Auto Dealer Monthly Magazine is the daily operations publication serving the retail automotive industry. This automotive publication serves dealer principals, officers and general managers with the latest best practices.
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By Don Reed F I X E D OP S ©ISTOCKPHOTO.COM/LEAF GIVE YOURSELF A RAISE Dealers who meet or exceed industry benchmarks in fxed operations all subscribe to the same formula: The right people plus proper training equals record profts. Take Take a moment to look back on the perk fo forma formance put in by your fxed operations te team l year. As a dealer, general manlast ag o ager or f xed ops director, you might want to start to star with the "Operating proft" line on yo your fnancial statement. Measure your te team's performance against the following industry benchmarks: Your service department's operating proft should equal 20% of the dealership's gross proft, and your parts department's operating proft should equal 30% of gross proft. If you are exceeding those benchmarks, then congratulate your team for a job well done! If not, you obviously have some work to do. Let's begin by asking a simple question: Are your expenses too high or are your gross profts too low? I have asked this question of hundreds of dealers. In most cases, the f xed operations team is doing a good job controlling expenses. But they're missing out on huge opportunities to increase their gross profits. You know you can't save your way into 26 increased proftability, so why are so many dealers falling short of the level of gross profts they deserve? Te answer is simple: personnel! To succeed in f xed ops, you must have the right people in the right positions, they must be properly trained, and they must be rewarded — and held accountable — for their performance. NEW HIRES Take a look at the individual members of your f xed operations team, from technicians and service advisors to service managers, parts managers and warranty administrators. Ten ask yourself this question: "If I knew then what I know now, would I hire this person?" Remember, there are only two reasons why any employee is not a top performer: Tey don't know how to do it or they don't want to. Te former can be solved with training; the latter can be cured with an aggressive recruiting campaign that will AUTO DE ALE R MONTHLY • FE BRUARY 2014 attract those who want to do what you hire them to do. If you answered the above question honestly, my guess is you are now in recruitment mode. I want to give you some ideas for recruiting the right people. Let's start with the service advisor. Tis is a key position for building gross profts because these people speak with more customers on the phone and face to face than just about anybody in your dealership. For that reason alone, they have the best opportunities to improve customer retention and produce upwards of $500,000 in gross proft per year. As such, the service advisor position requires a defnitive plan for recruiting qualifed candidates. Here are some simple rules to follow: • Do not hire an experienced service advisor who has not exceeded 2.0 hours per repair order (HPRO). You don't need to hire someone else's underachiever. • Recruit afermarket advisors and managers. Tey have had proper training and