KEA Advisors is an integrated and experienced team of thought leaders in the commercial dealership industry, providing full service business advisory across two decades for more than 375 commercial enterprises, manufacturers, dealerships and dealership technology companies since 1996.
KEA Advisors is comprised of subject matter experts. We provide detailed analysis of business operations with thoughtful implementation of innovative strategies that leverage your current team and systems. Our mission is to increase PROFIT for commercial dealerships by transforming their business operations to best in class.
Operational behaviors focused on Total Absorption build PROFIT.
The most important thing you can do to strengthen profitability in your dealership is focus on the daily behaviors that impact Total Absorption. Controlling what you can control is Total Absorption.
Most of the time, if you’re underperforming in Total Absorption, it has to do with culture and leadership. Your strategy, tactics, and reporting identify where you should start with improving total absorption. Strong leadership controls the inputs that impact the outcome of Total Absorption. Using our services such as KEA Advisory Discoveries, Interventions, KEA BI, PULSE, KEA U, you can make your dealership the strongest it has ever been.
Total Absorption Formulas
To calculate Total Absorption Dollars:
(Used Truck Gross Profit + Fixed Ops Gross Profit) / (Total Dealership Expenses - Total New Truck Selling Expenses)
To calculate Total Absorption Percentage Rate:
(Used Truck Gross Profit + Fixed Ops Gross Profit) / (Total Dealership Expenses - Total New Truck Selling Expenses
Where does New Truck Sales fall in these calculations? The main purpose of the New Truck department is to populate the market with as many trucks as it can. The secondary purpose is to do it at a high margin. People tend to get that flipped. If your dealership is running at a high level of Total Absorption, the New Truck department is allowed the flexibility to sell more trucks to meet their first priority: market penetration.