key performance indicators: the keys to professional...

1

Key Performance Indicators:The "Keys" to Professional Dealership

Management & GrowthWith

Jeff Sacks, Jeff Sacks AutoModerated by

Mike Bowers, Executive Editor at DealersEdgeThursday, August 29, 2013

1 – 2:30pm ET

Jeff Sacks is considered one of the premier experts in dealership operations. His accounting and business finance degrees, coupled with his practical "in the seat" operational experience, have allowed him to offer his unique insights to automotive clients worldwide for over 30 years.Jeff immigrated to the United States in 1977 and has immersed himself in car dealership operations since then. After having worked for a variety of dealerships he founded Jeff Sacks & Associates, a consulting company dealing with the needs of his automotive clients. Jeff merged his practice and became a principal with Dixon Hughes PLLC (formerly Dixon Odom), a leading automotive CPA firm, in 2001.In 2005, NCM Associates, Inc. and Jeff Sacks finally merged after collaborating for many years on various joint initiatives, including the highly respected General Manager's Bootcampsm. In 2009, Jeff returned to his roots as operating President with Jeff Sacks & Associates in order to provide customized programs to his clients.Jeff has spoken before many organizations that have used him as a resource to improve dealership functionality as it relates to process improvements strategies, asset and expense controls, computer utilization, management information systems and other related topics.He has published many automotive specific articles and was the contributing editor to the Jeff Sacks Newsletter. Currently, Jeff shares his insights on and knowledge of the automotive industry in his bi-monthly Dealer Magazine article.Jeff Sacks Auto | Tel: (858) 273-8085 | Toll free: (800) 867-2160 | Fax: (858) 273-0876 http://jeffsacksauto.com

2

Key Performance Indicators - The ‘Keys’ to Professional Dealership Management

& Growth Jeff Sacks, CEOJeff Sacks Auto

La Jolla, CA858.273.8085

[email protected]

DealersEdge Webinar

The ‘Keys’ to Professional Dealership Management & Growth• Drive productivity through a targeted ‘layered’

management approach• Key Performance Indicators (KPIs):

– What should they be?– Do they remain constant or do they evolve?– How can they be improved upon?

• Create your own customized report card

©Under copyright law, duplication is prohibited without written consent by Jeff Sacks & Associates

3

Auto Sector Performance SAAR

Source: Stephens, Inc.©Under copyright law, duplication is prohibited without written consent by Jeff Sacks & Associates

Key Focus Areas that DrivePerformance

• Personnel Productivity

• Asset Management


4

Drive Personnel Productivity• Personnel Costs:

– Exceed 65% of total dealership costs– Total personnel costs are probably going to be increasing rather

than decreasing

• Dealership Posture: Drive Gross per Employee Higher:– Continually seek out and embrace great training– Rationalize/streamline staff alignment– Embrace appropriate technology – Insist on accountability


Staff Alignment

• Productive to Supportive – Total Dealership:– Definition of productive employees– Goal is to be above 60% productive to supportive:

• Easier to accomplish the larger the footprint of the dealership and the # of employees

• Publics are shooting for well in excess of 60% across the board

• How does your dealership compare?


5

• ‘If you are not producing gross, you had better be supporting those who do!’:– Management’s leadership task is to enable the gross

producers to increase their effectiveness• Look to process improvement and/or technology to

help enhance this ratio:– Examples:

• Digitalizing the Service Drive Process• Consider providing assistants for high unit volume producers

• Dealership culture: Commitment to the Process

Some Pointers– Personnel Productivity –


Personnel Productivity– A Constant Focus –• The two positions that generate the most

gross profit:– Finance & Insurance Producers– Service Advisors

• Ensure that these positions are occupied by gifted, ethical, accountable and talented employees

• Must maintain high performance thresholds


6

Personnel Productivity StandardsAn Inverted Pyramid Approach

• Salespeople selling in excess of 12 vehicles per month at acceptable front end gross

• Finance managers handling in excess of 75 sales contracts per month with acceptable back end gross

• Technicians producing close to 200 hours per month in service (beware of an unbalanced labor mix)

• Ratio of service advisors to techs between 3.5 to 4.75 techs per service advisor

• Technicians comprise more than 50% of the total service department employee count

• Sales per parts employee of close to $50K per month


Gross per Employee GuidelinesGross Produced per Dealership per

Employee per Average Month• Domestic Dealers:

– >$9,000• Regular Imports:

– >$11,000• Luxury Imports:

– >$13,000©Under copyright law, duplication is prohibited without written consent by Jeff Sacks & Associates

7

Gross per Employee SubsetsAverage per Month per Position

SALES:• Gross produced per salesperson• Gross produced per sales manager• Gross produced per F & I producerSERVICE:• Gross per technician• Gross per service advisorPARTS:• Gross per parts employee


Commentary: Statistical Data– Gross Profit Analysis: NEW –

Gross Profit per UnitNew Vehicles ($)

Penske Auto Group 2,807Lithia Motors 2,278AutoNation 2,007Asbury Automotive 1,987Group 1 Automotive 1,935Sonic Automotive 1,864Source: Stephens, Inc. – 2Q13 Auto Ranking


