By David Keller
AC C OUNTING
VOLUME VS. GROSS
Ready to go big time? The magazine's resident accounting expert lays out the key considerations for
those who wish to become volume-unit dealers.
©ISTOCKPHOTO.COM/NEGAPRION
We review quite a f f nancial
e fe
few
tatements
e
r
statements on a reg
regular basis.
Te for mat d p
r t
Te format and pres
presentation of
nancia l data var
a a
f nancial data varies from franchis
franch
r h
chise to franchise. Each franchis eems
chise seems to think they have
t he
t forma
o
the best format to inform the
dealer how the business is performing.
Well, they are very diferent, but the basics remain the
same. Tere is a balance sheet
and an income statement. Te
income statement is broken up
into many departments: new,
used, F&I;, service, parts, body
shop, rental, quick lube, etc.
Some statements show some of
the variable expenses under the
sales and gross proft area; others list the gross and all expenses
separately.
It doesn't really make much
diference how these statements
are formatted, as most dealers
look at the bottom line on the
front page and then turn to the
second page to see the summary
David Keller is a partner with CliftonLarsonAllen, a
Top 10 nationwide accounting firm with extensive
experience in serving new- and used-vehicle
retailers, heavy truck and utility trailer outlets, and
BHPH dealerships. Contact him at 314.925.4317.
DKeller@AutoDealerMonthly.com
10
AUTO DE ALE R MONTHLY • M AY 2013
of all gross and expenses. Some
even turn to the sales and gross
proft pages to see if the counts
seem right and if the grosses appear to be reasonable based on
what type of month they think
they had.
So, are you a volume-unit
dealer with low to average grosses, or are you a large grosser
moving a lot less units? You
could sell 100 units at an average of $1,000 gross proft on
the front end, or you could sell
65 units at an average of $1,550
gross proft. Either way can get
you to $100,000 in gross for the
month. So, which way is better?
Well, there are quite a few factors
to take into consideration.
GO FOR BROKE
Te f rst factor is the amount of
inventory you are carrying and
how fast you can replace it. If
you want to sell 100 units per
month, you had better get busy
and visit the factory order bank
frequently. You'll also have to
spend some time at the auctions
— online and in person — to
purchase enough units to keep
up the sales pace you have set.
Another factor to consider is
the number of employees you've
identifed to sell 50 percent
more vehicles than normal each
month. Can you fnd enough
qualifed individuals to staf all
the needed positions, such as
F&I;, sales, technicians, detail,
etc.? You can probably do this
over time as you build up to the
increased unit volume.
You also will have to increase
your variable expenses consid-