Key Performance Indicators: The Keys to …

1 1 Key Performance Indicators: The & quot ; keys & quot ; to Professional Dealership Management & GrowthWithJeff Sacks, Jeff Sacks AutoModerated byMike Bowers, Executive Editor at DealersEdgeThursday, August 29, 20131 2:30pm ETJeff Sacksis considered one of the premier experts in dealership operations. His accounting and business finance degrees, coupled with his practical & quot ;in the seat& quot ; operational experience, have allowed him to offer his unique insights to automotive clients worldwide for over 30 immigrated to the United States in 1977 and has immersed himself in car dealership operations since then. After having worked for a variety of dealerships he founded Jeff Sacks & Associates, a consulting company dealing with the needs of his automotive clients.

2 Jeff merged his practice and became a principal with Dixon Hughes PLLC(formerly Dixon Odom), a leading automotive CPA firm, in 2005, NCMA ssociates, Inc. and Jeff Sacks finally merged after collaborating for many years on various joint initiatives, including the highly respected General Manager's Bootcampsm. In 2009, Jeff returned to his roots as operating President with Jeff Sacks & Associates in order to provide customized programs to his has spoken before many organizations that have used him as a resource to improve dealership functionality as it relates to process improvements strategies, asset and expense controls, computer utilization, management information systems and other related has published many automotive specific articles and was the contributing editor to the Jeff Sacks Newsletter.

3 Currently, Jeff shares his insights on and knowledge of the automotive industry in his bi-monthly Dealer Magazine Sacks Auto |Tel: (858) 273-8085 | Toll free: (800) 867-2160 |Fax: (858) 273-0876 Performance Indicators -The keys to Professional Dealership Management & Growth Jeff Sacks, CEOJeff Sacks AutoLa Jolla, WebinarThe keys to Professional Dealership Management & Growth Drive productivity through a targeted layered management approach Key Performance Indicators (KPIs): What should they be? Do they remain constant or do they evolve? How can they be improved upon? Create your own customized report card Under copyright law, duplication is prohibited without written consent by Jeff Sacks & Associates3 Auto Sector Performance SAARS ource: Stephens, Inc.

4 Under copyright law, duplication is prohibited without written consent by Jeff Sacks & AssociatesKey Focus Areas that DrivePerformance Personnel Productivity Asset Management Under copyright law, duplication is prohibited without written consent by Jeff Sacks & Associates4 DrivePersonnel Productivity Personnel Costs: Exceed 65% of total dealership costs Total personnel costs are probably going to be increasing rather than decreasing Dealership Posture: Drive Gross per Employee Higher: Continually seek out and embrace great training Rationalize/streamline staff alignment Embrace appropriate technology Insist on accountability Under copyright law, duplication is prohibited without written consent by Jeff Sacks & AssociatesStaff Alignment Productive to Supportive Total Dealership: Definition of productive employees Goal is to be above 60% productive to supportive: Easier to accomplish the larger the footprint of the dealership and the # of employees Publics are shooting for well in excess of 60% across the board How does your dealership compare?

5 Under copyright law, duplication is prohibited without written consent by Jeff Sacks & Associates5 If you are not producing gross, you had better be supporting those who do! : Management s leadership task is to enable the gross producers to increase their effectiveness Look to process improvement and/or technology to help enhance this ratio: Examples: Digitalizing the Service Drive Process Consider providing assistants for high unit volume producers Dealership culture: Commitment to the ProcessSome Pointers Personnel Productivity Under copyright law, duplication is prohibited without written consent by Jeff Sacks & AssociatesPersonnel Productivity A Constant Focus The two positions that generate the most gross profit: Finance & Insurance Producers Service Advisors Ensure that these positions are occupied by gifted, ethical, accountable and talented employees Must maintain high Performance thresholds Under copyright law, duplication is prohibited without written consent by Jeff Sacks & Associates6 Personnel Productivity StandardsAn Inverted Pyramid Approach Salespeople selling in excess of 12 vehicles per month at acceptable front end gross Finance managers handling in excess of 75 sales contracts per month with acceptable back end gross Technicians producing close to 200 hours per month in service (beware of an unbalanced labor mix)

6 Ratio of service advisors to techs between to techs per service advisor Technicians comprise more than 50% of the total service department employee count Sales per parts employee of close to $50K per month Under copyright law, duplication is prohibited without written consent by Jeff Sacks & AssociatesGross per Employee GuidelinesGross Produced per Dealership perEmployee per Average Month Domestic Dealers: >$9,000 Regular Imports: >$11,000 Luxury Imports: >$13,000 Under copyright law, duplication is prohibited without written consent by Jeff Sacks & Associates7 Gross per Employee SubsetsAverage per Month per PositionSALES: Gross produced per salesperson Gross produced per sales manager Gross produced per F & I producerSERVICE: Gross per technician Gross per service advisorPARTS: Gross per parts employee Under copyright law, duplication is prohibited without written consent by Jeff Sacks & AssociatesCommentary: Statistical Data Gross Profit Analysis: NEW Gross Profit per UnitNew Vehicles ($)Penske Auto Group2,807 Lithia Motors2,278 AutoNation2,007 Asbury Automotive1,987 Group 1 Automotive1,935 Sonic Automotive1,864 Source: Stephens, Inc.

