KPI Guide - Total Dealership
Net Profit % Sales
Calculation: Net Profit ÷ Total Sales
What does it measure: The amount of a dealership’s net income in relation to the total sales earned.
Why is it important: It helps a dealership determine how much actual profit is made from each sale earned. The higher the net profit % sales, the better the dealership is at converting sales into profit.
Days to Break Even
Calculation: Total Expenses ÷ (Total Income ÷ No. of Days in Month i.e. 30.4 days)
What does it measure: The number of days required for a dealership to generate enough income to cover its expenses.
Department Contribution to Gross Profit (New, Used, Parts, Service)
Calculation: Department Gross Profit ÷ Total Dealership Gross Profit
What does it measure: Measures how much gross each of the 'traditional' departments contributes to the total dealership gross profit pool.
New + Used + Parts + Service = 100%
Department Contribution to Gross Profit (F&I Share)
Calculation: F&I Income ÷ Total Dealership Gross Profit
What it measures: Measures F&I income as a proportion of the 'traditional' gross pool that is represented by F&I income.
Why is it important: High F&I share indicates a heavier reliance on F&I to make the dealership profitable.
Front End (Orientation)
Calculation: New + Used Department Contribution to Gross Profit
What does it measure: A measure of orientation that indicates whether the dealership is front end driven.
Why is it important: Front end driven dealerships generally exhibit more volatile profits as they fluctuate with vehicles sales and associated market conditions. For a “well-balanced dealership”, we suggest 56% of gross income from the front end and 44% from the back end.
Back End (Orientation)
Calculation: Parts + Service Department Contribution to Gross Profit
What does it measure: A measure of orientation that indicates whether the dealership is back end driven.
Why is it important: Back end orientated dealerships are not as subject to the volatility of market conditions. However, it is important for a dealership to manage the front end as vehicle sales drive the back end in the long run. For a “well-balanced dealership”, we suggest 56% of gross income from the front end and 44% from the back end.
Gross % Sales (New, Used, Parts, Service)
Calculation: Department Gross Profit1 ÷ Department Sales
What does it measure: Each department's gross margin - a ratio of gross profit to department sales. Note, this KPI does not reflect the impact of selling expenses of the department (see Selling Gross % Gross under each department).
Why is it important: Reflects the proportion of each dollar of sales revenue that the department retains as gross profit. This KPI should remain stable over time.
Net Profit per Employee
Calculation: Total Net Profit ÷ Total Number of Employees
What does it measure: The average net profit generated per employee per month.
Why is it important: See Gross Profit per Employee.
Sales per Employee
Calculation: Total Dealership Sales ÷ Total Number of Employees
What does it measure: The average sales generated per employee per month.
Why is it important: See Gross Profit per Employee.
Gross Profit per Employee
Calculation: Total Dealership Gross Profit ÷ Total Number of Employees
What does it measure: The average gross profit generated per employee per month.
Why is it important: A comparison of net profit, sales and gross profit per employee over time may indicate where the strengths of your dealership staff lie. Examples include:
a) A high sales per employee figure but a low gross profit per employee figure: this may indicate that a dealership is able to manage volume of customers, but are not maintaining a strong margin
b) High sales and gross profit per employee figures but low net profit per employee: this may indicate that a dealership should focus on lowering costs
1 New Vehicle Department Gross will include aftermarket, holdback, incentives, and loads. Used Vehicle Department Gross excludes wholesale gross profit but includes aftermarket and loads.