Industry Analysis An analysis of the of the industries best operators. September 2008 quarter V 6 months to June 2008.

Industry Analysis

An analysis of the of the industriesbest operators.

September 2008 quarter V 6 months toJune 2008

©2008 Deloitte. All rights reserved

You can keep “afloat” in this rough market!

Analysis performed

• We have grouped a selection brands together to keep the study simple yet relevant

– Group 1 volume brands

– Group 2 other non luxury

– Group 3 prestige brands

– Group 4 luxury brands

• Group averages and top 30% performers at the selling gross level for each department have been stated against each other.

• These performances have been compared for the 6 month ended June 2008 to the quarter ended September 2008.


What does this analysis tell us

Issues:

• Pressure on the front end margins due to drop in volumes and inventory levels.

• Selling gross contribution under pressure in new and used vehicles.

Top 30% dealers

• Have managed to keep within benchmark in most

• Drive best practices and are prepared to change to match market conditions.

• Take advantage of opportunities in used cars

• Continue to drive performance in the back end


0.0

1.0

2.0

3.0

4.0

Group 1 Group 2 Group 3 Group 4

1st Half 08

Average 1st Half 08

Sept Qtr 08

Average Sept Qtr 08

2008 BM-Lower

2008 BM Upper

%

Net Profit % Sales Top 30% of Dealers V Average

Group1:Toyota, Holden, Ford Group2:Mitsubishi,Nissan, Hyundai

Group3:Mazda,Honda,Subaru,Peugeot,Volkswagen Group4:MercedesBenz,BMW,Audi,Jaguar


Net Profit % Sales

Issues:

• The average dealer has experienced a significant drop in Net Profit as a % of sales.

• The Top 30% of dealers are still achieving results at or near benchmark levels.

Top 30% dealers

• Engage all managers and staff – this will develop “buy in” and reduce

misunderstanding around required performance and break even levels.

• Ensure department managers are aware of their breakeven point.

• Compare actual expenses to Benchmark as a percentage of gross whilst

maintaining a focus on actual expense $.


-5

0

5

10

15

20

25

30

35

40

45

50


1st Half 08

Average 1st Half 08

Sept Qtr 08

Average Sept Qtr 08

2008 BM

%

New Vehicle Selling Gross % Top 30% of Dealers V Avg




New Vehicle Selling Gross %

Issues:

• All dealers are experiencing pressure on New Vehicle selling Gross % due to the drop in volume and rising inventory levels.

• The majority of Top 30% dealers are still achieving results at or near benchmark levels on the back of excellent CRM strategies and maintaining gross profit $ per sales people at levels close to benchmark.

Top 30% dealers

• Ensure stock levels are within benchmark limits for both dollars and units – based on projected not historic volumes.

• Ensure stock vehicles are only ordered with the approval of the DP.

• Focus heavily on driving prospect management.


-20

-15

-10

-5

0

5

10

15

20

25

30

35

40

45

50

55

60


1st Half 08

Average 1st Half 08

Sept Qtr 08

Average Sept Qtr 08

2008 BM

%

Used Vehicle Selling Gross % Top 30% of Dealers V Avg




Used Vehicle Selling Gross %

Issues:

• The Top 30% of used vehicle operators are still operating at benchmark levels.

• The current market conditions have seen the gap widen between benchmark and average dealer performance in used vehicles.

Top 30% dealers

• Adopt a dynamic pricing policy to maximise their R.O.I.

• Ensure the utilisation of Stock Provisions

• Drive stock turn and have re-assessed their used car strategy for 2009.


0

510

15

20

2530

35

4045

50

55

6065

70


1st Half 08

Average 1st Half 08

Sept Qtr 08

Average Sept Qtr 08

2008 BM

%

Service Selling Gross % Top 30% of Dealers V Avg




Service Department Selling Gross %

Issues:

• The current conditions highlight the stability of the dealerships service operations in providing consistent selling gross performance.

• Many benchmark dealers have actually improved their performance.

Top 30% dealers

• Measure and reward individual technician performance.

• Have in place a consistent CRM process that drives customer retention.

• Have strategies in place that encourage the retention of 3 – 5 year old vehicles.

• Understand the financial impact of small improvements in service retention %.


05

101520253035404550556065707580


1st Half 08

Average 1st Half 08

Sept Qtr 08

Average Sept Qtr 08

2008 BM

%

Parts Selling Gross % Top 30% of Dealers V Avg




Parts Department Selling Gross %

Issues:

• The current conditions highlight the stability of the dealerships parts operations in providing consistent selling gross performance.

Top 30% dealers

• Ensure stock levels are within benchmark limits (maximum 45 days)

• Drive stock levels by movement code e.g. fast movement parts <14 days

• Monitor and drive R.O.I.


0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

55,000


1st Half 08

Average 1st Half 08

Sept Qtr 08

Average Sept Qtr 08

2008 BM Lower

2008 BM Upper

New Vehicle GP$ Salesperson Per Month Top 30% of Dealers




0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000


1st Half 08

Average 1st Half 08

Sept Qtr 08

Average Sept Qtr 08

2008 BM Lower

2008 BM Upper

Used GP Salesperson Per Month Top 30% of Dealers V Avg




Gross Profit per Salesperson per Month

Issues:

• Falling volumes are impacting on the productivity of sales staff

• The ability of salespeople to earn sufficient incomes under current department structures is an issue in some Dealerships and may become a bigger issue moving forward.

Top 30% dealers

• Compare sales staff productivity levels to benchmark.

• Have commission schemes that been reviewed in light of changes in the market, they are exponential in nature.


Industry Analysis An analysis of the of the industries best operators. September 2008 quarter V 6 months to June 2008.

Documents

benchmark levels

gross profit

jaguar slide

selling gross level

end slide

percentage of gross

gross contribution

new vehicle