I'm wondering about MONEY???

[machado]

Hey guys,

For almost 2 years I have followed the threads of conversation on this forum and other sites that offer a similar type of service. I have learned more about what the automotive community was thinking from this type of platform than just about anything else that I have experienced. Attending Arrow 5 this fall was a tremendous experience and if you are a serious player or some day hope to be I would strongly recommend that you attend the next event and PAY ATTENTION.

Over the last 3 years have attended the last 3 NADAs and the last 4 TADAs (Texas Auto Dealer Association Convention). Also during the last three years I have been invited to sit on Technology Councils with some of the larger players in the industry. Occasionally, I have the pleasure of addressing groups that share my interest in venues from small Twenty Groups to The NADA.

Last year I had the good fortune of being hired and fired by the largest Automotive Intent Training Company in the world, after just one week I did not fit in. After recovering from the shock I found a small Dealer Group in the Texas Panhandle that took me seriously and offered me a shot as their E-Commerce Director. Im not sure that it is too often that people get to do the kind of work that they honestly love doing and for that I truly am grateful.

In an effort to improve my game I spent the last few weeks pouring over hundreds of articles that I have collected over the last five and a half years I began to notice that there seems top be a glaring omission from virtually everything I read. That is the topic of Money or retained revenue. I find that sort of odd.

I would like to start hearing from a few of the people that post to this news group and see if any of you might have a shared interest in what the real Internet Performance is. What I am curious about is what you are spending on this project as opposed to how much you are putting in the bank.

I know that the First Liar never stands a chance so this PM I am going to email my performance to Dealers Edge for safe keeping to be posted on this service if there seems to be any interest on this string.

I will let you in on the method that we use to calculate my cost numbers:
 We do not count the cost of a PCs or a High-Speed connection or the digital camera that all the stores have since these are tools that you need to have for the fundamental operation of your E-Biz.
 We do count all monthly subscription charges like Hosting, Aggregators, and Advertising cost associated with the on-line departments and web page development upgrades.
 My fee that each of the 7 stores pays that covers my base salary, travel expanses, my housing and fuel.
 Any services that have recurring monthly charges like e-mail pagers and tools like Chrome Data, KBB Price Link, and Web Control.
 We do count salaries for the ISMs and support personnel.
How we calculate our Net Profit is by subtracting all of our cost from our total revenue and this is what we use to calculate Gross Profit:
 Front Payable
 PAC
 Hold Back
 Dealer Incentive
 F&I Reserve
 A&H + CL
 Service Contract Revenue

The only revenue that we do not count is Stair Step Programs or Retro-Money and we do not Count Floor Plan credits Primary or Supplementary.

I will tell you this our average gross profit for the last 3 months has been $3395.23 per copy front and back which out performs the rest of the groups retial sales by almost $295.00 per copy. Our group make up is nearly all Domestic and almost entirely Chrysler. Although, we do have to 3 small import lines at our multi-point store and a Chevrolet Point that adds to the mix.

The bulk of our stores are in small markets we do have a 1 major market store 30 miles outside of Austin.

Please let me know if any of you are interested in following this string or if you have any similar questions.


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Greg Machado
E-Commerce Director &
Independant Consultant

http://www.gMACgroup.com
machado@gmacgroup.com
210.710.8456

[This message has been edited by machado (edited 12-13-2000).]

[Andy]

Greg,
I am the Internet Manager for a Toyota/Vw and Jeep store in Pa. I would really like to know how you pull down that kind of $? I'm not sure what mine is but I know it's not that good. And your doing it with domestic? What am I doing wrong? I've only been at it a short time(10 months now)but I felt we were having decent success...20 cars a month and I would guess around $1500 a copy( using your calculations). But,obviously, I need to work on it. I have 2 of the best and I'm not doing your numbers. Can you give me some advice on what to do? I'd really appreciate it.

Andy

[mjacobs]

Gregg,
I have to admit, I am in the same boat as Andy. I have been doing this for about 2 yrs, selling Ford and Mazda. I thought I was having a bang-up month in January averaging just over $1900/copy, with a 17% closing ratio. My averages are outdoing everything but the used car department. What the heck are you doing that is do different?

[machado]

You are doing a good jobin fact you and Andy are both doing a good job.

Currently our closing ratios are in the tank we are using Web Control to track all of our leads. We now count everything but system test. So now we are running from a 7.26% closing ratio to about 12.12%.

Here is what make the largest difference for us we actively solicit the finance opportunity from the initial contact sequence.

As soon as we have any hint that our prospect might be a buyer we offer both finance and aftermarket opportunities to our on-line guest. This helps our gross profit immensely it also helps to develop buy in dealership wide. We also work vary hard at getting to our PR 3-4 times in the first 30 hours. This shows our prospects that we want to earn their business by offering to work for it.

