Fixed Operations
Examining Your Body Shop Profit Picture
By Dave Dunn
When it comes to body shop financial performance the average dealer who has a body shop looks the other way. The typical response we hear from dealers regarding body shop financial performance is that they don't understand the body shop or that you can't make money in a body shop.
However, there are established standards of performance for the body shop and you can and should make money. The impact of a properly run body shop on profit and CSI can be dramatic. Let's examine a few numbers relevant to your shop.
How much body shop business are you capable of generating?
Like all averages, you must be aware of special circumstances relating to your actual operation. In general, I believe that you should do a minimum of $1,000,000 in body shop business annually for every 1,200 units (new and used) sold. The $1,000,000 figure is the total sale including labor, parts, materials and sublet sales.
Dealerships that process their own used car work through the body shop often exceed this ratio. Keep in mind that these figures assume that no external marketing is done other than to your current customers who purchase vehicles from your operation. Once dealers learn the potential in sales and profit from their body shops, many often begin to market the body shop to the general public. Depending on the strength of large independent repairers within a market, dealers can often double their forecasted ratios by treating the body shop as a distinct and separate profit center. Many of my dealer clients have gone off-site with their body shop operations and really dominate their markets. We have dealers doing over $1,000,000 in total sales per month in such operations. In fact, a dealer in Fredericksburg, Virginia, Rosner Auto Group, is in the process of building an off-site facility which will be the largest, most professional body shop in the area. According to Clay Huber, General Manager, "We plan to be an offsite resource for the general public, not just our present client base." Huber has allocated some of the space to collision repair and some to mechanical repair. Huber feels that Rosner will get an opportunity to service customers that wouldn't necessarily frequent a traditional dealership. I recommend that you check out their Web site at rosnerauto.com. I predict that when this new facility is done and operating, dealers all across America are going to hear about it.
Sale Break Down
*Note: Material Sales are often less than 10% of the sale. Consequently dealership body shops lose money on paint and materials. The dealer often attacks the problem by seeking unreasonable discounts when the actual problem is that the estimators have not learned how to charge enough for paint and materials. Quick Tip: Pull a financial analysis report and calculate your paint and material relationship to the overall sales. If you are less than 10% you are leaving money on the table.
Profit Breakdown
Keep in mind that manufacturers often recommend accounting principles for the body shop statement. Normally we find that these recommendations are biased toward other departments. The body shop has traditionally been treated like a back yard business by the manufacturers. Consequently, results have been less than favorable. My advice to you is to quit mindlessly following the recommendations of a car company that does not care or is not qualified to give any advice about your body shop. Look at your body shop as a source of pride and profit. You will be amazed at the results.
Dave Dunn is the most respected consultant in the field of collision repair management. Dave owns and operates Masters School of Autobody Management in Santa Barbara, Calif. Dave also owns DaveÕs Auto Body in Galesburg Ill. ddunn@dealeronline.com
