Deloitte: Mixed fortunes for global automotive markets | Big4.com

Deloitte: Mixed fortunes for global automotive markets

February 28, 2012

Rob Starr, Big4.com Staff Reporter

The annual Deloitte Motor Industry Services ? Australian Industry Overview 2012 report shows this has been a year where there were mixed fortunes for global markets, both in broad economic terms and in vehicle sales, while ?the continued solid growth of the Australian economy has made the market here stand out, bringing the attention of many multinational car companies.

It was reported that on average, dealers operating in the Volume Market saw a fractional improvement in their results over the last 12 months, from 1.8% NPS in 2010 to 1.9% in 2011, while the Prestige Market dealers remained stable at 2.1% NPS. ?Perhaps the biggest surprise was the story in the Luxury Market, where the average profit of Luxury Market dealers declined from 2.1% NPS in 2010 to 1.6% in 2011.

Other highlights for the report included:

• The Top performers plan to make 5% net profit on sales.
• They then focus on the non-financial KPI?s that make this up (internet and showroom statistics, service retention and CRM measures) and their level of achievement.
• The focus is on the customer, not the franchise. A focus and reward structure built around creating value per customer interaction and maximising front end gross means the need to chase back end (re-earnable) margin isn?t as critical.
• People generate 100% of the gross and represent 70% of the costs. So the top dealers ensure their people are trained, developed and rewarded. The parts department continues to provide an important source of income to help offset the profit drain commonly experienced by the vehicle operations.
• Staff resource levels are increasingly being adjusted to best practice levels and there is a greater focus on cash flow and inventory management.

Danny Rezek, Deloitte Motor Industry Services partner supplied his overview:

?Within this environment we saw the average dealer profitability across the whole industry remain fairly static for 2011 with a net profit as a percentage of sales (NPS) of around 2.0%. However, looking behind that number, it was interesting to see that the way dealers generated their profit had shifted during the year.?

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Source: http://www.big4.com/deloitte/deloitte-mixed-fortunes-for-global-automotive-markets

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