Internal sublet mark ups

[Doug]

Years ago we starting running nearly all new/used cars sublets through either service or parts department with anyhwere from 10-30% markup.

And---whaddya know, miracle of all miracles---parts/service profits went up AND sales department had no problem maintaining the same gross on car deals. It's a win-win situation.

Cheers
Doug

[angiej]

We mark up sublet to the new and used car department 30%, anyhing over $500 is at 10%.Our new and used sales managers thought they would be smart and circumvent the system so as to not have a mark up, but when any payables come in and they are trying to charge directly to the stock number we add on the appropriate mark-up and give the service department the credit. That has generally stopped the problem of by passing the service department. Also, you can't get a PO with out an RO, and as we have notified our vendors we will NOT pay with out a valid PO #, it further enforces the fact that all sublet has to go thru the service dept.

[PucHed]

This opens the same argument as internal mark up. I am of the belief internal should be paying retail for the same reasons as stated already, but my dealer disagrees. We get 40% parts mark up, and $10 per sublet, whether we could have done it or not. I don't agree, but I just work here, that decision is above my pay grade.

[This message has been edited by PucHed (edited 07-28-2003).]

[Ronc925]

Everyone has given reasonable replies.

The balancing point is between sales and service. If the service/parts department is too high for the market, then the sales departments can't make as many sales, even though it is more gross per vehicle, that can be very negative.

As long it is the owner or General manager making the final decision, with all the facts presented, we have to work with the limitations of our superiors.

I recently began working in a market where the economy is hurting badly. Since parts and Service doesn't have 100% aborption, we have to depend on the sales department to pick up the remaining expenses. And if they don't move the cars, parts and service will suffer in 3-5 years. That would be a spiral effect I wouldn't want to be involved in.