How to Read a Dealer Financial Statement
A dealer financial statement is the monthly report every franchised store sends its manufacturer. It shows, department by department, what the store sold, what it grossed, what it spent and what it kept, for the month and for the year to date. Read in the right order, it tells you exactly where the store is leaving gross and net on the table.
What's on the statement
Every manufacturer lays the statement out a little differently, but they all carry the same building blocks:
The balance sheet. Cash, receivables, vehicle and parts inventory, what the store owes, and the owner's equity.
The income summary. Sales, gross profit, expenses and net profit for each department: new, used, F&I, service, parts and body shop.
The expense detail. Every expense line (salaries, advertising, floor plan, rent, data processing, policy) for each department.
Department detail pages. Units, gross per unit, labor and parts sales by pay type (customer-pay, warranty, internal), inventory counts and days' supply.
Most lines carry two columns: month and year to date (YTD). Use the year to date for decisions. One month can swing on a single deal or a big repair order; the year to date shows the pattern.
Read it in this order
Net profit, then net-to-gross. How much of every gross dollar did the store keep? A healthy franchised store keeps about 20 cents of each gross dollar as net (Pocket20 benchmark). If it keeps much less, the answer is in the expenses. See Dealership net profit as a percent of sales.
Gross by department. Which departments carry the store, and which ones under-produce for their volume?
Fixed ops coverage (absorption). Does the gross from service, parts and body cover the store's overhead? See Service absorption rate.
Per-unit gross. New and used front gross per unit, and F&I per unit, against benchmarks. See New vehicle gross per unit.
Expenses as a percent of gross. Personnel, advertising, floor plan and the rest. A rising expense line on flat gross is where net quietly disappears.
Inventory health. New and used days' supply, aged used units, and parts turns.
Turn the gaps into dollars
A ratio by itself doesn't tell you what to fix first. Turn every gap into dollars: the difference between the store's number and the benchmark, multiplied by the store's own volume.
Example (hypothetical round numbers): a store retails 600 used units year to date at $1,200 front gross per unit. Against a $1,528 bar, the gap is $328 a unit, or about $196,800 in missed gross over the year to date. That is a much clearer priority than "used gross is a little low."
Rank every gap that way, biggest dollar first, and you have the fix list a good 20 group meeting would hand you.
Common mistakes
Comparing one month to a benchmark. Use the year to date, or a trailing three months.
Recomputing what the statement already prints. If the factory prints its own ratio (Ford prints absorption, for example), read that number rather than rebuilding it.
Reading gross without volume. A $300 per-unit gap on 40 units is not the same problem as on 400.
See it on your own statement
Pocket20 reads every line of your factory statement, measures it against benchmarks, and ranks your missed gross and net opportunity in dollars. Get a free read of your statement, or see a sample read first.