Service Coupons

[Jay K]

At our store, for the last 20yrs, we have charged the coupon discount $ amount to Service and Parts advertising. This seems to be in accordance with GM's accounting bible. It states "FREE LIBRICATION" is charged to advertising, but this may be a throwback to 40 years ago. Other Service Managers tell me they reduce the gross on parts and labor.
What is the correct method and why?

[Doug]

One of the fun things about numbers, dollars, and statistics is you can move 'em around any number of ways to suit your desires.

I do charge free oil changes to advertsing BUT all other forms discounts come "off the top". Parts and labor prices are reduced accordingly to achieve the advertised price.

Charging discounts to advertsing really just skews your numbers.... you're showing gross which you really never made and needlessly inflating your advertising account. Furthermore, my advisors are paid on sales, not profit. Why pay them off of a inflated number ?

This is a good example of accounting differences between dealerships which tend to (at least partially) nullify the 20-group type comparisons. There'a a hundred ways to skin a cat. Some guys don't include LOF's in their RO averages. How's THAT for skewing the numbers ?! YeeeHaw.

Well, I've done my share of moving money around just to look good in one particular area. Anyone else care to fess up ?

Doug

[Rob Kealey]

I agree with Doug. Charging the discount to advertising skews your numbers and gives you a false reading on your department's health.

[DaveS]

I believe that if you brought the client in by advertising and the coupon is why they are doing that repair, then it should be charged to advertising. In addition to showing the effectiveness of your advertising campaign, it keeps from lowering your effective labor rate and thus keeping the factory from possibly granting a labor rate increase.

[Mike Vogel]

I also believe that coupons / discounts should come off the gross. What we do at our stores is we set seperate op codes for our coupons with the labor and parts prices already adjusted down. Any other coupons offered such as 10% off or $10.00 off on services other than coupons gets taken off the gross. As stated before it's only fair that personnel who are paid commision get paid on the actual sale after discounts, not before.

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Mike Vogel
Claremont Toyota/Ford
Claremont, CA