I was in a dealership a few weeks ago that just set a record fixed operations gross profit. The service manager was concerned because the dealer asked him to prepare to reduce his staff by two people. The service manager understood that if he reduced his staff the dealership would not be able to properly care for their customers. In discussion with the dealer he stated due to declining sales in new cars he needed to cut staff in every department. After explaining to the dealer his record gross profits will begin to decline as customers stopped returning to the service department he allowed the staff to remain. When looking at staffing requirements for fixed operations some general guidelines should be considered. Repair order count per advisor should average over 320 and not exceed 400 on a monthly basis. One advisor can handle up to four technicians and provide proper customer care. The parts department should generate a minimum $35,000 in sales per employee on a monthly basis. Some dealerships will find themselves slightly below these guidelines however a drop in one person would place them above proper levels. Never forget customer care must always be the primary concern and adequate staffing is required. The entire fixed operations team should be involved in aggressively growing repair order counts marketing to the customer base to meet these ratios.

Be sure to track customer accounts receivable to determine payments. The best practice is to never allow customers to charge repairs in service. Monitor warranty receivables that include aging to confirm follow up with service personal and management. Aged inventory in the parts department is another trap for dealership dollars capital investment. Develop a process that places in question inventory items over 12 months without a sale. What actions are being taken to reduce this unused capital and turn it into cash? Are special ordered parts over the counter paid for in advance? How about customer pay service special ordered parts?

Every store must be aggressive with cost controls. The best practice is to mail every vendor and explain you will be developing quotes from their competitors under a cost reduction plan. You will allow new pricing from existing vendors before the competitive quotes are received. It will surprise you how many vendors want to keep your account by reducing their prices. Pay special attention to uniform vendors. They are abusive with floor mat rentals, hand cleaner, air fresheners, towel inventories, mops, and the list goes on! Track shop supplies by Technician reviewing at least monthly items used and ask questions. Just knowing someone is watching will reduce shop supplies by at least 15%. Consider the ratio of Technician hours sold divided by shop supply costs to bonus the Technician with the lowest cost per hour.There has never been a better time then right now to increase fixed operations profits. Be determined the investment of your time will be rewarded with increased customer satisfaction and retention as well as profits.