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.
Motus Holdings Limited reported an improved operational performance for the six months ended 31 December 2025, with its South African operations remaining the primary contributor to Group performance.
Mazda South Africa has added a new model to its CX-3 range, one of the better selling nameplates of the brand.
Volvo Trucks South Africa recently announced its top achieving dealers for 2025, recognising excellence across 23 categories spanning over its full value offering, including parts, finance, service, uptime solutions, safety, and technical services.
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You can't buy happiness but you can buy cars and that's kind of the same thing.
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Volvo Trucks South Africa recently announced its top achieving dealers for 2025, recognising excellence across 23 categories spanning over its full value offering, including parts, finance, service, uptime solutions, safety, and technical services.
The Human Auto Group in the Free State and Northern Cape once again showed its strength, winning the Group Dealer of the Year for the 6th consecutive time at the recently held Ford Recognition Awards.
Navigating the various ways to pay for a vehicle can be as complex as choosing the car itself. However, understanding all the options available is critical to ensuring long-term financial wellness when finally buying that dream car.
