In order to optimize these ups and downs, auto dealerships must focus on sales while operating as efficiently as possible.
Many auto dealerships choose to keep the detailing/car wash function in-house.
Typically this means a team of hourly workers -- a fixed cost unless you aggressively manage their work schedules.
Most traditional accounting methods only focus on key measures like gross wages and overtime--ignoring workers compensation, damages, cost of turnover, etc.
The problem with this approach is that you pay for the function whether or not there is detail/car wash work to perform.
Of course, productive work can always be found to keep this team busy; but is this the right use of payroll dollars? By outsourcing this service, you pay for what you use.
Managing hiring and scheduling becomes someone else's problem.
In fact the entire process of outsourcing, helps the dealership focus on quality standards and their enforcement -- which sometimes is harder to do when those failing are your own Associates.
Be sure you are evaluating an outsource against the "real cash" dollars of your in-house team.
Internal transfer pricing scenarios (Eg.
, "Packing") can muddy the waters and lead to less than optimal financial decisions.
The savings from Outsourcing must be based on real numbers, not internal pricing numbers.
In a good economy or bad, outsourcing should always be considered for functions outside the dealership's core competency -- which should be selling and servicing cars! Remember to:
- Evaluate fully loaded internal costs versus outsource pricing
- Utilize average volumes to evaluate internal cost per car-- also look at the variability of these volumes
- Strip away the impact of "internal transfer pricing and profits" - make decisions that benefit the entire dealership - not just Service Department Absorbency rates