While new and used inventory issues and the impressive profit margins on vehicle sales have been garnering the headlines in the auto industry, dealers are aware that being strong in fixed operations will carry them through the ups and downs of vehicle sales.
Service Department
- Over 77% of dealers reported an increase in service sales dollars year over year, but only 30% have exceeded their 2019 levels.
- 11.31% – The average percentage increase in service sales. However, 2021 is still running behind 2019 by 5%.
- 80% of dealerssaw overall gross profit dollars increase yet, like overall service sales dollars, only 30% surpassed 2019.
- Gross margins for both years remain in the 66% range and that is comparable with 2019.
Parts Department
- 86% – Percentage of dealers who reported growth in parts sales dollars. Yet only 50% have surpassed their 2019 sales.
- 16.71% – The average percentage rise in parts sales. When compared to 2019, sales were flat.
- As with service, gross margins kept consistent year over year, hovering in the 33-34% range.
- Anecdotally, we are hearing that supply chain issues has made procuring parts more difficult. Typically, many parts managers run their departments lean since they could obtain necessary parts within a day or so. That may need to be reassessed in the near term until such issues are resolved.
Body Shop Department
- Nearly 78% of dealers with body shops saw business rebound in 2021, although only 41% bettered their 2019 results.
- 23% – The average percentage increase in body shop sales. When 2021 is measured against 2019 sales there was a 3.9% increase.
- Gross margins remained steady, averaging between 45-46%.
With prior year results heavily impacted by the effects of the pandemic, it is no surprise that most dealers were able to eclipse 2020. As detailed above, many dealers have been unable to return to the levels experienced in 2019. Since fixed operations relies heavily on new vehicles sold in prior years, dealers should anticipate fixed operations to experience limited growth even in a best-case scenario. These departments should be managed with this in mind.
If you have any questions regarding this article, please contact Charles Paolino at CPaolino@DowneyCoCPA.com or at 800-849-6022.
