Automotive Updates

Automotive Consultants, Automotive Dealership Consulting Firm, Enterprise Management Services, Mergers & Acquistions, Litigation Support

By Phil Villegas

With the Holiday season upon us, many dealerships are planning year-end parties to celebrate the year. These gatherings are great for employee morale and a great opportunity to socialize with other co-workers in a much more relaxed setting. Some dealerships will have their event onsite at the dealership with a pot-luck or barbecue, while others will choose to have their event hosted at an outside location.

Regardless of the location, one practice I saw a few years back from a dealer in their effort to be equitable to all their employee’s hard work was the following:

Early in December, the dealer would send notices to its vendors informing them that in lieu of any holiday gifts or baskets, to either contribute gifts or funds to be used as door prizes during the dealership holiday party. Any gifts or baskets received at the dealership would be kept together to be shared during the [...]

By Marilou C. Vroman, CPA, CFE

As the year end approaches, we get wrapped up in the holidays and strive for strong year-end sales  performance and profitability.  While we focus on a strong finish, it’s also a great time to focus on clean and compliant beginnings and make sure our dealerships up to speed with regulatory changes coming in the new year.

One hot spot for many dealers is sales tax compliance.  States tend to focus on dealers as they are a great source of tax revenue and are at risk of non-compliance, whether it’s use tax on purchases, tax on policy repairs or substantiating sales tax exemptions.   Sales tax audits are common for some dealers and it can be very costly if amounts remitted to the state fall short of an auditor’s estimate.

From personal experience, many auditors react positively to good faith efforts to be compliant, at least when it comes to tax [...]

By Sam Flores

It seems that as technology has taken a stronger foothold in the office, so has the tendency to overload managers with the amount of reports available at our fingertips, and because they are available, they should be run, right? Not necessarily.  Often, I see managers inundated with reports that are either, redundant, or irrelevant.  Either way, sifting through these reports to get to the truly relevant information causes inefficiency. It is important for managers to determine what data they require to manage effectively and efficiently.

Companies should periodically review the reports being sent throughout the company and determine their purpose.  Who is using them? What type of data is being sent out and to whom?  Should certain employees have access to the information? This streamlining of data reporting process may uncover some interesting results.  I have seen companies reduce the number of reports being generated by 30%.  One issue we uncovered was [...]

By Phil Villegas

For most of my automotive career I’ve been around dealership buy/sells, first as an employee at a dealership, then for a dealer group that was acquiring stores, and lastly as an advisor to dealers in these transactions.  Over this time, I’ve had the opportunity to witness a wide variety of what makes some deals work and others not so much.

In circumstances where transactions went very well, I’ve found that it’s a progressive evolution of the dealer, where expansion comes on the heels of maximizing current operations.  These dealers have put themselves in a situation where they have generated strong financial performance and developed a deep management bench and look for new stores to provide their capital and team members a platform for continued success.

Which raises the inherit question as to why certain dealers expand when there is still plenty of growth and opportunity at their existing stores.  For most public [...]

By Marilou Vroman, CPA, CFE

Remember a time when journal entries were hand written on green ledger paper and were reviewed and approved by the controller prior to posting?  In a time when our DMS systems have enabled ease of journal adjustments through source journals we have found more opportunity for theft and income manipulation than ever before.

During our internal audits we often review adjusting journal entries very closely; we have found there is an inverse relationship between the cleanliness and “health” of a dealers financial records and the volume of journal entry adjustments that occur within the dealers books.  In a perfect world, there would be very few adjustments since every transaction would be recorded correctly up front.  Since we are not in a perfect world, it’s important to know who is adjusting the books, why those adjustments are being made and whether the adjustments have been properly approved by department management.

In [...]

By Sam Flores

As we close yet another year, it is important to “review and measure” your dealership’s overall performance to gain a better understanding of the things that worked and didn’t work for you and your operations, so you can make the necessary adjustments now to lead to greater success in the future. Did your company meet its goals? What objectives were missed? Were there any obstacles that kept you from succeeding?  Does your team know what your objectives are?

A “review and measure” approach should be conducted annually, both for you and your employees.  I cannot stress enough the importance of employee evaluations.  When done correctly, the personnel  evaluation should reflect a clear outline of the characteristics which make for a successful employee within your company, but not just any company – YOUR company.  It should not be solely a critique of an employee’s performance on their anticipated job duties, but rather, a [...]

By Phil Villegas

After many years of the stability and brand performance parity, I sense we are going into a very interesting era for automotive dealers. While in my opinion there is a lot of fuss over “Mobility” and the virtual doom it has in store for a large percentage of the dealer network, I feel there is a more traditional and imminent threat to dealers before autonomous, subscription or ride-sharing services put a dent in the industry.

My primary concern relates to what appears to be a likely recession to come within the next few years.  While there are varying schools of thought of whether a recession is likely, the reality is we currently find ourselves not too far from being in longest economic recovery in US history, close to 10 years.  Despite this extended economic run, we are seeing other signs that bolster recessionary concerns like:

 

  • Slowdown in U.S. retail vehicle [...]

By Marilou C. Vroman, CPA, CFE

The fact that you are now reading this article means you already embrace the value of this week’s tip.   We’ve all been there – you start your day with a to do list a mile long and wonder how you will make it through.  Deadlines, making deals, meeting objectives, pressures coming from all directions.  Your day is spent just keeping up.  For many months I was so busy, I would see the latest issue of Automotive News or Journal of Accountancy land on my desk only to see it be covered by the next month’s issue, and the issue after that. You’re shaking your head thinking “well that sounds familiar.”

There came a day during a business lunch where I was among several dealers discussing a hot topic stemming from an OEM playing a strong hand with the franchisee’s and I really had nothing to say.  It was not [...]

By Sam Flores

Are you sure you have the right people in the right seats?

It has been my experience that when people are hired, they are usually brought on board to fill a need, a specific function or set of related functions left vacant or added due to growth. But how close are these functions really related? Are they simply bundled together because these were left to delegate after the main functions were handed out?  Many times, we as managers, focus on the set of tasks that need to be done, and assign them based on complexity to the most experienced employees.  We tend to distribute functions according to skill set until the most basic tasks are left for the newest employees.  This approach is not necessarily the best solution because I have found even the least experienced employees can excel in certain areas where even the most experienced may not.

Instead of focusing [...]

By Phil Villegas

During my career I’ve been part of dozens of dealership buy/sell closings, and they all have a common thread in that each closing is entirely unique yet will undoubtedly have a certain level of stress associated with it.

To put it simply, the largest stressor of any closing is that one or both transacting parties want to screw the other over.  Call it financial discretion or competitive gamesmanship, either way, this approach by many dealers at a closing can often be counter-productive, not to mention very costly if the parties are not properly prepared.

From the calculation of vehicle credits, identification of incentives, validation of fixed assets, valuation of miscellaneous and parts inventories, to the determination of liabilities to existing customers and vehicles that have already been reported as sold, there are several areas for either a buyer or seller to easily be taken advantage of.

Many dealers approach the closing quite [...]

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