Do You Know Your Margins?

Knowing your margins provides you with good yard- markers with which to locate your financial position on the field of dealership play.

When you deposit money into your local bank, you want to know what interest rate you will receive on your deposit. The banker may tell you that you will receive 1% annually on your money, which means that for every $100.00 you deposit at the beginning of the year, you will receive $1.00 at the end of the year. The 1% figure helps you understand exactly what to expect of the bank in exchange for the use of your money.

Dealership operations are much the same. Now, I can’t speak for all dealers and there is a variation between the margins for an RV dealer and a marine dealer, but the following are margins that I use when I analyze a dealership’s business operations. Please keep in mind that the margins below are strictly my opinion based on experience and by no means represent industry standards. Anyway, having disclaimed my entire claim to fame, here’s my input:

MARCO’s MARGINS: What You Should Attain

New RV/Boat Sales                     10-15% Gross Profit

Used RV/Boat Sales                    20-25% Gross Profit

Service Retail Labor                   75% Gross Profit Service Warranty Labor     72% Gross Profit Service Internal Labor               64% Gross Profit Service Comeback Labor    0% Gross Profit Service Retail Parts                    40% Gross Profit

Service Warranty Parts             30% for RVs/10% for Marine Service Internal Parts     25% Gross Profit

Service Come-back Parts           0% Gross Profit F/I Reserves/Ext. Warranty 90% Gross Profit

(10% allow for charge-backs) Overall Dealership G/P 20-25% Gross Profit – in the black