key performance indicators for automotive retailers

Pitcher Partners Automotive

Non-Luxury edition 2016 and Luxury edition 2016

Key performance indicators for automotive retailers

ContentsAutomotive services 1

Non-luxury edition 2

Luxury edition 4

About Pitcher Partners 6

Automotive servicesWelcome to the 2016 Pitcher Partners Automotive Key Performance Indicators for Australian Automotive Retailers – Non-Luxury and Luxury EditionsThe Australian new car market has continued to experience strong sales, with official sales figures for the calendar year 2015 showing sales of 1.155 million units, representing a 3.8% increase on the sales for the 2014 calendar year (1.113 million units). This was off the back of strong organic growth in New South Wales, Queensland and Victoria.

The increase in new car sales continues to be driven by sales of passenger vehicles, with the Toyota and Mazda manufacturers continuing to generate the highest sales volumes in the calendar year. This has been a continued trend in the last few years. Further, sales of SUV vehicles have continued to increase, with SUV unit sales accounting for 35.4% of total new car sales in the calendar year. Australian manufactured vehicles represented 8.4% (2014 – 9.0%) of new cars sold in 2015.

The retail automotive industry has witnessed a marginal increase in dealership profitability since 2014, with average dealership profitability, measured by net profit as a percentage of sales, amounting to approximately 2.3%.

A key issue impacting the automotive industry in 2016 will be ASIC’s ongoing review of finance and insurance arrangements. ASIC has released two reports focusing on add-on insurance products sold to consumers when purchasing vehicles, with ASIC questioning the process surrounding the sale of these products, as well as the benefit and value to consumers. They are also continuing to focus on the flexible commission arrangements in the motor vehicle finance sector. The outcome of this could heavily impact retail automotive dealerships, specifically with reference to the sale of the products within the F&I departments.

Furthermore, the automotive industry is expected to be impacted by the proposed regulation surrounding parallel imports. The Australian Government announced in February its planned changes to the Motor Vehicles Standards Act 1989, which would effectively allow the private importing of a new vehicle from another country with comparable standards to Australia. The planned changes pose significant risks to both dealerships and consumers, with questions raised surrounding the servicing of these vehicles, as well as the resale value of the vehicles in comparison to Australian compliant vehicles.

Overall, we expect 2016 new vehicle sales to remain stable at the 1.16 million sales mark, in line with VFACTS forecasts, and these sales to be underpinned by low interest rates and strong employment numbers.

The market performance was largely driven by the following:

Strong competitiveness within the market, allowing for consumers to have access to a greater level of choice and access to high quality vehicles.

Record affordability levels, largely driven by manufacturer product offerings and franchisor incentives.

Low interest rates and strong employment within the Australian economy.

1

Non-Luxury edition

The Big PictureDealership Profitability 2016 KPI Gross Contribution 2016 KPI

Net profit % sales 3-3.5% New 36%

Rent % gross 11% Used 18%

Admin & DP salary % gross 8% Front-end 54%

Gross % sales 13-15% Parts 12%

Monthly gross per employee $11,500-$13,000 Service 34%

Fixed absorption (minimum) 55% Back-end 46%

Finance and insurance income

20-25% of total gross

Vehicle OperationNew Vehicles 2016 KPI Used Vehicles 2016 KPI

Gross profit % 8-10% Gross profit % 12-14%

Gross profit per unit * $2,400-$2,600 Gross per unit $2,500-$2,600

Days’ supply 55-60 Days’ supply 65-70

Unit per sales staff per month 14 Unit per sales staff per month 13

Gross per sales person per month $37,500 Gross per sales person per month $35,000

Advertising per unit $235 Advertising per unit $255

Floor plan per unit $280 Floor plan per unit $180

Salaries & comm. per unit $700 Salaries & comm. per unit $730

Gross ROI 55-65% Used/new ratio 0.4

Aftermarket income per unit $350 Gross ROI 85-90%

* Includes holdback, bonuses and aftermarket Aftermarket income per unit $250

2

Fixed OperationsParts 2016 KPI Service 2016 KPI

Gross profit % 23-25% Gross profit % total 66-68%

Days’ supply 45-50 Gross profit % labour 75-78%

Monthly gross per staff $16,000-$17,000 Monthly labour gross per tech $11,000-$12,000

