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| Car Dealer Insider Apr 15, 2013 Issue | | | - How to achieve and maintain 100% service absorption
There are a hundred ways to measure dealership service department success, or the lack thereof, and each has its merits, but perhaps the most common is service absorption.
Long the holy grail of dealership profitability, 100+% Service Absorption, has been an elusive target for most dealerships.
As Steve Nickelsen, CEO of Nickelsen Partners (www.nickelsenpartners.com) said during a DealersEdge workshop on the topic, "Service absorption measures how much service and parts gross profits can cover (or absorb) all of the fixed costs in the dealership. The higher the level of service absorption, the better position your dealership is in to sell more vehicles at a lower price than competing dealerships. Or conversely, the less critical it is to sell vehicles."
| - Trend Spotting
Wholesale used vehicle prices rose seasonally but fell annually in March, says tom Kontos of ADESA Analytical Services, indicating a softening overall pricing environment compared to the last three Spring/tax seasons. The softening is to be expected as used vehicle prices had risen to high levels relative to new vehicle prices and as used vehicle supplies, including those from trade-ins on higher new vehicle sales, have begun growing. Still, strong retail sales of used and certified-pre-owned vehicles provided demand support that prevented prices from softening further.
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