6: Top 5 Opportunities
Total Dealership Gross Profit
For the Year 2017, the Dealership Sales to Gross Profit came in 7.05%. The Western Region of 87 Dealers achieved a 9.37% average gross to sales. If Irvine would have been at the mean of the Region, gross profit for the Dealership would have increased the gross profit by $2,446,372.
Used Vehicle Gross
The Dealership lost an average of $41 for every Used Vehicle Sold in 2017 before Finance Income. This Department is typically a major contributor to the overall profit of the store. Had Irvine performed at Region average of $1520 per vehicle retailed there would have been an increase in Gross Profit of $647,815.
Finance Income
By increasing Product Penetration, the gross profit would be significantly increased. Setting achievable benchmarks in all products through proper presentation would significantly impact Gross Profit as currently 65% of the Finance Income is based on Reserve.
Expense Control
The deficiency of Gross Profit drives the indicator that overall expenses are high. However Gross Profit can fix this metric, but in fact can also hide expense issues. Of note is that from 2016 to 2017 overall gross profit decreased by almost $600,000 while expenses increased just over $200,000. What caused the increased expense? Are pay plans in line with Gross Profit expectations?
Service Potential
Based on the last 5 years of sales and talking into account published industry assumptions, the Dealership is achieving just under 60% of overall Service Potential. The indication is that there are up to $4½ Million in potential Fixed Operation Sales. At a blended (Service & Parts) sales to gross profit of 45 to 55% would increase gross profit of over $2 Million. This is also indicated by a Fixed Coverage of 58.4% per the Mercedes Executive Summary, while the Region performs at 68.3%