At some stage in the next twelve months, you are going to be faced with drawing up budgets for the next financial year. Simply taking last year’s performance and adding or subtracting from those numbers for your budget is really easy but mostly ineffective.
I detail below some critical inputs that should be considered when budgeting for your new vehicle Gross Profit (GP):
Once you have the volumes and model mix for your area, you need to calculate/estimate the selling price of your models as well as the GP% you expect per model.
What are you going to charge for PDI? This needs to be considered as part of your cost of sale.
With the above info, you will be able to calculate the dealership’s new vehicle volumes, average selling price and GP for new vehicles (first gross).
I like to break down GP into first gross, second gross and F&I gross:
Second gross consists of all additional products that are not finance or insurance related. This includes accessory sales, “3 in 1” sales, window tint, documentation fees, admin fees and any other products that you sell that are not finance and insurance related.
You need to consider model mix when determining your second GP as the potential for accessories on an LDV is way higher than it is for an entry-level car.
F&I GP is you finance commission, warranty sales and GP, maintenance/service plan sales and GP.
Lastly, you may want to include a provision for after-sales, advertising or any other type of provision that you deem necessary.
In order to pinpoint performance, I would recommend a separate line item for each of the components that make up first GP, second GP and F&I GP. It is then much easier to measure areas of performance and non-performance.
Supergroup Dealerships announced the upcoming launch of four new MG dealerships as part of its growing portfolio. The new locations that are set to open soon, include three on the East Rand, one in Rustenburg and one in Paarl, Western Cape.
The highly anticipated F&I Industry Awards 2024, which were held recently, showcased the pinnacle of excellence and innovation in the automotive financial and insurance sector.
In a groundbreaking move towards offering a comprehensive, one-stop integrated service to its customers, Absa has introduced an integrated Finance & Insurance solution for dealer partners across South Africa. This innovative initiative marks a significant step towards enhancing customer experience and streamlining financial services.
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Have you ever noticed that anybody driving slower than you is an idiot, and anyone going faster than you is a maniac?
George Carlin
Supergroup Dealerships announced the upcoming launch of four new MG dealerships as part of its growing portfolio. The new locations that are set to open soon, include three on the East Rand, one in Rustenburg and one in Paarl, Western Cape.
The Nissan Magnite seems to have captured the imagination of traditional as well as new buyers of the brand. With an updated Magnite recently launched and arriving at dealerships currently, there is good interest from prospective buyers of small Crossovers with a strong SUV character.
As 2024 draws to a close, I think it is pertinent to look back at some of the articles that I have written this year. I always try to concentrate on the basics and very often they are the areas of a dealership that need continuous and regular focus.
