You will recognize the title of this article is the popular definition for insanity. Surely that definition doesn’t fit your dealership. I know that you want to be more successful next year than this year and that speaks to the name of a best-selling book What Got You Here, Won’t Get You There by Marshall Goldsmith. That means you can’t apply the popular definition of insanity to your dealership.
Let me share a couple of stories with you. First, I had the chance to attend a WEDA sponsored parts seminar and learned a formula showing what the dealership must do to recoup wasting U.S. $1.50. The formula is expense ÷ percent of net profit. Using the industry average of 2 percent, the instructor showed that to recover the loss of $1.50 the dealership must sell U.S. $75 to recoup the wasted $1.50: $1.50 ÷ .02 percent = $75
Most of the participants were shocked by this financial fact. I was shocked they were shocked. I would have thought this was common knowledge among parts professionals. Assuming made an A** out of me (remember my training is in psychology not finance). Here’s the good news. Those participating in that seminar now know… and they can apply that knowledge at work because their dealer principals enrolled them in the class.
Western Equipment Dealer Magazine Spring 2019 Issue
By Larry Cole, PhD