Most dealers are bottom line performance individuals and start there when reviewing a financial statement. Parts Departments have some interesting considerations that should be understood when reviewing their financial performance. Many dealerships don’t utilize G&A accounting that separates General Management, Dealer, and office personnel into a separate account. I prefer this separation when analyzing the financial performance of fixed operations because this inflates expenses such as personnel above the real result of the department. Advertising is another expense that may be divided amongst fixed operations departments even though it was used to promote sales. Gross profit transfer that takes 50% of customer pay from the parts Department into service is another factor that should be considered when evaluating parts department performance. I have seen departments that look great on paper however, they have accounts receivable so past due and uncollectible they will eventually be written off. I’ve seen parts departments lose hundreds of thousands in aged inventory that will never be sold. Gross profit margins have become more critical as most states developed laws that allow dealers to collect retail margins on warranty parts repairs. Many dealerships demand gross profit margins be reduced substantially on the internals to reduce the cost to the used car department and reduce gross in parts. Some dealers and General Managers instruct their parts managers not to exceed a certain value in inventory investment. This could restrict technician fill rate and reduce efficiency in the service department costing hundreds of thousands over a year. True inventory turnover is another indicator of parts performance. If the number is too high on turnover service suffers and if low the dealership will never produce a good return on inventory investment. Today’s parts managers are in a constant juggling act attempting to balance manufacturers loyalty and compliance with their programs and being profitable for their dealership. The parts department is criticized often for excessive pricing or performance, however, not recognized for the amazing details required on a daily basis to maximize performance for everybody including the customer. If you are blessed with a parts department manager that balances these key performance indicators well and understands how to put this complex puzzle together thank them often. Never forget the charges and factors that affect financial results before you complain about bottom line performance.



Rob Gehring, President

Fixed Performance Inc.


To receive more stories like this one, subscribe to my newsletter by clicking here! Make your dealership bulletproof by clicking here!

Views: 25


You need to be a member of to add comments!



DealerELITE created this Ning Network.

Latest Activity

Profile Icon via Twitter
RT @SteveStauning: Checking out "Real Social Selling" on @dealerELITE:
Twitter37 minutes ago · Reply · Retweet
Jeff Cowan posted a blog post

Write Service Podcast: Episode 45- The Holes in Your Process

This week, Jeff continues the discussion on having a true process on your service drive. Some of…See More
1 hour ago
Todd Smith posted a blog post
3 hours ago
Black Book posted a blog post


Vehicle Values With Historical Performance Can Greatly Increase Accuracy in Claims…See More
3 hours ago
Holly Markel posted a video

3 Keys to Developing Employees on the Phone (Part 2)

CallRevu Vice President of Customer Experience Holly Markel shares the first of three keys to developing your staff to handle the phones properly in part 2 o...
3 hours ago
Profile Icon via Twitter
Checking out "Real Social Selling" on @dealerELITE:
Twitter3 hours ago · Reply · Retweet
Steve Stauning's video was featured

Real Social Selling

If your salespeople aren't driving their own Up Bus, they're not doing everything they can to sell 20, 30 or even 40 units a month. Send them a link to this 49-minute lesson where they'll learn all they need to start generating real referrals from…
3 hours ago
John Sternal posted a blog post

August Auto Lease Prices Increase By Up To 54% On Several Vehicles

Several Brands Increase Lease Prices by up to 54% on Vehicles of All Sizes as New Model-Year Units…See More
4 hours ago
Profile Icon via Twitter
Dealer Elite Daily News is out! #automotivesales #carsales
Twitter4 hours ago · Reply · Retweet
Steve Stauning posted a video

How To Sell Cars on Facebook: Real Social Selling

Originally recorded live as part of the Undeniable Advantage Live Video Webcast Series. Social Selling is real and it's happening today! Right now, dynamic, ...
4 hours ago
Thomas F. Jung posted a blog post
5 hours ago
Simon Hopes posted a blog post

Best Run about Boats For Family

If you are searching for a boat that is great for the whole family but it is also quite satisfying…See More
5 hours ago
Profile Icon via Twitter
RT @Automotive_News: AutoNation's CEO says the industry is 'freaking out' about Trump's tariffs
Twitter15 hours ago · Reply · Retweet
Profile Icon via Twitter
RT @Automotive_News: Automakers offer financial assistance to victims of Hurricane Florence
Twitter15 hours ago · Reply · Retweet
Profile Icon via Twitter
RT @dealerrefresh: Are OEM's forcing you to put codes in your website? -
Twitter15 hours ago · Reply · Retweet
Profile Icon via Twitter
RT @SteveStauning: The Dreaded “Just Looking” – How to Overcome Objections on the Lot #automotivesales #carsales #…
Twitter15 hours ago · Reply · Retweet

de sponsor

Get Newsletter

dE Sponsor

© 2018   Created by DealerELITE.   Powered by

Badges  |  Report an Issue  |  Terms of Service