Every term below is written for the person who has to act on it: what it is, how it is computed, why it matters, how to read it without fooling yourself, and what A.D.A.M. does with it. No vendor language, no averaged averages.
Service absorption is the percentage of the whole rooftop's expense that the fixed side of the building pays for on its own: service, parts, and body shop gross profit, measured against total dealership expense.
Read the definition → GlossaryELR, effective labor rate (ELR)Effective labor rate, ELR, is what the shop really collects for an hour of work: labor sales divided by the hours billed to produce them. It is the posted door rate after the real world has had its say, after discounts, after warranty and internal mix, after every courtesy write-down.
Read the definition → Glossaryper vehicle retail, F&I PVRPVR is the F&I department's gross profit per vehicle retailed: everything the business office earned on a deal, products and finance reserve together, divided by the number of deals delivered. It is the common currency of the variable side, which is why it is quoted so often and why it lies so easily.
Read the definition → Glossaryproducts per deal, F&I product indexThe product index is how many F&I products the business office sells on the average deal: total products sold divided by deals delivered, carried to two decimals. It is the penetration number behind PVR.
Read the definition → Glossaryfront-end gross, FGPVRFront gross per unit is the gross profit the store made on the car itself, before the business office adds anything, divided by the number of vehicles retailed. It is the desk's number: the price the store held against the cost it paid.
Read the definition → Glossarydays supply of inventory, DSIDays supply is how many days the lot would last if the store kept selling at its recent pace and bought nothing. It turns a unit count into a question the desk can act on: are we long, are we short, and in which lane.
Read the definition → Glossaryaged units, over-90 inventoryAged inventory is the part of the lot that has been in stock longer than the store is willing to tolerate. Most operators draw that line at ninety days, and the count of units past it, as a share of the lot, is the number.
Read the definition → Glossaryclosing ratio, lead close rateClose rate is the share of opportunities that became a delivered vehicle: deals divided by leads. It is simple to say and surprisingly easy to count two different ways, which is why two managers can argue about the same month.
Read the definition → Glossarynet-to-gross ratio, expense to grossNet to gross is the share of the store's total gross profit that survived as net profit after every expense. Its mirror, expense to gross, is the share the expenses consumed. Together they say whether a net number is durable or propped up.
Read the definition → Glossaryinventory turnover, turn rateInventory turn is how many times in a year the store sells through what it owns. It is the annual, whole-lot version of days supply, and it is the number the floorplan lender and the controller tend to watch.
Read the definition → Glossarycost-to-market percentage, price to marketCost to market is what the store has in a unit, acquisition plus reconditioning, expressed as a percentage of the price the market is currently asking for the same vehicle. It is the buying desk's report card, written one car at a time.
Read the definition → Glossaryfinance reserve share of PVR, reserve dependenceReserve share is the slice of F&I gross per deal that came from finance reserve rather than from products the customer bought. It is the honest way to say how much of a PVR is fragile.
Read the definition → Glossarycustomer-pay labor, CP laborCustomer pay is the work in the service department that a retail customer paid for out of pocket: not warranty work the manufacturer reimburses, not internal work the used-car department is billed for. It is the slice of the shop the store prices, sells, and keeps.
Read the definition → Glossaryhours per RO, flagged hours per ROHours per repair order is how much labor the shop billed on the average ticket: total flagged hours divided by the number of repair orders. It is the earliest honest measure of how much work the advisor found and sold on each visit.
Read the definition → Glossaryparts gross, parts marginParts gross profit is the gross the store earns on the parts it sells: parts sales less the cost of those parts. On a repair order it rides beside labor as the second half of the ticket; over the counter and wholesale it stands on its own.
Read the definition → Glossarytech efficiency, flagged hours over clocked hoursTechnician efficiency is how much billable work a technician produces for each hour spent working on cars: flagged hours over clocked hours. A technician at one hundred percent bills an hour for every hour on the job; above it, they are beating the time guide.
Read the definition → Glossarytech productivity, clocked hours over attendanceTechnician productivity is the share of the technician's day that is actually spent working on repair orders: clocked hours over attendance hours. It says nothing about how fast the work gets done; it says whether there was work to do.
Read the definition → Glossarydays to turn, time to saleDays to sale is how long the cars the store actually sold had been sitting when they sold. It is the outcome measure of the lot: days supply predicts, aging warns, and days to sale reports what happened.
Read the definition → Glossaryfloorplan interest, flooring costFloorplan cost is the interest the store pays its lender on the money borrowed to own the cars on the lot. Spread over the units and the days they sit, it is the daily rent on every car, and it is paid whether or not the car ever sells.
Read the definition → Glossaryrecon cost, recon per unitReconditioning cost is everything the store spends on a used unit between acquisition and the front line: mechanical, cosmetic, tires, detail, and the internal labor the shop billed for it. It is the part of a used car's cost that is decided after the car is bought.
Read the definition → Glossarypenetration rate, attach rateProduct penetration is the share of delivered deals that carry a given F&I product: service contracts on forty of a hundred deals is forty percent penetration on service contracts. Added across the menu, the penetration rates are the product index.
Read the definition → Glossaryshowroom close rate, internet close rateClose rate by source is the store's close rate computed one lead source at a time: walk-ins, web leads, phone, referrals, third-party leads. A showroom visit and an internet form are different opportunities with different odds, and a single blended close rate describes neither.
Read the definition → Glossarynet margin, net profit as a percent of salesNet profit margin is net profit as a share of total sales: what is left after every expense, divided by everything the store sold. It is the number an outsider uses to compare businesses; it is not the number an operator uses to run one, because sales in a dealership are mostly the cost of the cars.
Read the definition → Glossarydealer pack, used car packA pack is a fixed dollar amount the store adds to a vehicle's cost before the salesperson's commissionable gross is figured. It is not a cost: the pack is gross profit the house keeps on every unit, and it belongs in the store's profit calculation the same as any other gross dollar.
Read the definition → Glossarydocumentation fee, dealer documentary feeA doc fee is the documentation fee a store charges on a deal for preparing and processing the paperwork: the contract, the title work, the registration. Where a state regulates it, the ceiling is set by law; where it does not, the store sets it. On the statement it typically lands as additional income, with the credit going to the administrative expense account it exists to offset.
Read the definition → Glossarydealer holdback, factory holdbackHoldback is a payment from the manufacturer to the dealer on every new vehicle sold. It is built into the invoice price and paid back after the sale, the amount varies by manufacturer, and it is added to the store's gross: on the statement it lands under additions or manufacturer payments rather than inside the deal's front gross. Whether the general manager is paid on it is a pay-plan question every store has to answer out loud.
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