What Needs to Be on Every Dealership’s P&L Report

November 10, 2021

Dealer principals today must be on top of their business’ financial performance. Simply knowing your financial stats can make the difference between mediocre and excellent profitability at your dealership. 

While the accounting and bookkeeping aspects of dealership operations may not be the aspects of your business that get your blood flowing, they can be very useful for telling you exactly where you stand, where you have leverage in your business, and what decisions you need to make to put your dealership on the path to greater profitability.

There is, as we all know, one particular financial document that can be very useful to dealers who want to grow their business or turn their dealership into a great acquisition target for a deep-pocketed buyer. That document is the P&L report.

What is a P&L Statement?

Your Profit and Loss statement, also called an Income Statement, is a financial statement that displays your dealership’s revenue, its expenses, and as a result, its level of profitability (either net income or loss). It outlines all parts of the formula: Revenue – Expenses = Profit

A P&L report represents business operations within a specific period of time, which can be a month, a quarter, a year, or any other informative timespan.

But it’s not quite that simple

P&L for an automobile dealership can get pretty complicated, because one dealership has multiple distinct departments, each of which has its own revenue and expense profile. These business units, including:

  • New car sales
  • New vehicle leasing
  • Used car sales
  • Service and parts
  • Body shop (if you have one)

Each performs differently from the others, so you must know how they all perform over time, separately and together, to make decisions that will improve your overall business. 

What needs to be on your dealership’s P&L report?

Within the general categories of revenue and expenses, there are many subcategories, all of which should be listed on your dealership’s P&L report. Here’s an overview:

    Revenue:

    • Gross vehicle sales
    • Factory sales incentives
    • F&I revenue
    • Leasing revenue
    • Service revenue
    • Parts revenue
    • Body shop revenue
    • Warranty repair revenue

    Expenses:

    • Cost of new and used vehicles sold
    • Floor planning costs
    • Cost of F&I products
    • Employee wages
    • Employee benefits costs
    • Sales commissions
    • Cost of service department supplies and materials
    • Cost of parts
    • Cost of body shop supplies and materials
    • Advertising & marketing costs
    • Rent or mortgage costs
    • Insurance costs
    • Utility costs
    • Owner/partner salaries/draws
    • Professional services (accountants, legal, etc.)
    • Interest payments on any debt
    • Taxes
    • Depreciation
    • One-time expenses

    Revenue:

    • Gross vehicle sales
    • Factory sales incentives
    • F&I revenue
    • Leasing revenue
    • Service revenue
    • Parts revenue
    • Body shop revenue
    • Warranty repair revenue

    Expenses:

    • Cost of new and used vehicles sold
    • Floor planning costs
    • Cost of F&I products
    • Employee wages
    • Employee benefits costs
    • Sales commissions
    • Cost of service department supplies and materials
    • Cost of parts
    • Cost of body shop supplies and materials
    • Advertising & marketing costs
    • Rent or mortgage costs
    • Insurance costs
    • Utility costs
    • Owner/partner salaries/draws
    • Professional services (accountants, legal, etc.)
    • Interest payments on any debt
    • Taxes
    • Depreciation
    • One-time expenses

    Your total revenue is your “top line.” Subtract all expenses to get your “bottom line” or “net income.” A healthy bottom line is advantageous, not just for you, but also for attracting potential buyers if you plan to sell your dealership.

    Why you need to look at your P&L

    Your P&L can tell you a lot about how well – and how profitably – your dealership is operating. Red flags that may pop up on your P&L report can point you towards serious problem areas that need to be fixed. These warning signs can include:

    • Sagging sales
    • Declining profits
    • Reduced profit margins on products and services
    • Unexplained increases in expenses
    • Inconsistent growth over time

    Your dealership’s P&L statement lets you see exactly where you need to increase sales, improve profitability, reduce costs, or pursue some combination of these strategies.

    Why your dealership needs an accurate P&L report

    While you need to have an accurate and up-to-date P&L report to monitor the ongoing status of your dealership, it can also be a great tool if you have any present or future plans to buy another dealership or sell the business. Every item on the P&L statement is worthy of analysis. Taken both individually and together, these P&L items can reveal how well the business is operating.

    If you are considering buying an additional dealership, an accurate P&L report from your profitable, growing auto dealership will show both the seller and your potential lenders that you are fully capable of managing the additional debt needed to finance the transaction. Your P&L is a symbol of your creditworthiness and proof that you have the skills to run your new dealership in the same capable and profitable way.

    If you have plans to sell your dealership, that same profit-heavy P&L statement demonstrates that your dealership has the right people and management systems in place to continue successfully into the future, long after the sale has been concluded. Even if the buying entity plans to come in with its own team and systems, your P&L report will show that your business has the inherent ability to be operated profitably. As such, your P&L report can help you get a more competitive price for your dealership sale.

    We are a firm that understands what it really takes to buy or sell your dealership

    DCG Acquisitions knows how important an accurate P&L report is when presenting your dealership to both potential buyers and sellers. Rock-solid P&L numbers will make the case that your dealership has been run properly and profitably, with no red flags to create uncertainty.

    We are a full-service mergers and acquisitions firm in every sense of the term. DCG Acquisitions is there for you, from the beginning of the process through the final signatures on the agreement. Our decades of established resources and relationships ensure the success of your new acquisition.

    DCG Acquisitions has an impeccable reputation and a long track record of proven results, because we’re committed to service beyond the sale. The DCG Acquisitions team has personally closed billions in transactions to date. Our experienced team of experts consistently manages efficient, high-return dealership transactions.

    Contact DCG Acquisitions to speak directly with an Automotive M&A specialist and learn how our expertise can help you get the most out of your next dealership sale or purchase.