$ sales per $ salary 17 Unapplied time % COS 5% max

Gross ROI 180-200% Non-chargeable salaries % gross 22-24%


* Apprentices and foreman are weighted to arrive at an adjusted number of technicians

Chargeable to non-chargeable 2 to 1

Labour hours per retail RO 2.0 hours

Technician to service advisor 5 to 1

Parts / labour ratio $0.60

Fixed absorption (minimum) 55%

Finance and InsuranceNew Vehicles 2016 KPI Used Vehicles 2016 KPI

Finance penetration 35-40% Finance penetration 35%

Income per contract $2,300-$2,500 Income per contract $2,600-$2,800

Finance per retail unit $885 Finance per retail unit $900

Insurance per retail unit $200 Insurance per retail unit $200

F&I income per staff per month $55,000-$60,000

Units retailed per F&I staff per month

50-60

3

Luxury edition

The Big PictureDealership Profitability 2016 KPI Gross Contribution 2016 KPI

Net profit % sales 3.5-4% New 46%

Rent % gross 11% Used 10%

Admin & DP salary % gross 5% Front-end 56%

Gross % sales 14-16% Parts 13%

Monthly gross per employee $12,000-$13,000 Service 31%


Finance and insurance income

13-15% of total gross

Vehicle OperationVehicles 2016 KPI Used Vehicles 2016 KPI

Gross profit % 9-11% Gross profit % 12-13%

Gross profit per unit * $4,500-$5,000 Gross per unit $2,500-$3,000

Days’ supply 60-65 Days’ supply 65-70

Unit per sales staff per month 11 Unit per sales staff per month 11-13

Gross per sales person per month $50,000-$55,000 Gross per sales person per month $35,000-$40,000

Advertising per unit $500 Advertising per unit $500

Floor plan per unit $480 Floor plan per unit $300

Salaries & comm. per unit $1,100 Salaries & comm. per unit $800

Gross ROI 70% Used / new ratio 0.4

Aftermarket income per unit $350 Gross ROI 75-80%

* Includes holdback, bonuses and aftermarket Aftermarket income per unit $250

4

Fixed OperationsParts 2016 KPI Service 2016 KPI

Gross profit % 24% Gross profit % total 70%

Days’ supply 50-60 Gross profit % labour 78%

Monthly gross per staff $18,000-$20,000 Monthly labour gross per tech $12,500-$13,000

$ sales per $ salary $18-$20 Unapplied time % COS 5% max

Gross ROI 180-200% Non-chargeable salaries % gross 30%

* Apprentices and foreman are weighted to arrive at an adjusted number of technicians

Chargeable to non-chargeable 2 to 1

Labour hours per retail RO 2.5 hours

Technician to service advisor 5 to 1

Parts / labour ratio $0.80

Fixed absorption (minimum) 50%

Finance and InsuranceNew Vehicles 2016 KPI Used Vehicles 2016 KPI

Finance penetration 30-35% Finance penetration 30-35%

Income per contract $2,200-$2,400 Income per contract $2,250-$2,450

Finance per retail unit $750 Finance per retail unit $800

Insurance per retail unit $170 Insurance per retail unit $200

F&I income per staff per month $55,000-$60,000

Units retailed per F&I staff per month

50-60

5

About Pitcher Partners

Pitcher Partners is an accounting, auditing and rm providing personal service

and quality advice to high wealth individuals, small to medium public companies, large proprietary companies, local government and privately owned businesses.

rms located in Melbourne, Sydney, Perth, Adelaide, Brisbane and Newcastle, Pitcher Partners is purpose-built for the middle market. We have a strong reputation for providing personal service and quality commercial advice to our clients across a broad range of industries.

On 1 November 2015 Moore Stephens Sydney and Pitcher Partners Sydney merge to become a new Pitcher Partners t from greater infrastructure

support both locally and nationally through the Pitcher Partners association.

t from the collaboration and support that comes from the eight largest international accounting network - Baker Tilly International. Increased scale brings unlimited potential for growth, with exposure to new service off cant opportunities for both our clients and our staff .

