Automotive News - October 21, 2013 - Supplement - S33

OCTOBER 21, 2013 ❙ 33

G R E G M AY H O N D A , WA C O , T E X A S , A N D G R E G M AY C H E V R O L E T, W E S T, T E X A S

Texas stores' weekly scrutiny of bills
cuts costs, encourages collaboration
Printed in Automotive News June 24, 2013
Amy Wilson
awilson@crain.com

uring the depths of the recession,
Texas dealer Greg May knew he
needed to look at all options to
limit expenses.
After scrutinizing monthly financial statements with his office manager, May realized
that he had to involve all of his department
leaders.
"I said, 'We really need to be concentrating
on these things all the time,'" May recalled.
"We need to make good decisions on these
expenses, and we really need to share all the
expenses for all the dealership departments,
so we could all learn from them."
The weekly expense review meeting was
born. In 2009, May and the managers at his
Honda store in Waco, Texas, and Chevrolet
store in West, Texas, began to set aside the
first part of their Tuesday management
meeting to review the previous week's bills
one by one. A so-called redline report is created at the end of the month with a detailed
spreadsheet for each vendor to help managers catch anomalies.
May saw big results from the beginning.
Expenses dropped 20 percent in 2010, the
first full year of the program. At the Chevrolet
store, monthly expenses fell from $325,000
to a steady $250,000 today. At the Honda
store, monthly expenses are down $25,000 a
month.
The reductions have touched all areas of
the dealership from office supplies to head
count, May said. Some porter positions were
eliminated when managers questioned
whether they were needed after seeing that
some porters stood around with long waits
between customers. Scam billings - solicitations designed to look like invoices or bills
for services that hadn't been authorized by
dealership personnel - also were weeded
out more effectively.
The review uncovered a leak in the Honda
store's sprinkler system when managers
questioned why the water bill had spiked. It
also led to lower electricity bills: Covers and
locks were installed on thermostats so employees couldn't bump up the heat in the

Dealer Greg May involves all his managers in a weekly review of expenses. In the first full
year of the program, in which bills are reviewed one by one, expenses dropped 20 percent.
winter or lower the air conditioning in the
summer.
May considers peer review the most important aspect of the program. It has led to
new programs and more collaboration
among managers. Managers are more careful before they sign up for a new expense because they know they will have to defend it.
"We question everything we do because we
know we'll talk about it in that managers'
meeting every week," May said.
The biggest reductions have come in advertising. Before the reviews started, "we just
spent and spent and spent" on new promotions hoping they'd bring more business into
the dealership, May said. Now managers
look at promotions more analytically, seeking evidence that they are working before
programs are continued.
The managers were surprised when they
saw how much the dealerships were still
spending on Yellow Pages advertising. That
was eliminated at a savings of about $3,000 a
month.

May changed his bonus system to reward
managers for total store results, not just for
their own departmental outcomes.
If the stores hit a certain net profit goal,
managers receive a $2,000 bonus that must
go toward taking a trip.
The Honda store hit its yearly goal for the
first time in 2012, and managers have gone
to such places as Las Vegas, Colombia and
the Caribbean.
May has watched collaboration blossom
among managers. They brainstorm ideas for
new programs and look for ways to spread
benefits across departments and reduce duplication of spending. For instance, if a
sales manager is considering a direct mail
campaign, the service director might ask
for a section of the mailer to print a service
promotion.
"You'll see [managers] going to each other
outside of the meeting and bouncing ideas
off of each other," May said. "It's 10 times
more effective because they've actually taken
ownership in the deal. This is our store." c

Automotive News - October 21, 2013 - Supplement

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