Automotive Updates

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

By Marilou C. Vroman, CPA, CFE

A recurring challenge we find in the automotive retail dealerships is what appears to be a general lack of available talent.  Many dealers I speak with have asked me if I know of a good service manager or controller looking for a new opportunity.  Turnover is a reality for most dealerships, whether it is driven by poor leadership, high pressure to perform, compensation or other reasons, there seems to be a revolving door in many stores.

When there is turnover, a silver lining presents itself with an opportunity to seek out a better candidate than the one who we had before.  However, what we often find is “the good ones are already taken.”  At times, a candidate may appear good on paper, with glowing referrals and relevant work history but less than stellar results when immersed into the dealership operations.  Similar to a recently detailed pre-owned vehicle with polished [...]

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By Phil Villegas

Read the WardsAuto Article here

For auto retailers, monthly sales reports (as required by automakers) paint a somewhat inefficient and non-representative financial picture.

Last year, General Motors was the first major manufacturer to cease reporting sales on a monthly basis and shift to quarterly reporting.

Ford followed suit this year and Fiat Chrysler recently announced it would too.

Prior to that, Tesla was the only mainstream automaker to report quarterly, not monthly.

The move essentially gives the OEMs some latitude in having to explain monthly spikes and/or drops that can be seasonal or tied to fleet sales, allowing them to gain better control of the message when reporting quarterly.

While I agree with the shift, I can only wish this would trickle down to dealers.

For dealers, monthly sales reporting paints a somewhat inefficient and non-representative financial picture. It can misrepresent the broader operating environment.

If you look at the actual lifespan [...]

By Marilou C. Vroman, CPA, CFE

You know them well; the dent guy, your advertising agency, the landscaping crew.  We need them so we can stay focused on doing what we do best – selling and servicing vehicles.  As much as we appreciate our vendors, we also know they can pose a risk to the unsuspecting dealer by slowly diminishing the dealership’s financial health by quietly eroding profitability for personal gain.

How may a vendor take advantage of a dealership? In a high-volume store, sales managers are often so busy closing deals and getting cars “over the curb,” they may delegate the task of inspecting vehicles and authorizing dent or wheel repairs to a porter or a salesperson. If an unethical vendor becomes aware of this delegation of authority, they could solicit a porter with a $100 cash spiff grant the vendor permission to generate an additional $500 in repairs to the inventory than are [...]

By Phil Villegas

We’ve discussed in the past that one of the greatest benefits of working at a dealership is having the ability to buy a car that would be considered below market price.  However, should selling a car through the dealership also be a perk? We are not talking about traditional traded-in vehicles as part of a normal sale but rather the consignment or pre-trading (a car that is traded in and sold before the new vehicle is acquired) of employee vehicles.

While nowhere as common as employee purchases, we occasionally come across transactions where dealership employees will sell their personal vehicle through the store.  When we have come across these transactions, it’s very rare that these transactions have been carried out with the transparency and level of documentation we would expect with an employee or third-party transaction.

For starters, we typically see personnel from the sales department consigning their vehicles. We have yet [...]

By Marilou C. Vroman, CPA, CFE

Most dealers and their personnel in financial management roles are quite familiar with the fundamental requirement to reconcile cash balances with the bank.  Many of our clients perform daily reconciliations in addition to a full monthly reconciliation to ensure all transactions have been captured, and the GL is an accurate representation of the dealer’s cash position from one day to the next.  Because of the inherent risk in cash, is common for an outside auditor to request copies of bank statements and the related reconciliations to ensure proper cash controls are in place.  However, is viewing a reconciliation which balances to zero and ties out to the bank and GL balances sufficient to know your cash is properly controlled?

We often examine bank reconciliations and supporting statements, but from a different perspective.  We know bank reconciliations are usually expected by the controller or CFO and are likely reviewed.  However, [...]

By Marilou Vroman, CPA, CFE

CSI, SSI, Customer Satisfaction… you hear about it all the time and know how vital these terms are for dealership success and profitability.   How each dealership approaches its CSI is very different.  In visiting many stores, and being a dealership client myself, I’ve observed many different practices in place and how these potentially impact customer satisfaction.   Interestingly in the most complex CSI initiatives, there is one simple thing that your employees can change today that can easily increase client satisfaction.

While recently visiting one of my clients for internal audit field work I took notice to how the employees of the dealership were treating their guests, and me.  Believe it or not, auditors don’t always receive a warm welcome in dealerships, in fact, some auditors are intentionally placed an uncomfortable work space, such as a cold room with no windows and employees are instructed to not provide any more information [...]

By Courtney Becton

Over the years, the Axiom Advisors team has had the opportunity to work in many areas serving the retail automotive industry, including working directly in dealerships and for CPA Firms. In these years, a common trait observed about dealership owners and executives, is their plates are always full. Work-life balance seems nearly impossible and getting burned out is more likely, which in turn, increases the margin for error and key operational details can be overlooked. The financial aspects of typical dealerships are unique, highly intricate and can be stressful to maintain. Often-times, owners are wearing multiple hats and haven’t been able to relinquish control over responsibilities to the appropriate personnel. Often, there isn’t sufficient headcount, or the right skill set to effectively delegate all the work that needs to be done.

Having worked in dealerships for many years, I grew to believe that outside help was very limited or even non-existent. After [...]

By Phil Villegas

Last year GM was the first of the major manufacturers to cease reporting sales on a monthly basis and shift to quarterly reporting. Ford followed suit early this year and FCA announced earlier this month to do the same.  Prior to GM making the initial move, the only other mainstream manufacturer to not report monthly but rather quarterly was Tesla. The move essentially allows the manufacturer some latitude in having to explain monthly spikes and/or drops that can be seasonal or tied in with fleet sales, allowing them to gain better control of the message when reporting quarterly.

I agree with the move of getting away from monthly reporting and opting for quarterly, I can only wish this move could trickle its way to dealers moving to quarterly financial reporting.  I believe that similar to manufacturers, for dealers, monthly sales reporting is somewhat of an inefficient and non-representative financial picture of the [...]

By Marilou C. Vroman, CPA, CFE

A dealer and his loyal CPA and family attorney typically form a bond over the years in a relationship that has potential to last for decades provided that level service and value for the price paid both remain high.  I believe that this relationship is important and should be respected by other CPA, consulting and advisory firms.  However, a dealer may have specific needs that require the skills of a specialist.  Is it OK to explore and engage the use of more than one firm to address a dealer’s highly specialized operational needs?

Accountants and attorneys, like doctors, often specialize in a practice area.  While every doctor knows that exercise and proper nutrition will lead to a healthier body and every CPA knows how to properly keep the financial records, and most attorneys know contract law, not every doctor knows how to perform heart surgery, nor does every accountant [...]

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