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Measuring controllable expenses in the used-car department

November 24, 2010

How can a dealer determine if his used-vehicle operation is pulling its weight? Does it contribute to the overall health of the dealership? By measuring expenses, a dealer can determine an average gross profit per used vehicle retail (PUVR). An awareness of expenses creates an attitude of (1) controlling those expenses, (2) maintaining a higher gross PUVR, and (3) increasing volume.

The first line of defense is to increase the volume of retail usedvehicle sales. In so doing, the expenses are spread over a greater number of units, automatically reducing expenses PUVR. A formula devised by the National Automobile Dealers Association can help measure controllable expenses. The formula was excerpted from "A Second Look: Profitcentering the Used-Vehicle Department," available from the NADA in videotape, diskette and workbook set formats.

The management guide can be ordered by calling 800-252-6232, ext. 2. Cost to NADA members is $189 for the 35-minute video, one diskette and one 36-page study guide, plus shipping. Additional guides are $10 each.