Automotive News Canada - February 2021 - F10
FIXED OPS JOURNAL
" Fixed absorption guarantees they're going to
be in business tomorrow without the need to sell
new cars. One of the things we've learned during
the pandemic is that service is the backbone of the
dealership. Not the back end, but the backbone. "
BOB ATWOOD, management instructor, NADA Academy
SELF-ABSORBED
Dealerships can boost key fixed absorption metric to survive and thrive
U
RICK POPELY
foj@autonews.com
.S. new-vehicle sales fell 14 percent last year, and many dealerships suffered greater declines in
states where businesses were
locked down because of the pandemic, temporarily idling sales.
That shifted more pressure to service departments to pay the bills and keep the lights on,
and it made fixed absorption - the ability of
fixed operations to cover a dealership's expenses - more of a priority for many managers.
PAGE 10
FEBRUARY 2021
" Fixed absorption guarantees they're going
to be in business tomorrow without the need
to sell new cars, " Bob Atwood, a management
instructor at the NADA Academy, told Fixed
Ops Journal. " One of the things we've learned
during the pandemic is that service is the
backbone of the dealership. Not the back end,
but the backbone. "
Fixed absorption is often preached as a necessary tool for dealership success, but definitions vary. Some say service departments
should cover 100 percent of a dealership's
fixed costs, leaving out variable expenses such
as sales commissions. Manufacturers often
set other guidelines for their dealers.
The NADA Academy says fixed operations
should cover 60 percent of all costs, and
used-vehicle sales 40 percent to reach 100.
(See chart, next page.) The national average
among NADA members is 56 percent absorption from fixed operations.
" If I get to 100 percent, then all new-vehicle
sales are pure profit, then I can sell more cars
at lower gross, thereby putting more cars over
the curb and have more vehicles come back
into the service department, " Atwood says. " If
Automotive News Canada - February 2021
Table of Contents for the Digital Edition of Automotive News Canada - February 2021
Automotive News Canada - February 2021 - Intro
Automotive News Canada - February 2021 - 1
Automotive News Canada - February 2021 - 2
Automotive News Canada - February 2021 - 3
Automotive News Canada - February 2021 - 4
Automotive News Canada - February 2021 - 5
Automotive News Canada - February 2021 - 6
Automotive News Canada - February 2021 - 7
Automotive News Canada - February 2021 - 8
Automotive News Canada - February 2021 - 9
Automotive News Canada - February 2021 - 10
Automotive News Canada - February 2021 - 11
Automotive News Canada - February 2021 - 12
Automotive News Canada - February 2021 - 13
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Automotive News Canada - February 2021 - 20
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Automotive News Canada - February 2021 - 24
Automotive News Canada - February 2021 - 25
Automotive News Canada - February 2021 - 26
Automotive News Canada - February 2021 - 27
Automotive News Canada - February 2021 - 28
Automotive News Canada - February 2021 - F1
Automotive News Canada - February 2021 - F2
Automotive News Canada - February 2021 - F3
Automotive News Canada - February 2021 - F4
Automotive News Canada - February 2021 - F5
Automotive News Canada - February 2021 - F6
Automotive News Canada - February 2021 - F7
Automotive News Canada - February 2021 - F8
Automotive News Canada - February 2021 - F9
Automotive News Canada - February 2021 - F10
Automotive News Canada - February 2021 - F11
Automotive News Canada - February 2021 - F12
Automotive News Canada - February 2021 - F13
Automotive News Canada - February 2021 - F14
Automotive News Canada - February 2021 - F15
Automotive News Canada - February 2021 - F16
Automotive News Canada - February 2021 - F17
Automotive News Canada - February 2021 - F18
Automotive News Canada - February 2021 - F19
Automotive News Canada - February 2021 - F20
Automotive News Canada - February 2021 - F21
Automotive News Canada - February 2021 - F22
Automotive News Canada - February 2021 - F23
Automotive News Canada - February 2021 - F24
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