Hidden Revenue Galaxies
Fixed Absorption: Income You Can Count On
In a changing marketplace where unit sales are on the decline, optimizing per-unit gross profits is increasingly important. Top dealers are financing 70%+ of unit sales. Ideally, to maximize on F&I opportunities, there should be someone in-house focusing on F&I sales. What is fixed absorption?
This includes:
Administration costs
Accounting
All support roles
Rent
Utilities
All other fixed and semi-fixed expenses
Why fixed ops revenue is more reliable than sales: RV sales are highly competitive, and we don’t control what the market will bear. Service, however, is rarely price-shopped. We have a captive customer because we have their vehicle in our possession, which means we have more control. If you aren't actively working towards achieving fixed absorption at your dealership, it's time to start. It's the best way to develop a bulletproof, economic-proof business. Fixed absorption has been the benchmark in the auto industry for a long time, and the RV industry needs to catch up. Margins are being compressed, and dealers will have to deliver better service to accommodate this.
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The Next Frontier of RV Dealership Management
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