1. Repair Order Parts Analysis Florida Motorcycle Dealers Association Warranty Parts Mark-Up Update

2. Three Options for Request 50 Repair Order Sample Current Suggested Retail Price Average Gross Profit as a Percent of Cost

3. Repair Order Sample 50 customer pay repair orders within the previous 3 months 10 day request to the manufacturer Exclusions for fleet or group work, government work, or third party pay Exclusions for factory discounts, engines, transmissions, tires and maintenance parts

4. Why Look at Customer Pay Repair Orders? Find your parts mark-up percentage Analyze your repair order parts discounting Confirm your dollar$ per repair order Evaluate your parts mark-up matrix Compare customer pay vs.warranty parts mark-ups

5. Compare Customer Pay vs. Warranty Parts Mark-up Example - annual figures for warranty work Parts cost = $89,500 Sales = $125,000 Mark-up is 40 percent Gross profit = $35,500 (28.4 percent)

6. Compare Customer Pay vs. Warranty Mark-up Order Example - annual figures for customer pay Parts cost = $300,000 Sales = $500,000 Mark-up is 66.6 percent (list?) Gross profit = $200,000 (40 percent)

7. Is a Higher Warranty Mark-up Percentage Worthwhile Lost warranty gross, as compared to customer pay gross, equals $24,000 – a two thirds increase over current warranty gross Every repair dollar ($1.00) cost allocated to a warranty part loses $0.26 compared to being allocated to a customer pay part

8. What’s Required to Do a Customer Pay Parts Analysis Sample 150 repair orders Select 50 customer pay repair orders Select part(s) and display cost, net price (after any discount) and mark-up Highlight part(s) used on repair order

9. Next Step – Manufacture Should Pay Retail Rate Dealerships should submit to manufacture for an increase in warranty rate Manufacturers should pay retail rate in order to avoid misallocation of resources Use repair order sample to submit mark-up analysis to manufacture

10. Why Are Dealerships Reluctant to Submit for an Increase Too difficult to calculate (hundreds done) The Florida Franchise Law may not clear on methodology (not anymore) Dealerships fear losing favor with manufacturer Fear of warranty audit

11. Any Questions… Lou Young lyoung@mspcpa.net John Parziale jparziale@mspcpa.net 732 379 5200