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.
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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.
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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.
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