Chris CollinsHelping Struggling Dealerships Build Profitable, High-Performing Service Departments | Automotive Coaching Expert | CEO

The Value Of Service Profit | SDR #228 Short

18 Feb 2023 · 0 min

Watch on YouTube

0:16

A short clip in which Chris Collins explains the value of improving a dealership's service department profits. He gives a numeric example: a dealership already making $1,000,000 on front-end sales adds $1,000,000 in parts & service profit (bringing total annual profit to $2,000,000), and states that $2M of recurring profit is worth $16M in company value. He also notes that gross profit is rarely discussed when valuing dealerships.

Questions this video answers

$1,000,000 per year.

$2,000,000 per year.

$16,000,000.

We come into a dealership and they're making a million dollars a year on the front end, but service is making nothing. Or losing in some cases. Or losing in some cases. But let's just say they're breaking even for the sake of this math. So we come in and they start making.
We'll just say in a year's time, they make a million dollars in parts and service that they weren't making before. Now the. Now the company is making $2 million a year. What is that worth? 16 million.
So when a service manager is focusing on gross profit, when it is calculated how much you pay for a dealership, does gross profit ever come up in the conversation? Never.