 

per repair order 

Do the Service Advisors use a maintenance menu to sell from—including benefits? 

Review the Multipoint Inspection process for gaps in performance either by the Service 

Advisor or the Techs. 

Is there a second effort (TO) process in place when the Customer says, “No?” 

Do the Service Advisors have enough time to follow-up with Customers (Average 10 –14 

CP and Warranty R.O.s a day allows enough time, more than that the Service Advisors 

become order takers.) 

If Technician Productivity is Low: 

 

 

 

 

 

 

Are the right Techs getting the right jobs? 

Do the Service Advisors do a GOOD job at completing the repair order? 

Do we have a GOOD parts inventory to sell from? 

Are productivity goals set and monitored for Techs and Service Advisors (daily, weekly, 

monthly)? 

Do we confirm the Customers’ reservations? 

Are special tools, the necessary equipment, TSB and manuals easily accessible by the 

Blueprintforprofits.com © 2013 Profit Blueprints, LLC 1.877.316.7418


If Body Shop Expenses High: 


 

 

 

 

 

 


Body Shop Direct Personnel Expenses (without allocations or benefits) should be 30% or 

less. 


Are pay plans based on productivity? Estimators pay plans should not be paid on Sales, 

as labor rates and parts prices increase the Estimators get automatic pay raises. 

Estimators should be paid the same time as Productive Staff—not a draw, but the commission 

earned. 

Use sub-accounts to track expenses like advertising or policy. Ex: Policy, shortages, 

comebacks, shortages 

If Gross Profit Retention Percentages are Low: 

 

 

 

 

 

 

Not filing for supplements when warranted. 

Paying Productive staff more time than the estimate allotted. 

Department paying for helpers instead of the Body Men or Painters. 

Any hourly or salaried Productive staff? How much are they really costing per flag hour? 

Using the sublet and materials accounts for paying the Productive Staff more without having 

to file a supplement. 

Materials—painter over mixing, reconcile the mixing machine reports to the estimates 

If Technician Productivity is Low: 

 

 

 

 

 

 

Are we doing a good job with DRPs? 

Do the Estimators do a GOOD job at writing the estimate? 

Is there a quality control process that each step is signed off on, which includes date and 

time? 

Are productivity goals set and monitored for Productive Staff and Estimators (daily, 

weekly, monthly)? 

Do we confirm Customer reservations, that the necessary parts are here, and they are the 

correct parts? 

Are special tools and the necessary equipment up-to-date and easily accessible by the 

Productive Staff ? 



If Parts Expenses High: 



Parts Direct Personnel Expenses (without allocations or benefits) should be 25% -30%. 


Are pay plans based on productivity? Pay plans should not be paid on Parts Sales—as 

parts prices increase the counter people get automatic pay raises. 

Use sub-accounts to track expenses like advertising or freight. Ex: Freight for returns, 

shipping in, shipping out. 

If Gross Profit Retention Percentages are Low: 

 

 

 

 

Run daily exception report to confirm staff is not overriding the established prices. 

Poor parts inventory requiring excessive emergency purchases. 

Employees purchases are excessive (Counter Retail). 

Discounts being misapplied. 

If Parts Inventory is too High: 

 

 

 

 

Are we doing perpetual inventories? 

Customer Pay special order parts should be pre-paid. For Warranty special order parts 

the Customer should have an appointment set before the part(s) are ordered. 

Review DMS management reports for aging and stocking status. (2213 for R&R, MGR for 

ADP) 65% + for Normal or Active Parts. 

Dealership performs monthly reconciliations of Parts Inventory —General Ledger compared 

to Parts Management report.

Gross Profit - DealersEdge

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?