8

Source: Stephens, Inc. – 2Q13 Auto Ranking

Gross Profit per UnitUsed Vehicles ($)

Lithia Motors 2,768Penske Auto Group 1,928Asbury Automotive 1,762Group 1 Automotive 1,697AutoNation 1,598Sonic Automotive 1,418

Commentary: Statistical Data– Gross Profit Analysis: USED –


Commentary: Statistical Data– Finance & Insurance –

Finance & Insurance per Retail Vehicle ($)

AutoNation 1,375Asbury Automotive 1,305Group 1 Automotive 1,188Sonic Automotive 1,116Lithia Motors 1,100Penske Auto Group 1,024Source: Stephens, Inc. – 2Q13 Auto Ranking


9

54.8%

29.6%

11.7%3.9%

20.0%14.4%

42.5%

23.2%

0%

10%

20%

30%

40%

50%

60%

70%

New Used Parts & Service F&I

January – June, 2013 - Business Line Profit Contribution vs. Revenue Contribution

Sales % TotalGP % Total

*Source: Asbury Automotive filings


Gross-to-Sales:Public Companies – 2Q 2013

• Key Elements to achieving high Gross-to-Sales %:___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________


10

The Personnel Productivity Picture

• Don’t lose sight of the critical elements:– Your other channels that you need to work– ‘Out of the box’ thinking and ‘in the box’

execution• Have systems and processes to ‘enable’ the

production of gross


THEN

MULTIPLE DEALERSHIPS

NOW

MULTIPLE DEALERSHIP WEBSITES

RESEARCH

ENGAGE

CONVERSION/ PURCHASE

VISITED 4.5 DEALERSHIPS ON AVERAGE VISIT 1.4 DEALERSHIPS ON AVERAGE


The Purchase Funnel – Then & Now


11

Internet Lead Response TargetsOf every 100 leads you receive . . . Actual Target

With how many do you establish two-way communication? 60% =60

Of those, how many do you make appointments with? 60% =36

Of those appointments made, how many show up? 60% =22

Of those, how many purchase a vehicle? 60% =13

Source: 2011 Hyundai eCommerce for Dealership Leaders Seminar

©Under copyright law, duplication is prohibited without written consent by Jeff Sacks & Associates©Under copyright law, duplication is prohibited without written consent by Jeff Sacks & Associates

‘Linking’ Dealership Activities to Produce Incremental Gross• Sales to Service Handoffs

• Service Drive Activities

• Customer Retention Activities

• Customer Defection Activities


12

Asset Management

• New Vehicle Days Supply

• Used Vehicle Days Supply

• Inventory of Hours To Sell


Commentary: Statistical Data – New Vehicles: Days Supply –

InventoryDays Supply New Vehicles

Sonic Automotive 53Penske Auto Group 63Group 1 Automotive 67AutoNation 67Asbury Automotive 68Lithia Motors 76Source: Stephens, Inc. – 2Q13 Auto Ranking


13

Commentary: Statistical Data – Used Vehicles: Days Supply –

InventoryDays Supply Used Vehicles

Sonic Automotive 29AutoNation 30Group 1 Automotive 33Asbury Automotive 36Penske Auto Group 42Lithia Motors 51Source: Stephens, Inc. – 2Q13 Auto Ranking


Bias to Execute• Identify low hanging fruit and be cognizant of

your short, medium and long term strategic objectives

• Create a game plan that includes …..– Manager buy in– Employee buy in– Metrics to manage and monitor– Consistent tracking– Holding people accountable


14

‘Within the Month’ Management• Break down your monthly objectives into weekly

chunks:– Be cognizant of ……

• Weekends• The last 1/3 of the month sales pattern• Long weekends and public holidays

• Break your week into two segments:– Monday thru Thursday– Friday and the weekend

• Review segments Friday and Monday for signs of performance lags and create a game plan to lift performance


Dealership Scorecard

©Under copyright law, duplication is prohibited without written consent by Jeff Sacks & Associates©Under copyright law, duplication is prohibited without written consent by Jeff Sacks & Associates

15


Other Scorecard PossibilitiesYOU CAN TRACK ….

• Gross-to-sales percentage • CSI• Service retention• First service appointment kept• Gross per unit:

– New– Used– Back end gross

• CPO as a % of used vehicles retailed• Fresh internet leads: % engaged in two-way communication


16

Create Your Dealership Scorecard

Advantages:• Customized and collaborative• Targets specific areas or ‘financial levers’• Can work for a group with different franchises

having different objectives and benchmarks • Forces review and competition • Could be used for pay plan design


Jeff Sacks GM Workshop

• 2-1/2 days: October 15-17 – Newark, NJ

• Target audience: GMs & prospective GMs

• DealersEdge referrals receive $200 discount per person – Use coupon code de200 when registering online at www.jeffsacksauto.com


17

Any [email protected]

800.867.2160www.jeffsacksauto.com

Thank you!


key performance indicators: the keys to professional...

Documents