Increasing the Profit
“How do I increase profits in my service department?” This is a question that we often hear, so today we are going to look at three ways to increase profits in your service department!
When is the last time you looked at your uniform bill with any kind of detail? I’ve looked at many uniform invoices over the years paying particular attention to how many non-uniform expenses were on them. The worst case I’ve found so far exceeded $70,000 annually! This particular dealership was renting floor mats, mop handles, air fresheners, and the list went on extensively.
All of these items can be bought reasonably at any wholesale club or big box retail store, however the uniform provider talks his way into the dealer by trying something out at no charge for a short period of time. The free trial time runs out and they become a large profit center for your uniform provider. I suggest everyone take a good look at their uniform invoices and challenge thinking of renting these items that are not uniforms.
Medicine cabinet vendors are very convenient to the dealerships personnel, however they charge massive pricing for common supplies that could be purchased at any wholesale club or big box retailer. Look at your medicine cabinet vendor and challenge your thinking to compare their pricing at Walmart. You’ll find unnecessary items that are not needed and extremely high pricing on everything. We work too hard to bring gross profits into the dealership to lose them so aggressively by buying throat lozenges and aspirin.
Gain better control of shop supplies by tracking individual technicians on what they are using. The parts Department should have subcategories using technicians name and invoices closing them out on a weekly basis. Copies of these invoices should be provided to service management for review. If the manager has any questions they could compare usage of each technician on products to see who is using more of an item.
The fact is most dealerships don’t track who is using what and can’t answer why shop supplies are so high. If the technicians understand how critical shop supplies are to maintaining a profitable operation in the service Department, this expense with declined dramatically.
We must review our Uniform, Medicine cabinet vendors and Shop Supplies invoices, in my experience they are so often overlooked by management. By comparing these three invoices to the price we pay at any big box retail store, we can greatly increase the profits in your service department!
Rob Gehring, President
Fixed Performance Inc.
Rob is President and Founder of Fixed Performance Inc. which he began over 15 years ago. His passion for customer care and helping others has assisted hundreds of dealerships with their fixed operations performance. His common sense coaching and training lifts people up as individuals and team members. With over 30 years of dealership management experience, he understands and respects the daily challenges of fixed operations. Placing a strong value in people and best practice processes always provide growth. His articles have been published regularly in national publications and weekly newsletters are read by thousands.