![]() If your used vehicle sales are equal to or higher than your new vehicle sales, this can be an indicator of a strong used vehicle department. For a vehicle to be financially soluble, it needs a minimum GROI of 156. If it sold in one month (a 12-turn equivalent), the GROI would be 156. That’s 13 percent gross as a percent of sales. 1 This measurement provides a reflection of how efficiently the current investment inventory is being utilized.įormula: (Vehicle gross profit ÷ Cost to market) x (365 days) = GROĮxample: A $20,300 vehicle sells for 21,700 for a profit of $1,700. The gross return on investment (GROI) evaluates the rate of return as a percentage of the sale multiplied by the turn rate. Or you can use your total costs to see how your entire dealership averages.įormula: Acquisition cost + Reconditioning cost + Transportation cost + Maintaining on the showroom floor cost = Cost to marketĮxample: $8,000 acquisition cost + $1,000 reconditioning cost + $200 transportation cost + $300 maintaining on the lot cost = $9.500 cost to market 4. You can use this formula for an individual vehicle to measure its profitability. You’ll want to make a distinction between used and new vehicles to accommodate any reconditioning costs. This is where it’s important to know how much you’re spending on acquiring, reconditioning, and maintaining vehicles. You want a margin between the costs to acquire, recondition, and sell a vehicle and the actual retail price. 1įormula: Cumulative time spent reconditioning vehicles ÷ Number of reconditioned units = Average time spent reconditioningĮxample: 500 hours spent reconditioning vehicles ÷ 50 reconditioned units = 10 hours spent reconditioning on average 3. Either way, you’ll want to make sure your automotive reconditioning time is well spent. You may get trade-ins or buy used cars from an auto wholesaler. ![]() Some dealerships only do light touch-ups, while others do extensive reconditioning. Whether your automotive dealership is selling used or certified pre-owned vehicles, you’ll need to invest a significant amount of time into reconditioning units. If you can sell your entire inventory fifteen times instead of ten in a year, that’s a 50% increase.įormula: Units sold annually ÷ Number of units in stock = Turnover rateĮxample: 600 units sold annually ÷ 50 units in stock = Turnover rate of 12 2. Improving your turnover rate is a great way to increase your profitability. ![]() Your auto dealership’s inventory turnover rate describes how many times your full inventory turns over in a year. These KPIs for automotive dealerships give you a more holistic view of where you’re winning and where you can improve beyond just the bottom line. We’ve compiled a list of ten metrics for car dealers to track for a profitable used car dealership. initiatives, and then focus on areas of improvement. Track them for automotive dealership benchmarks, set your S.M.A.R.T. initiatives (specific, measurable, attainable, relevant, and time-bound) around them. But don’t just take these numbers and file them away. Whether you’re new to tracking automotive metrics or an experienced analyst, it’s always good to refresh what you’re tracking. But how do you narrow down which KPIs matter most for your dealership? Car dealerships have so many key performance indicators (KPI) options to choose from.
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