Just curious....

[cain12]

we are a GM dealership, family owned for 60+ years. Our used car dept sends the majority, not all, but the majority of our used cars to get ready for the lot to an outside mechanic garage. Why? because they do the work a bit cheaper than our service department and each manager at our store are responsible for making a profit in their own department. Some of these vehicles are even GM ones.

My question is what is the criteria (or rule) at your dealership? Is it similiar to ours or very different?

Thank you,
Cain

[texaslp]

This is an age old problem that can probably only be fixed by the dealer or GM. He will have to mandate that all used car repair is done in your shop.

Often this is a problem not only because of price but because of personality conflicts between service and used cars. Does service give used cars any price break? Does service get the used cars out quickly or do they put their retail customers first? You may need to dig a little deeper.

[TheOne]

I would be more concerned about my next location of employment. Your situation provides conclusive evidence that your DP does not understand how to keep his bottom line sound.

The math is relatively simple. Start with a fictional Repair price through your shop parts and labor total $1000.00. Further using an over-simplification of 50/50 split parts to labor the gross should breakdown
Labor $500.00 (x) .73 = $365.00
Parts $500.00 (x) .42 = $210.00
Total Gross profit RETAINED $575.00
Net expense $425.00
Net value added to vehicle inventory $1000.00

Sending the same repair outside for an arbitrary $200.00 savings.
Net expense $800.00
Net value added to vehicle inventory $1000.00

Assuming a retained gross profit at the time of sale the true numbers for this transaction would shake out as follows:

In house repair
Fixed ops gross profit $575.00
Used vehicle gross profit $2000.00
Total gross profit $2575.00

Outside repair:
$200 repair gross less salesman and sales person commission 25% and 15% respectively
net $120.00
Used vehicle gross profit $2000.00
Total gross profit $2120.00

Difference $455.00

This also assumes that the sales department sells the work for its true value, which they never seem to. Yor dealer has issues.....

[TheOne]

Relative to texaslp's comments. If conflicts between service and sales management get in the way of maximizing profits, and your DP isnt stepping up to fix the issues in a manner most advantageuos to the dealership he is putting ALL of you at risk.

[sp7128]

as the one stated :
In house repair
Fixed ops gross profit $575.00
Used vehicle gross profit $2000.00
Total gross profit $2575.00

Outside repair:
$200 repair gross less salesman and sales person commission 25% and 15% respectively
net $120.00
Used vehicle gross profit $2000.00
Total gross profit $2120.00

The used car dept sells from the bottom up anyway!!..They know what type of gross they need to make and if it is 1500, 1800, 2000 they just discount the advertised sell price for the car accordingly to the selling price that nets them their set gross profit, no matter if it was a 1000.00 repair form outside or the 1200 repair from their own service/parts dept.

[gmcgrew]

To put it bluntly the used car manager is stealing from the dealer. Take THEONE's comment to the Dealer/GM and point out the truth. The used car department if run correctly takes the cost of repairs and adds it to the cost of the vehicle. So in essence it costs the used car department nothing to keep the work internal.

The real issue I have seen that texaslp may be referring to is what happens if the sales department needs to dump the car. They lose $200 less by using the outside mechanic but it costs the dealership an additional $575 using THEONE's numbers. So overall the dealership lost an addition $375 by using the outside mechanic.

These issues don't even touch on what your techs would make and if they could make more money and be happier with the additional work. Yes each department needs to stand on their own merit but they need to work to benefit the DEALERSHIP not just their department. When you benifit the dealership everybody wins. When you look out for only your department everybody can lose.

[sallen1]

Seems silly in these times.

Used stays in house. Sublet off-brand warranty in a rare case.

Service should charge UC retail and work them as their best customer, period.

Our store would look like yours if I didn't force this policy. For some reason, UC managers like doing things their own way.

s

[zekensted]

Does your service department treat your sales department like they are a really good customer? Most dealerships without a strong dealer principle, do not. Its a shame - for everyone. No matter what the dealer principle makes the used car managers do, the managers will go where they think they are valued. Why not "win" over your used car manager just like you would try to do with some fleet manager somewhere that can keep you shop busy on slow days?

[scotstrong]

And then there are the ever-present kickback schemes. Are you sure that the used car manager is not getting some type of "kickback" from the outside repair facility? Have seen this happen MANY times over the years.

[sp7128]

that "kickback" usually happens when you see the cream-puff get wholesaled!! for some unknown reason