by Larry Williams
This article is directed to dealership parts managers directly managing employees handling both mechanical and collision parts, however, the same principles apply to parts management in a body shop. Read on to see how to improve your parts and people management.
Larry Williams is a former parts manager and consultant who has received national awards and over 40 years of experience in creating profitable departments. He can be reached at
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Fact: The typical [dealership] parts department has more investment and returns less profit than any other department. Every other department can be financed, leased, depreciated, or leveraged. Automotive parts require cash—paid in full, every month. Many parts departments are sinkholes, sucking resources from the dealer, tying up capital in un-saleable inventory, maintenance, and personnel. This needs to change.
Today’s parts department must be an asset to the dealership. Analyze your parts department’s profitability. Look at the ratio of net profit to inventory. A well-run parts department can generate annual net profit ratios of 50% or more, based on your inventory investment. Then show the dealer principal that your inventory is an investment, better than the bank when it comes to the rate of return. This should be your goal. Every inventory dollar working to produce more profit and every employee’s time managed to maximize their productivity.
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