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The Big 3 Focus Points for Exceptional GMs:
1. Asset Management
2. Process Management
3. Efficiency Management
Effective use of dealership assets depends on “Capacity Utilization”.
Capacity utilization in an auto dealership is the efficient use of resources, including personnel, inventory, and facilities, to optimize sales and profits. High utilization indicates strong demand, streamlined operations, and effective marketing, while low utilization reflects potential inefficiencies or market challenges. Regularly monitoring and adjusting capacity utilization can drive continuous improvement, enhancing customer satisfaction and dealership
success in the competitive automotive landscape.
Assets of the dealership are commonly expressed as “Asset Inventories.” There are many that the GM has to focus on with a special focus on maximizing the dealership’s
return on the investment in each inventory class.
Three Primary Asset Categories Under the GMs Control and Guidance:
Inventories
Parts
Vehicles
Let’s dig a little deeper into just 1 Asset Category…
Time Inventory – Human Assets
Perhaps the most difficult to manage are the Inventories of “Employee Time.” It’s your responsibility to maximize the organization’s benefits from its investment in having skilled people to carry out the business plan.
The organization pays to have team members in place and operating effectively to help build and maintain a suitable Return on Investment (ROI). Payroll is a huge expense item and the one category where wasted investment and effort can remain somewhat hidden. It is the inventory of time from your “Line Employees” that is most important to monitor closely.
In almost all organizations, team members can be divided into “Staff” and “Line” categories.
A staff position is typically a role that provides support, advice, and expertise to the line positions … those that are responsible for the primary activities of the business.
Examples of staff (or support) positions may include human resources, finance, legal, IT, and marketing departments (sometimes), which provide support to the line positions by performing functions such as hiring, budgeting, legal compliance, and technology management.
A line position in the dealership is a role that directly contributes to the core activities of the business and is responsible for achieving the business’s objectives. Line positions have direct responsibility for the sale and delivery of your many products and services.
You have a somewhat complex list of positions in the dealership; each requiring your oversight and direction. These include:
Vehicle Sales Consultants- There are a number of methods for compensating a salesperson, but the common denominator is that they all occupy space in the organization. A highly productive salesperson does well for themselves, but also contributes even more to the financial health of the organization. Having ineffective salespeople occupying space in your showroom has to be avoided.
F&I- For many, if not most, dealerships the F&I process is key to producing a healthy gross profit on the sale of new and used vehicles. It is also a sticking point where customers become frustrated and dissatisfied with the entire buying process. Some experts in the field have indicated that GMs should focus on the quality of their F&I personnel as major and important contributors to the bottom line for the whole organization.
Service Advisors- Often underappreciated; the Service Advisor has more opportunity to either delight or repel future customers than anyone else in the dealership. Even more so than in the showroom, as visits to the Service Advisor’s counter are often filled with angst for the customer. Earning the customer’s trust is key to success in this position. But, of course, they are also key to helping to build a healthy gross profit from the sales they generate.
Technicians- Like everyone else, technicians take up space and time and need to be productive… for themselves as well as for the organization. Whether you pay them a constant salary; and hourly rate by time spent; or employ the flat rate system… in each case the technician uses valuable space within the service department which needs to be utilized to maximum efficiency.
Parts Consultants- For the most part, the Parts Counterperson is functioning at high efficiency when they are supplying the parts needed by technicians to complete the repair orders in process. Service (nor parts) can produce gross profit until the repair order is completed.
The General Manager Guidance presented above is just a small segment of a complete DealersEdge Guide – General Manager’s Desk Reference and Operating Guide. See below for info on how to get a copy for your desk.
The automotive General Manager's core responsibility lies in safeguarding organizational processes by skillfully leveraging the expertise and intelligence of team members.
Through effective delegation, collaboration, and communication, they foster a dynamic work environment that promotes innovation and ensures the organization's resilience, ultimately driving success and long-term sustainability.
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