I’ve always encouraged dealers and managers to track ROI. It’s one of the most critical pieces of information you can know—and it directly impacts your bottom line.
If nothing else, tracking ROI keeps you aware of how important speed is when it comes to making money on used cars. (Or new ones, for that matter.)
My first promotion in the car business was as a used car manager. In my mind, I was determined to guard the dealership’s money as if it were my own—especially when it came to “giving away” something to take care of a customer.
Honestly, I didn’t know any better. Back in the early ’70s, CSI wasn’t even a buzzword, and nobody talked about getting a good return on used car inventory. Sure, we wanted to make gross, but ROI wasn’t part of the conversation.
Fast-forward to today—there are millions of dollars tied up in dealers’ inventories.
Every member of the management team should understand how much money is sitting there and feel the responsibility to deliver ownership a fair return on that investment.
If you had a stockbroker handling your money, wouldn’t you hold them accountable for getting you a good return?
So how can you, as a member of the management team, not feel the same weight of responsibility?
If nothing else, understand the three key numbers that go into the ROI calculation:
- Front Gross
- Age
- Cost of the Unit
The sweet spot—excluding F&I—is around 110%.
If you include F&I, you need to be north of 200%
.
Want to check your ROI? Go to FixRoi.com and plug in the three numbers.
No matter how much gross you make or how much you have in the unit, the longer it sits, the worse your ROI gets.
So ask yourself—
If your stockbroker kept giving you a poor return, what would you do?
That’s all I’m gonna say.
– Tommy Gibbs