Fixed Absorption
Ideally, fixed absorption rate is one measurement in which no auto dealer wants to come up short: If a dealership's fixed operations generate enough net income each month to cover all of its costs — a 100 percent rate — then all the other pieces of the profitability puzzle go right to the bottom line.
Source: Automotive News, June 10, 2019
The News
The concept might seem simple. But getting to that level? Not so much.
According to the latest Average Dealership Profile from the National Automobile Dealers Association, the average fixed absorption rate for U.S. dealers in the first quarter was 57 percent — despite an average fixed operations profit margin of nearly 47 percent.
Source: Automotive News, June 10, 2019
The Bottom Line
Put another way: Despite earning almost $47 in profit on every $100 of sales from service, parts and body shop work, most franchised dealers must rely on their used- and new-vehicle departments to cover large portions of their operational costs before they hit profitability.
Source: Automotive News, June 10, 2019
Consulting
BDS also provides the following valuable partnership tools that you can use to help your declined service percentage:
•Fixed Operations Financial Program that approves at a 80% run rate even in subprime customers.
•Quick link – Our outbound Electronic Marketing Platform is designed specifically to capture declined service customers and return them to the dealership.
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•BDC – Our call center works with the dealerships' declined service customers by pre-qualifying them with the finances needed to purchase service at your dealership.
Fixed Operations Declined Service Program
In-The-Lane service engagement with the advisor introducing the BDS System reduces declined services.
Our system operates in over 350 dealerships currently: we measure and track engagement through multiple key performance indicators. We provide Fixed Ops Forecasting and Business Plans through our Performa Reporting Program.
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You have a dedicated rep who will train personnel.
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We have a dedicated call team to assist advisors.
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We provide performance reporting to our dealership partners.
We are so confident in our program, we do not charge the dealership any fees. It cost you nothing for our program! As a true partner, we neither make money on the dealership, nor do we charge you transaction fees.