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Service and Parts discounted for Sales?

DealerSocket CRM

BDeVries

Noob
Jan 5, 2016
2
1
1
First Name
Brittany
Our dealership is having a conflict that I am sure many others have. I am curious if the industry has moved to a specific trend. So here are my questions..

-Those with service centers - what do you charge the sales department for internal work? Do they pay the retail labor rate that a customer pays? Or is it discounted and if so, by how much?

-For parts, same thing. Does sales pay retail price or a discounted rate? And discounted by how much?
 
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Alex Snyder

President Skroob
May 1, 2006
2,847
1,488
113
First Name
Alex
You're probably not going to like this: Charge the sales department retail or higher.

When you own a business you need to manage cash flow. It is the most important part of keeping the lights on. If you have a captive stream of income you maximize it. If you own the land and building the dealership is working out of, you charge the dealership rent and set the real estate up as a separate business. And you charge the dealership A LOT of rent. As much as the IRS will let you get away with.

It is kinda the same for variable vs. fixed operations internal sales. You pump the dollars into the fixed operations as much as possible because that part of the financial statement is the lifeblood of the organization. Take your losses in sales. It is all part of that critical money management happening up high.

If you're not the owner... well... you have to play with the cards you've been dealt. And I have felt your pain. But there might be times the actual dollars going into your paycheck flowed from the service and parts department.
 

jscole86

Refresher
Mar 2, 2011
135
98
28
First Name
Josh
Don't ever miss retailing a vehicle because of mark up. That said, you should maximize the margin wherever you can.. and it starts with service / parts. Also, anyone at your store that is paid on Used Vehicle front gross, should have their pay plan restructured so it includes internal parts and service gross --> do that and watch everyone get on the same page and you'll also see the arguments disappear between the UCM and Fixed ops.
 
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Tallcool1

Sr. Refresher
Mar 17, 2014
342
200
43
First Name
Clint
It is just a pack. A way to move profit away from the most heavily compensated department in the store (sales), and into one of the least compensated parts of the store.

Ultimately, billing internal at Retail is the way to go...because it is really a pack against the sales department. @jscole86 hit it on the head. Pay UC Dept managers on the Internal Service/Body Shop/Parts gross, and there ya have it!