I'm always surprised at how much potential business some dealers give away by concentrating on the new-car side and ignoring the backshop.
A savvy dealer can capture a lot of wholesale business with some aggressive salesmanship.
The other day, a manufacturer talked about the absorption rate, which is the percentage of a dealership's overhead covered by its parts and service business.
I thought that was an obsolete term locked into the 1960s and 1970s. When you look at the overhead of any modern dealership, you can't ignore any corner of the operation.
As new-car sales wane from time to time, the profit that a dealership might make from every area of the business becomes very important.
Every Saturday morning, millions of dollars are siphoned away from franchised dealerships into all sorts of aftermarket shops that look at the dealerships as a gold mine worth plundering.
That doesn't even take into account the potential sales to new-car buyers who go down the street to have their new cars outfitted by the local tire merchant rather than making it part of the purchase. Tires are a small part of the potential for after-sale sales.
Whenever business gets tough, many dealers suddenly remember that there are lots of revenue possibilities within their dealerships.
When times are great, it's easy to concentrate on the revenue that comes from new-car sales. But it's critical to remember that used cars and service and parts are all handsome profit providers.
That includes wholesaling parts in your community. The savvy dealer has trucks on the road covering plenty of miles. That's where service is really important.
With the number of cars and trucks on the road increasing and the number of franchised dealerships decreasing, the opportunities must start to make real sense.
There are plenty of ways to maximize new-car revenues, but there are even more ways to maximize profits from the other departments in a dealership. And there can't be a better time than right now to make sure every single dollar is covered.