Why You Need Tighter Expense Controls to Hit 20% Net-to-Gross in Your Dealership’s Service Center

To maintain a strong profit margin, it is important to have tight controls on expenses in fixed operations. By reducing the amount of money that is spent on unnecessary expenses, you can ensure that your dealership’s net-to-gross ratio is consistently in the 20% range. Let’s take a look at how growing gross profits through dealership training will improve your net-to-gross ratio for your dealership’s Service Center.

Do you think 20% net to gross is achievable in your service department?

Yes, achieving a 20% net-to-gross ratio is possible, and many dealerships do. Not only do they manage expenses well, they also grow profits through training, coaching and monitoring the service sales team.  20% net to gross is a good ratio for any service department because it ensures that the dealership is making a healthy profit while providing high-quality service to its customers.

What are two ways to improve your net-to-gross ratio?

Two ways to improve your net-to-gross ratio are to increase gross profits and decrease expenses. Some common expenses that typically need tighter controls are things like policy adjustments and unapplied time. Another contributor to low net- to- gross ratios are unauthorized discounts.  

Next, you need to take a look at your service procedures and make sure that they are efficient and effective. Anything that doesn’t contribute to customer satisfaction should be eliminated or reduced.

Lastly, you can find areas where gross profits can be increased not just by cutting costs, but by increasing service sales as well. This is the end result of a well-trained service sales team focused on providing the highest quality service to each customer on every service visit.

What are common expenses that need tighter controls?

Like most managers, you might be looking at vendors, shop supplies and uniforms as additional possibilities to reduce expenses. And you would be right. You can find these by conducting an analysis of your expenses and comparing them to other vendors and resources to get the best possible deal.  Most dealerships can benefit from a Profit Improvement Plan analysis to help the indentifiy where there are opportunities to increase profits or reduce costs on each and every service visit.

How can dealership training from DealerPRO help you identify areas of opportunity for either increasing gross or decreasing expenses?

DealerPRO Training can help you identify areas where you can increase gross profits and reduce expenses with a Profit Improvement Plan and our auto dealership training will help you optimize your service operation and make the most of your available resources. Our workshops and in-dealer training options are designed to help you improve your service sales, customer retention while increasing profits.

Get in touch today, and start achieving 20% net-to-gross profit in your Service Department!