The Profit Centers of a Dealership
by: Jeff Sellers
Exactly what are the “Profit Centers” of a typical
dealership? This might differ depending upon the size, complexity, and
make up of the dealership. However, there is an accepted format for
this, and without structure, how can the managing staff properly assign
responsibility and accountability?
When visiting many dealerships, it is apparent that confusion exists
in this area. Some dealership staffs are not exactly sure what their
“true” job classification is and this creates problems, as
well as a potential loss of income.
Here are the generally accepted profit centers of a typical
Sales Profit Center: This incorporates the profits
generated from each RV sale.
F&I Profit Center: This includes all the profits
generated by sales of F&I products. This includes the sale of
service contracts, environmental protection products, sealant products,
GAP insurance, credit life and disability insurance, wheel and tire
coverage, and even the reserve garnered from interest rate mark-ups.
Service Department: The service department should be
a stand-alone profit center that is accountable for the profits
generated from repairs, upgrades, and maintenance work.
Parts Department: The parts department should be a
stand-alone profit center that is accountable for the profits generated
from sales of parts and accessories.
It is important to have each of these departments have their own
manager, or senior staff leader, that is in charge of ensuring that each
employee is properly trained, educated, and aware of the importance that
each respective profit center brings to the dealership.
Naturally, the size of the dealership determines if having one person
in charge of several departments is reasonable. If one person is working
in more than one profit center, make sure they are trained and aware of
the compliance issues with each department. Regardless of the size, the
dealership needs these departments to be individual profit centers.
PROPERLY FUNCTIONING PROFIT CENTERS
Every dealership needs to stress the importance of each of these
departments being a working member of the overall dealership. The
service, parts, and F&I departments must understand that the most
profitable and largest supplier of business to their departments is the
sales department. The sales department must recognize that the other
departments are their best allies in reassuring the customer that they
made a wise decision purchasing their RV from your dealership. A
properly functioning dealership allows each department to understand the
value that each profit center adds to the dealership.
The sales department should encourage the purchasing of products and
services that the other departments offer, and the other departments
should provide strong leads, and increase overall customer satisfaction,
for the sales department.
This is why it is vital to outline the importance of the “Team
Concept” and how each department must work individually as a
profit center, while cooperating with the other departments. Bring in an
outside consultant, trainer, or coach to conduct a dealership meeting
from time to time. The key here is to know that there are individual
profit centers in the dealership and to outline the importance of each
The very existence of many dealerships in today’s economic
climate depends upon the cohesive and collective efforts of each of
these respective profit centers working together for the greater good
and financial survival of the dealership.
Even as business continues to pick up in the coming months, winter is
generally a slower time of year at many dealerships. Now is a perfect
time to start addressing this matter and put into place a program
whereby each department recognizes the various profit centers of the
Jeff Sellers is the director of sales and promotions for the
Professional Dealership Alliance (PDA). Staff members of PDA write
industry articles and, speak at local, state, and national conventions
and seminars on various topics relating to the retail sales industry.
You may reach Jeff at firstname.lastname@example.org.