Anyone in the business of selling cars knows that the sales process has been upended in recent years. Not only do dealerships have to contend with companies that bring sales directly to a consumer, but they also are now working with a consumer who is incredibly shopping-savvy. It used to be that consumers would spend a week visiting multiple dealerships in search of a price that fit their budget. Now they are bringing new knowledge directly to the dealership showroom and using it to apply a form of price pressure. This puts dealerships in an increasingly competitive position where they need to take a close look at every area of the business that affects profitability. This includes the dealership pack.
When the correct margins are built into a car pack, a dealership can see a strong profit on every sale. But without the right pack strategy, profit margins can suffer. As a dealership, how do you ensure that your vehicle pack is sufficient? An outsourced CFO can help.
What’s Included in a Dealership Pack
Car packs, when developed correctly, can have a strong impact on a dealership’s overall profitability. It’s important not to group packs as a general accounting category but as individual line items. A Soft Pack is generally directly tied to a salesperson’s commission while a Hard Pack can affect the overall base inventory price of the vehicle. In short this means that a soft pack is tied into the gross sales number and a hard pack is tied to the inventory cost.
As a general rule, a car dealership pack does not directly include the cost of document processing, overhead costs, or add-ons to a buyer’s purchase.
The Role of an Outsourced CFO
If you are using the same numbers to calculate your vehicle pack that you did last year or even six months ago then your pack totals are probably no longer supporting you in the way that they once did. That’s because changes in inventory (from cars sold, added, or both) and the direct and indirect costs of doing business mean that those static pack numbers are most likely no longer in line with your dealership’s financial strategy.
And that’s where an outsourced CFO can help. They can develop, and then return to, a pack pricing strategy that keeps costs competitive as well as sales profitable.
For example, an outsourced CFO may look at sales across the past three months, consistent overhead costs, and expenses that aren’t consistent or easy to categorize (i.e., after-sales repairs, transport costs, supplies, etc.) to determine appropriate pack numbers. They can also establish triggers that will call for those numbers to be re-evaluated and perhaps realigned.
The strategy and forecasting that an outsourced CFO brings to that equation ensures those numbers can help the dealership reach its overall profit potential.
Operate at Optimal Profitability With an Outsourced CFO
Reaching profitability is of course the goal but without a good strategy those profit numbers will be a spike, not a sustainable path to a strong bottom line. That consistency is what a dealership experienced outsourced CFO can work with your internal financial team to develop.
If you’d like to learn more about how your dealership can benefit from outsourced CFO support, schedule a free consultation today.