The service department, is similar to the parts department, and should be reported such that the Reporting Franchise is separated out from Other Franchises. As detailed here, service department information is displayed in three columns:
- Reporting Franchise
- Other Franchises
- Total (the sum of Reporting Franchise and Other Franchises)
Service sales and gross profit information should be categorised into the below types of sale, where:
- Sales represents the selling price of all labour, parts, sublet, oil, grease and other items sold through the service department
- Gross profit as is generally the case, equals sales less cost of sales
- Labour cost of sales represents the cost of technicians hours sold to complete a repair order (refer to ‘Types of Sales’ below for categorisation). This should exclude any apprentice training time as well as any annual or sick leave expenses
- Other service cost of sales includes the actual cost of parts, sublet repair, fuels, oils or other items
- Incentive Income should reflect all incentive payments and bonuses that specifically relate to the service department
Types of sale
Labour sales to all retail, fleet or government customers
- Capped price service jobs should be included here.
Labour sales relating to the dealership’s internal panel beating/bodywork operations (where one exists).
Warranty and policy claims
Labour sales performed under factory/extended warranty at factory/extended warranty approved labour rates.
Internal (incl. pre-delivery)
Work performed on all internal items, including accessory fitting, used vehicle reconditioning and warranty, free services, pre delivery, company vehicle maintenance etc.
Represents a gross profit adjustment for the cost of all technicians time not charged on to a repair order
- this number should be recorded as a negative.
Work performed outside the dealership by independent entities such as tyre services, auto electricians etc.
Body shop materials
Includes the sale of all miscellaneous items such as petrol, oil and grease, batteries etc. through work performed by the dealership’s internal panel beating/body work operations (where one exists).
Includes the sale of all miscellaneous items such as petrol, oil and grease, batteries etc. to retail or warranty customers.
Automatic calculation totalling the sales fields from the above.
Total gross profit
Automatic calculation totalling gross profit (less unapplied time).
Expenses of the service department should be reported such that the Reporting Franchise is separated from Other Franchises. This can be done in one of two ways depending on the dealership’s account structure/preference:
- Direct mapping/input: Reporting Franchise expense accounts should be entered into the Reporting Franchise column while all other franchise expense accounts should be entered into the Other Franchises column
- Percentage allocation: a percentage should be entered into the expense allocation boxes beside each of the departmental expense lines to allocate a portion of total service department expenses to the Reporting Franchise
Each expense line is available to collect the following information:
All wages paid or accrued to the non-chargeable/non-productive members of the service department – service manager, service advisors, workshop foreman, warranty clerk, courtesy bus driver
- if you have partly non-productive staff such as a foreman who is 50% productive, then 50% of his salary should be reflected in the labour cost of sales.
Training expense for service department staff
- subsidies received should be netted against this expense.
Advertising and promotion
All advertising and sales promotion expended in the service department including sponsorship, media coverage, displays, trade shows, signage etc.
Associated costs relating to shortfalls or non-receipt of warranty/policy claims e.g. rework not covered by factory warranty and amounts written off due to disputes.
Tools and supplies
Supplies specific to the service department and the nature of its operations (not office supplies) e.g. boxes, tape, razor blades, ladders, trolleys etc.
Equipment and vehicle maintenance
All expenses relating to the repairing and maintenance of equipment used in the service department, this includes office and workshop equipment, loan and other vehicles
- all other service department expenses that do not fit into the above/below categories should be included here.
Includes accrued technicians salaries for sick leave, vacation leave or public holidays
- sick/holiday pay for non-chargeable employees should be included in the above salaries line.
Automatic calculation totalling the expenses recorded in the above categories
Total selling gross
Equals to total gross profit and any incentive payments received less total service expenses – gives an indication of true departmental profit before the dealership’s fixed overhead expenses are taken into account.
Service performance indicators
As this information is not often included in a dealership trial balance, it is important that a dealership manually enter in these fields correctly in order for productivity and efficiency KPIs to be readily calculated in ProfitFocus reports.
Where a dealership has this information in their trial balance, the relevant accounts can be mapped accordingly.
Hours technicians are available to work during the month.
Hours technicians were clocked onto repair orders.
Hours technicians’ time were sold on repair order.
# of repair orders
Number of repair orders in the month.
# of work bays (including hoists)
Number of work bays in the service department.