Building on Opportunity
First, a few numbers: In 2016, fixed operations departments at dealerships totaled roughly $109.5 billion in total sales, a 12.7 percent jump from 2015. Breaking that down a bit, $64.7 billion of that was in parts; $49 billion was labor.
This comes from the National Automobile Dealers Association’s latest NADA DATA report, which was released just a couple weeks prior to this letter being written. I bring this up for a specific reason—and it’s the same reason I mention this data in our feature this month, “Profitability Bootcamp”. The automotive industry, as a whole, has grown substantially in recent years. New vehicle sales hit record levels last year; you’re all likely well aware of that fact. Profit margins for vehicle sales, according to NADA, remained flat, though. Adding more to the bottom line on the variable operations side comes down to volume, and it’s dependent on various economic factors. But, as you’re well aware of, and the subjects in our feature story explain, fixed ops is very different.
Improved processes, increased efficiencies, slashed expenses—there are a number of ways to improve profitability throughout every segment of your department, and today, as one industry consultant points out in the story, “Fixed operations is where the largest opportunity resides” for dealerships to improve profitability.
Opportunity is the key word here.
You’ve likely noticed it already, but every story our team writes in this magazine is based on that opportunity that you and your colleagues have to improve, to increase production, to better serve customers, to increase margins. All of it. Our approach to the content we create is to provide you with tangible strategies that other operations have already proven to be successful—systems, processes, and concepts that can lead to immense business improvement. Our goal is to help you seize that opportunity. I’ve said this before, and you’ll likely hear it in the future too, but we only succeed at Fixed Ops Business if we help you succeed.
I started off this letter mentioning those substantial growth numbers, and they demonstrate how exciting of a time this is for the industry. There’s a lot of opportunity out there. It’s time to take advantage.