How it is computed
Add the gross profit from service, parts, and body shop for the month. Divide it by the total expense of the entire rooftop for the same month, not only the fixed departments. Multiply by one hundred. That is your absorption.
Why it matters
It is the number that tells you whether the store could keep the lights on if the showroom sold nothing. A rooftop at full absorption pays every bill from the shop and the parts counter, and every front-end gross dollar is profit on top.
It is also the most honest read of fixed operations, because it is measured against the whole building. A service department can post a strong gross and still leave the store exposed if expense grew faster.
How operators read it
- Measure it against total rooftop expense, every time. A version that divides by fixed expense only will flatter the number and hide the gap the variable side is covering.
- Read it as a trend, not a snapshot. One strong month of warranty work moves it. Three months of customer-pay growth moves it for real.
- Decompose it before you act. Absorption falls for two reasons that need opposite fixes: fixed gross slipped, or expense grew. Find out which before anyone is asked to sell more hours.
Questions people ask
What is a good service absorption rate?
The figure a given store should steer by depends on its franchise, its market, and its expense structure, so the useful question is where your own number has been and which way it is moving. A store whose absorption climbs every quarter is building something durable; a store whose absorption sits still while the showroom carries the expense is one soft sales month away from a hard conversation.
Does absorption include the body shop?
When the rooftop has one, yes. Absorption is fixed-side gross, and the body shop is part of the fixed side. A store without a body shop simply has fewer gross dollars in the numerator.
How A.D.A.M. reads it
A.D.A.M. computes absorption as service, parts, and body gross over the rooftop's total expense, never over fixed expense alone, and reports it as a whole-number percent. He reads it beside the numbers it trades against, names what the gap is worth, and leaves the decision where it belongs. What an AI advisor should do, and refuse to do.