Our on-line program is now about 5 months old in Dec. we ran a $2469.00 gross adv.
We should be a bit higher in Jan. around $2490.00. One other thing that helps a bit is that we are selling about 35% used cars online. Our new car grosses are suffering and pulling down our adv. from where we were in Oct. and Nov. Im sure that as the spring approaches our adv will get back to where we had them.

One of the elements that tends to help us is that we have templates for introducing almost every part of the shopping and buying process. We offer a letter from the UCM that talks about appraising the trade up front. An auto responder from F&I for online credit apps. and even a letter from the Business Manager that acts as a finance TURN. One template that we use from the GM for missed opportunities.

Our other goal is to get our guest on to our web site and off the aggregators channel so that they become more immersed in our process and less likely to put us in a bidding war with our competitors. We have some fairly strong sites loaded with tools like KBB, Chrome and we will be adding Lot Runner later this month.

Here are a few links, take a look at one or two of them and see if you think an online shopper might want to spend more time with us than our competitions.
www.aachevy.com www.texasdodge.com www.spiritauto.com



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Greg Machado
E-Commerce Director &
Independant Consultant
http://www.gMACgroup.com
machado@gmacgroup.com
210.710.8456

[Results]

Greg, I am interested in getting a string going that be focused on how all of us count our gross.
The largest problem I have with some of my stores is that the information you have available from yours is not always available.
This information might be revealed to me but in most cases I can not pass it on to the Internet Department.
We average $1,645 so far in all my stores based on your accounting, but we do take everyones salaries into the scenario. that is because in most cases the guys on the floor are working straight commission or with payback draughts. As far as hardware and such we don't count it since the floor is not including their office equipment.
I would say that if we dropped salaries out we would still only be up to $2100 per copy.
You are doing an exceptional job!
To mjacobs - 17% closing ratio is pretty darn good. how about some tips on that. How do you calculate it? I have a few stores that hit 20% but they drop right down to 12 the next month.

------------------
Results
Mike Stinson
results@rintuit.com
www.rintuit.com

[Dennis Rushing]

I think just about all dealerships use a different method to figure out their grosses, and even possibly their closing ratios. During the year 2000, I posted a 23.6% closing ratio from all leads. My overall gross for new and used cars, using your method of calculations, would put me at $2887.00 per copy on the average. This DOES include all cost incurred with the internet department, to include my salary, which is decent by any standards. To not include this would be a mistake, it's all part of doing business on the internet. I spend on the average, $2184 monthly total on my internet here, besides my salary.

[This message has been edited by Dennis Rushing (edited 02-27-2001).]

[This message has been edited by Dennis Rushing (edited 02-27-2001).]

[machado]

Dennis,

Your numbers are wonderful!!!

I would love to do that well, tomorrow when we close our month I'll post ours.

We look to be in the area of about an 11% closing ratio with a gross average of around $2600.00/copy.

And we should put well over $125K in the bank but I'll give you more accurate numbers by the later.

Greg Machado
gMACgroup.com http://www.gmacgroup.com
<machado@gMACgroup.com>

[This message has been edited by machado (edited 02-27-2001).]

[machado]

Here it is:

Our Internet program is now 5 months old.

We have seven stores all in small markets. With the exception of one store 30 Miles outside of Austin, TX.
This store has a brand new ISM that has only been on the job a few weeks and did not perform well last month. I anticipate that she will be in the game next month. Today is only the 2nd and she already has 2 in the bag.

Here is how we wound up.

With 52 deals we made $155,455.60 that is over $2898.00 per copy.

Our expenses were $28,955.54 and $10,500.00 of that is the $1500.00 per month that each store pays the group so that they cover my travel, housing expenses and salary.

That means our net was $126,500.06

This is the first time we crossed the $100,000 mark our next big goal is 100 cars and $250,000.00 in gross. Im confident that we will hit it this summer. Our goal is to be selling 300 cars per month in the next year.

Our group-closing ratio was 12.92% of all leads we need to work on improving our closing ratio and getting more folks to our websites.

I think I almost have this thing figured out.


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Greg Machado
E-Commerce Director &
Independant Consultant
http://www.gMACgroup.com
machado@gmacgroup.com
210.710.8456

[Results]

Greg,
I just realized that you must not be breaking out your new and used in your numbers. What do your numbers look like on new versus used.

Dennis, What kind of closing ratio do you have new versus used, and the profit picture on them?

Our gpc on used averages $3,700. Usually a store will average an easy $1,500.00 over new. Our leads are fewer on used even though they are sitting on a lot more sites. How about some ideas there.

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Results
Mike Stinson
results@rintuit.com
www.rintuit.com

[Dennis Rushing]

Mike,
I have a closing ratio of about 18% on used cars with a gross average of around $3400.00 per copy. My new car closing ratio stands at around 26%. The gross profit is about $2170.00 per copy.

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Dennis Rushing
Internet Sales Manager
2001 AIADA-Carpoint Internet Sales Person of the Year
McNamara Pontiac-Isuzu
407-540-9210