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Efficient retailing: Manufacturer composites

In the seventh of our series of insights into running an efficient dealership, Thurlby Motors’ managing director Chris Roberts looks at manufacturer composites

A budget is often viewed as sufficient to measure a manager’s performance. I would recommend a few additional targets be used to try to gain small trading improvements during the year.

Many good businesses set managers key performance indicators which sit alongside the budget and form equally important objectives.

But sometimes financial objectives can be more difficult, particularly due to outside factors, such as economic conditions, which can change during the year.

This is where the manufacturer composite can be a very useful tool.
I know there is scepticism about the accuracy of composite information across the dealer networks.

Overall, however, the composite does give a rational and reasonable guide to most areas of the business due to the sheer number of dealer inputs averaging out the numbers.

Most good businesses carry out monthly accounts reviews with their management teams. These are normally based around performance against budget and prior year.

While this is a good starting point these meetings can have added benefit if the composite is brought into the equation.

Most manufacturers issue not only a full composite for the network, but also a summary sheet which highlights their own main objectives.

You should look for areas which are key to your own circumstances.

By taking the summary and comparing your own performance, you can quickly see if there are any great variances.

When you have identified the headline issues, take a look at the underlying numbers, which may include the following:

  • Sales: GP as a percentage of sales; F&I income per retail unit; return on used vehicle stock
  • Aftersales: overall workshop efficiency; parts sales per hour of labour
  • General: departmental expense as a percentage of GP (by department); administration and indirect expense; overhead absorption

Admittedly, sometimes there are unavoidable differences, such as multi- site costs skewing the numbers, treatment of rental costs etc, but these can normally be easily identified

Benchmarks for most of the key indicators are communicated regularly in the trade press and industry views should not be ignored, but the numbers achieved do vary with seasonality and economic factors. The composite will give you the network trend. Your objective should be to outperform the rest.

Finally, if you are still unsure about using your manufacturer composite, many others exist to cross-check the accuracy of national industry performance, as well as your own franchise. These are readily available both online and through several industry specialists and publications.

Try using your composite to make small ongoing improvements. It will add another dimension to your control. 

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