This Key Performance Indicator is most effective for measuring the trend of your V.O.R Penalty, especially when comparing your results with other dealers.
In this example, Purchases at List Price represents the total price that you would receive if you were to sell all the parts at their full retail sales value.
Although you will not receive the full list price due to the discount that you give on some parts sales, it is the best yardstick to use as a comparison because different dealers give different levels of discount. If you used your parts sales turnover for this equation, the different levels of discount would produce a sizeable distortion.
Example:
A) V.O.R. Penalty* = R12,254 B) Purchases at List Price = R734,743 C) V.O.R. Penalty % = 1.68% (A ÷ B)
*Please see V.O.R Penalty on the previous page to gain a full understanding of this equation.
Discussion:
Your franchise manufacturer usually provides your Parts Department with these statistics on a monthly basis.