A short YouTube interview clip (Chris Collins, Service Driver Revolution) discussing the critical role of service managers (and parts managers) in dealership profitability. Collins explains how service losses erode working capital, may force recapitalization (manufacturer working-capital requirements), and shows how some owners/public companies obscure true performance via rent/management-fee offsets—creating hidden liabilities for buyers.
Cool. So if you're a service manager, then the thing is to understand the gravity of profitability.
Parts manager, any, anybody. Now fix specifically what happens is they, they're a lot of dealers that we see are okay with service losing 50 grand a month because sales is making 200, 000. That 200, 000 goes away. And now they're, they would be breaking even. And they're losing 50 because service is losing 50.
Yeah.
That starts to erode your, your working capital. And what happens in a dealership that's losing money is you have a capital requirement. So let's say the manufacturer, Ford says that this dealership this size in this market has to have $2 million of working capital all the time. Well, what happens if you go three months losing 100,000?
Then you got to put $300,000 in.
So you have to recapitalize the dealership. And nobody likes pulling money out of savings or selling an asset. And to capitalize an asset that's losing money.
Right.
No matter who it is, you always have to do a gut check. Which is why these, these public companies probably in a lot of these situations are like, we're sick of recapitalizing these dealerships. Let's just get rid of them or get somebody to buy them.
Yeah. Take them off the books.
And I've seen things with public companies when I've been in a buy sell where public companies will. I had this situation with, with one of the public companies that they were pumping money back into the dealership that wasn't real sales.
Oh, that's interesting.
They were doing it in weird ways like where they would credit the rent. They would do things like that. So you look at the lease and the lease on the building was like you pay 40,000amonth, but when you looked at the rent line, they were paying 10amonth.
Yeah.
And so if you buy the dealership now you got to pay 40. You're assuming that lease and nobody's offsetting that rent. 30,000. So I found it, I found it in the rent. I found it in the management fee. They were putting it back. They're really sneaky the way that they.
Well, they've been practicing for a lot of years.
Just think about this. You got one big financial for the whole company, and then you have a bunch of little companies and then a bunch of dealerships that are all different corporations. How much you can hide in that many financials?
Yeah, super interesting.
You have to be really good at looking for that stuff.
Nice. It reminds me of another business. I dated this girl. She used to collect magazines. She had a lot of issues.
Thanks so much for watching this clip.
Of Service Driver Revolution.
We're uploading new stuff every day, so make sure you subscribe and click the bell icon so so you don't miss out. If you have a question you'd like us to answer on the show, call 8333 Ask SDR and we'll answer your question on the show. That's 8333 Ask SDR. For special deals on our books and training, head over to offers.chriscollinsinc.com now that's offers.chriscollinsInc.com I'm Chris Collins, and I'll see you in the next video.
