This article is the final installment in our annual series analyzing the year to date results of our dealer clients, 2017 versus 2016.
Fixed operations (parts, service, and body shop sales) have historically been a strong profit center for dealerships. Their profits absorb a significant portion of a dealership’s overhead, typically between 70-85% of those expenses.
| Service | Parts | Body Shop | |
| Average overall increase in sales | 1% | 1% | 5% |
| Average gross profit percentage | 64% | 33% | 49% |
Our client base experienced a slight increase in fixed operation sales. It is interesting to see a 5% increase in body shop sales. The increase is a result of small independent shops closing as well as full service dealerships exiting the body shop business. The body shop can be a significant profit center.
With vehicle gross margins shrinking, dealers must rely on back end sales to create profitability. The back end of the store generates a significantly higher gross profit percentage and is the key to maintaining profitability over a sustained period of time. Successful dealers will continue to find ways to increase fixed operation sales and enhance dealership profitability.
If you have any questions regarding this article, please contact Charlie Paolino at CPaolino@DowneyCoCPA.com or at 800-849-6022.
