Make Your Parts Department Its Own Profit Center

by James Stoneham

Making the parts department more profitable is one of a dealership’s top challenges. Using a reliable dealership management system such as Charter Software’s ASPEN can greatly assist you in achieving your parts department’s maximum potential.

The parts department is a major part of your dealership’s “bottom line”  profitability, so to ensure total support of the store’s overall operation, you must view and operate the parts department as its own separate profit center.  To do this, you will need to analyze current performance, establish marketing goals and react on the areas that need attention.  Your parts department can become much more profitable by other means than just simply raising prices.

ASPEN Windows-based Dealership Management System is an affordable solution with built-in tools to help you pinpoint and improve the areas of your parts department that need work.

Accurate Departmental Accounting through ASPEN

  • Built-in departments on the General Ledger chart of accounts allow you to track expenses and revenue of each department
  • Vendors can be set up to distribute to the proper departments automatically
  • Print each department’s financial statement to see overall contribution to net income
  • Set up departmental budgets and report budget versus actual – then use that info to act on problem areas

Only Stock What Sells Using ASPEN

  • Keep an accurate sales history by month for five years
  • Use past sales history, order codes and season codes to automatically generate suggested stock orders based upon what sells and when
  • Record lost sales with just one-click – see what you should be stocking so you don’t miss out on future sales
  • Generate surplus returns on non-moving parts, return what doesn’t sell and buy what does
  • Auto-reset order formula codes when demand is dropping
  • Achieve the best purchase discount possible by matching parts you need to suppliers’ promotional programs

View Your Parts Department “Report Card” through ASPEN

  • View sales volume and margin reporting by brand
  • Track inventory turnover ratios by brand
  • Compare stock order vs. emergency order percentages by brand
  • See fill percentages for the shop and counter for both normally stocked and all parts
  • View the value of inventory with zero sales and its percent to total inventory
  • Reports include up to 12 rolling months on one page to see trends for all of the above
  • Use the above metrics to balance a high fill percentage with the minimum investment in inventory
  • Track parts warranty expenses by brand to determine overall profitability by brand
  • Use the information to narrow down your suppliers by only stocking those that perform

Ideas to Increase Sales Volume with ASPEN

  • Generate customized promotional mailings by type of customer, service dates or by the type of equipment they own
  • Market services to customers with expiring warranties
  • Include on customer invoices suggestions for additional parts to be used in conjunction with the part sold

 

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Filed under: Best Practice, Financial Management

Written by James Stoneham