Our commercial services to dynamic businesses

Financial essentials• Accounting and Business

Advisory Services• Audit, Risk Management

and Assurance• Internal Audit• Recovery, Turnarounds

and Insolvency• Tax advice and Compliance

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and Commercial Advice• Business Performance

Improvement• Business Structuring• Corporate Finance• Corporate Governance• International Business Advisory• Investment Advisory Services• Succession Planning• Superannuation Services• Tax Consulting• Technology and IT Consulting• Valuations

Our private wealth services• Estate Planning• Family Offi ce Management• Investment Advisory Services• Philanthropy Services• Succession Planning• Superannuation Strategies• Tax Advice and Compliance

Industry specialisations• Retail• Professional services• Health and aged care• Manufacturing

t• Property and construction• Government and the public sector• Agriculture• Food and beverage• Hospitality

$3.8bnWorldwide revenue 2015 (USD)

141Countries

28,000+Partners and staff globally

100+Partners nationwide

1,200+People nationally

Pitcher Partners is a national association of

rms.Liability limited by a scheme approved under Professional Standards Legislation.

Sydney

240+Total Sydney staff

26Sydney partners

106

Firm locations

MELBOURNE

ADELAIDE

SYDNEY

BRISBANE

PERTH

NEWCASTLE

Pitcher Partners has the resources and depth of

rm, rm

feel. We give our clients the highest level of personal service and attention. That’s the diff erence.

Pitcher Partners is a national association rms. Liability limited by a

scheme approved under Professional Standards Legislation.

David Knowles

Alexis Kokkinos

2015

AUSTRALIAN ACCOUNTINGAWARDS 2015

FIRM

OF THE YEAR – LESS THAN $1B

N 2015


GRADUATE PROGRAM OF THE YEAR 2015


THOUGHT LEADER OF THE YEAR

TAX & ACCOUNTINGEXCELLENCEAWARDS 2015 Accounting Firm of the Year

WINNER

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2 0 1 4F INAL I ST

7

Key

24Asia Paci�c Firms

28North America

Firms

62European Firms

36Middle East and

African Firms

15Latin America

Firms

Baker Tilly International is one of the world’s leading networks of independently owned and managed accountancy and business advisory firms united by a commitment to provide exceptional client service.

Every day, 28,000 people in 141 countries share experiences and expertise to help privately held businesses and public interest entities meet challenges and proactively respond to opportunities. International capability and global consistency of service are central to the way we work.

Our globalreach

GlobalExperts across a wide range of industry and business sectors, each Baker Tilly International member firm combines high quality services and in-depth local knowledge.

165 independent firms come together across four geographic areas. Sharing knowledge and resources, our business approach brings together the power of the global network to deliver exceptional results to clients globally.

8

Key


28North America

Firms

62European Firms

36Middle East and

African Firms

15Latin America

Firms

Baker Tilly International is one of the world’s leading networks of independently owned and managed accountancy and business advisory firms united by a commitment to provide exceptional client service.

Every day, 28,000 people in 141 countries share experiences and expertise to help privately held businesses and public interest entities meet challenges and proactively respond to opportunities. International capability and global consistency of service are central to the way we work.

Our globalreach

GlobalExperts across a wide range of industry and business sectors, each Baker Tilly International member firm combines high quality services and in-depth local knowledge.

165 independent firms come together across four geographic areas. Sharing knowledge and resources, our business approach brings together the power of the global network to deliver exceptional results to clients globally.

Key


28North America

Firms

62European Firms

36Middle East and

African Firms

15Latin America

Firms

LocalPitcher Partners is an independent member of Baker Tilly International. Our strong relationship with other Baker Tilly International member firms, particularly in Asia Pacific, has allowed us to open many doors across borders for our clients.

9

Get in touch...

Insight_AutomotiveKPIs_160317

MELBOURNE

+61 3 8610 5000 [email protected]

ADELAIDE


SYDNEY


BRISBANE


PERTH


PITCHER.COM.AU

NEWCASTLE


Pitcher Partners is an association of independent firms. Liability limited by a scheme approved under Professional Standards Legislation.

John Gavljak National Head of Automotive

+61 2 8236 [email protected]

John TaouilManager – Automotive

+61 2 8236 [email protected]

key performance indicators for automotive retailers

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