Gross Profit (New Vehicles)
Invoice Price of Vehicle x Cost Price of Vehicle
Guideline: Franchise Specific
Description:The basic understanding of Gross profit is simply sales less the cost of those sales. Within the Sales Department there are many things that are sold that are all contained on the sales invoice such as accessories, warranty and of course the vehicle itself. Take care to understand exactly what your reports are including and excluding from this equation. Generally speaking, most reports will show all of these items separately, especially the Gross Profit in the vehicle.
Example:A) Vehicle Sale Price = R18,268 B) Vehicle Cost Price = R17,719 C) Vehicle Gross Profit = R549 (A X B) D) Gross Profit % = 3% (C ÷ A X 100)
Discussion:There is no benchmark for this KPI because profit retention is very different in all vehicle marques. There is however, one item that needs to be quantified. When your franchise manufacturer provides you with a tactical bonus payment, is this bonus included or excluded from the vehicle Gross Profit? Also see Target Related Bonus. The reality is that there is no hard and fast rule for this one and therefore you will need to research your own reports before you draw any conclusion on your results.
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