Average Monthly Policy Expense

[lovemotors]

I am interested to know how much other service managers are spending each month on policy expense (6704 account) and if anyone knows what the national average is?

[DIRECTOR]

We're an "E" size Dodge, Dodge Truck & Chrysler store. My latest Chrysler guidline, in print mind you, is 3% of your departmental gross.

I have 3 writers and 15 techs. We write anywhere between 1500 and 2000 repair orders per month. My monthly policy is usually between 1.5 and 2%.

I do not know what the national average is.

[Mike Vogel]

Toyota says that policy should be between
1.0 to 2.5% of total labor gross profit.
Our store averages around 1.8% - 2.0%
Toyota states that too low means that there is to strict a policy and the customer is not being taken care of. Too high obviously means that there is a tech or advisor problem where there is too many shop comebacks or misuse of the account.

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Mike Vogel
Claremont Toyota/Ford
Claremont, CA

[Doug]

Hate to muddy the waters but once again the differences between dealerships in how they handle write-off's can really skew the numbers.

When I charge something to the policy account labor is billed at dead cost and parts at cost plus 10%. Some dealerships charge off work at full retail. Others, undoubtedly, do something in between.

I worked at one dealer where EVERY charge off was posted to the policy account. At my current dealership rentals are charged to "rental expense" (92D in GM parlance), lot damage to "miscellaneous" (77D) and all other "we gotta eat it" items go to the actual "policy account" (67D).

For my own personal reference I consider $100 per tech, per month, my guideline. For me, that's $1500/month.

I don't even want to talk about rental expense.....!

Doug

[flyboy@molalla.net]

Mid sized GM store, we shoot for 2% of gross.

I empower my writers to make their own decisions, without having to "check with the manager". But I have been able to keep it under control by rewarding them with a bonus for good numbers. I give them a crisp $100 bill if it is under $2000 and $50 if under $2500. They have missed the better mark but once in three years.

I believe the empowerment has really made a differance, they own the decision and the customers dont feel like they have to go over ther head to get something done. If they do make a poor judgment, I catch it when reviewing the RO's, we talk about it, and I coach them. Yes, I will chastise if it is blatant, a real act of cowadice or something stupid like that, but I have very seldom needed to do so.

[lovemotors]

Thanks everyone. This has been a great help just to know what is going on with other shops. This board can be a great help with questions like this one to someone like me.
Thanks again.....