7 2Q13 Auto Ranking Under copyright law, duplication is prohibited without written consent by Jeff Sacks & Associates8 Source: Stephens, Inc. 2Q13 Auto RankingGross Profit per UnitUsed Vehicles ($)Lithia Motors2,768 Penske Auto Group1,928 Asbury Automotive1,762 Group 1 Automotive1,697 AutoNation1,598 Sonic Automotive1,418 Commentary: Statistical Data Gross Profit Analysis: USED Under copyright law, duplication is prohibited without written consent by Jeff Sacks & AssociatesCommentary: Statistical Data Finance & Insurance Finance & Insurance per Retail Vehicle ($)AutoNation1,375 Asbury Automotive1,305 Group 1 Automotive1,188 Sonic Automotive1,116 Lithia Motors1,100 Penske Auto Group1,024 Source: Stephens, Inc.

8 2Q13 Auto Ranking Under copyright law, duplication is prohibited without written consent by Jeff Sacks & & ServiceF&IJanuary June, 2013 -Business Line Profit Contribution vs. Revenue ContributionSales % TotalGP % Total*Source: Asbury Automotive filings Under copyright law, duplication is prohibited without written consent by Jeff Sacks & AssociatesGross-to-Sales:Public Companies 2Q 2013 Key Elements to achieving high Gross-to-Sales %:_____ Under copyright law, duplication is prohibited without written consent by Jeff Sacks & Associates10 The Personnel Productivity Picture Don t lose sight of the critical elements: Your other channels that you need to work Out of the box thinking and in the box execution Have systems and processes to enable the production of gross Under copyright law, duplication is prohibited without written consent by Jeff Sacks & AssociatesTHENMULTIPLE DEALERSHIPSNOWMULTIPLE DEALERSHIP WEBSITESRESEARCHENGAGECONVERSION/ PURCHASEVISITED DEALERSHIPS ON AVERAGEVISIT DEALERSHIPS ON AVERAGE Under copyright law, duplication is prohibited without written consent by Jeff Sacks & AssociatesThe Purchase Funnel Then & Now Under copyright law, duplication is prohibited without written consent by Jeff Sacks & Associates11 Internet Lead Response TargetsOf every 100 leads you receive.

9 ActualTargetWith how many do you establish two-way communication?60% =60Of those, how many do you make appointments with?60% =36Of those appointments made, how many show up?60% =22Of those, how many purchase a vehicle?60% =13 Source: 2011 Hyundai eCommerce for Dealership Leaders Seminar Under copyright law, duplication is prohibited without written consent by Jeff Sacks & Associates Under copyright law, duplication is prohibited without written consent by Jeff Sacks & Associates Linking Dealership Activities to Produce Incremental Gross Sales to Service Handoffs Service Drive Activities Customer Retention Activities Customer Defection Activities Under copyright law, duplication is prohibited without written consent by Jeff Sacks & Associates12 Asset Management New Vehicle Days Supply Used Vehicle Days Supply Inventory of Hours To Sell Under copyright law, duplication is prohibited without written consent by Jeff Sacks & AssociatesCommentary.

10 Statistical Data New Vehicles: Days Supply InventoryDays Supply New VehiclesSonic Automotive53 Penske Auto Group63 Group 1 Automotive67 AutoNation67 Asbury Automotive68 Lithia Motors76 Source: Stephens, Inc. 2Q13 Auto Ranking Under copyright law, duplication is prohibited without written consent by Jeff Sacks & Associates13 Commentary: Statistical Data Used Vehicles: Days Supply InventoryDays Supply Used VehiclesSonic Automotive29 AutoNation30 Group 1 Automotive33 Asbury Automotive36 Penske Auto Group42 Lithia Motors51 Source: Stephens, Inc. 2Q13 Auto Ranking Under copyright law, duplication is prohibited without written consent by Jeff Sacks & AssociatesBias to Execute Identify low hanging fruit and be cognizant of your short, medium and long term strategic objectives Create a game plan that includes.