Your next car deal could come with an AI upgrade you’ll appreciate
Artificial Intelligence (AI) can play a vital role for customers to make the right choice when hunting for a pre-owned vehicle.
- Industry News
- 5 November 2026
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.
Artificial Intelligence (AI) can play a vital role for customers to make the right choice when hunting for a pre-owned vehicle.
The South African motor industry has lost one of its longstanding business figures following the passing of Jebb McIntosh, the group chief executive of Combined Motor Holdings (CMH), on Monday, 2 November 2026.
“South Africa’s automotive industry has been AGOA’s largest user, but for the sector the preference has already been largely overridden by the 25% Section 232 tariffs applied on vehicles and components. Losing AGOA adds a further cost to an industry that has already absorbed a significant shock.”
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