Today’s technologically advanced Service Departments can spend millions of dollars in building expenses and equipment. Many dealerships consider the Service Department a necessary evil and the expense as a cost of doing business for the goal of selling units.
Monthly reviews often consist of how many units are sold and gross profit, instead of focusing on more specific indicators of dealership health such as actual performance versus potential. Reviewing key performance indicators (KPIs) of the Service Department can highlight areas of potential revenue increases, which will turn this often neglected department into a profitable component of a thriving dealership.
Many variables affect the profitability of the Service Department. The first step is to analyze the Facility Utilization and Labor Sales potential.
To find the maximum productive capacity of a Service Department:
Increasing the Service Department hours even slightly can make a dramatic impact in on the Facility Utilization rate. For example, a 10 bay dealership with a labor rate of $125 can increase their monthly revenue by $38,750 just by staying open 1 additional hour per day. Adding a second shift can almost double revenue.
To determine the Labor Sales potential of the Service Department:
To learn more about evaluating your Service Department’s profitability, contact the Motility Software Solution’s training department at email@example.com.