Auto Dealer Monthly, May 2013

ACCOUNTING VOLUME VS GROSS Ready to go big time The magazines resident accounting expert lays out the key considerations for those who wish to become volume unit dealers 10 AUTO DEALER MONTHLY MAY 2013 By David Keller We review quite a few fi nancial statements on a regular basis Th e format and presentation of fi nancial data varies from franchise to franchise Each franchise seems to think they have the best format to inform the dealer how the business is performing Well they are very diff erent but the basics remain the same Th ere is a balance sheet and an income statement Th e 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 profi t area others list the gross and all expenses separately It doesnt really make much diff erence 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 of all gross and expenses Some even turn to the sales and gross profi t 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 1000 gross profi t on the front end or you could sell 65 units at an average of 1550 gross profi t Either way can get you to 100000 in gross for the month So which way is better Well there are quite a few factors to take into consideration GO FOR BROKE Th e fi 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 Youll 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 youve identifi ed to sell 50 percent more vehicles than normal each month Can you fi nd enough qualifi ed individuals to staff 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 fe f reg tatements r pres p fifi var chise franch chise eems be t forma 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 3149254317 DKeller@ AutoDealerMonthly com ISTOCKPHOTO COM NEGAPRION