U.S. RETAIL PERFORMANCE GUIDELINES FOR VARIABLE OPERATIONS

Dear Clients, Colleagues, and Friends,

It’s hard to believe that it’s almost been one year since the NCM Institute temporarily closed its doors, alongside some of our clients, due to the stay-at-home orders sweeping the nation. At that time, none of us knew what the future held, and we certainly couldn’t have predicted that we would be looking at some of the most profitable months in recent history. It has definitely been a whirlwind, but the industry that I have fallen in love with demonstrated that we can adapt quickly where needed.

For those of you that are regular subscribers to this publication, you will notice that many of the KPIs look different than you are used to seeing. This is not surprising given that most of these numbers are Benchmarks based on full year 2020 data from thousands of dealerships. As you can imagine, several things impacted the financials for our clients, such as changes in supply chain and consumer behavior, dealerships who had full or partial closures, and changes in personnel counts/structures. However, even though these same variables remain to be seen for this year, the 2020 numbers are still a great place to start for reviewing areas of opportunity for your dealership. As we always say in class, the Benchmarks don’t give you the answers to what it should be, but it gives you the right questions to ask yourselves. We hope as you examine your goals, you will use these numbers to continue to challenge yourself, both in the areas that were at their historical highs, as well as the areas that were at all-time lows. Even as the market changes, our most progressive dealers have already started action planning on how to sustain the desired results, and focus on the areas that need to return.

The time is now to start asking yourselves… “What’s Next?” But don’t forget…it doesn’t stop with these numbers. As they say, “A goal without a plan is just a wish” – Antoine de Saint-Exupery. I hope that this year, as you are making your goals, and then considering your plan, you will remember the value of the NCM community. I wish you and your dealerships, employees, and your family nothing but prosperity and happiness in this new year.

Best Wishes,

Brandiss Drummer VP, Education and Client Programs

Contact Us:info@ncmassociates.com 800-756-2620

*Including any administrative pro-rates.

VOLUME IMPORT FRANCHISES

LUXURYFRANCHISES

DOMESTICFRANCHISES

Total Sales Compensation % of Adjusted Gross

Total Sales Compensation per Vehicle Retailed

Total Financial Services Compensation % of Adjusted Gross

Total Financial Services Compensation % of F&I Net

Total Financial Services Compensation per Vehicle Retailed

Total Supervision Compensation % of Adjusted Gross*

Total Supervision Compensation per Vehicle Retailed*

Total Other Salaries & Wages % of Adjusted Gross

Total Other Salaries & Wages per Vehicle Retailed

Total Direct Comp. Expense (sum of #5-#8) % of Adjusted Gross*

Total Direct Comp. Expense (sum of #5-#8) per Vehicle Retailed*

5

6

7

8

9

CONTROLLABLE EXPENSES

13%

$562

5.1%

16.1%

$223

11.4%

$496

4.6%

$198

34.1%

$1,479

10.5%

$400

4.4%

15.9%

$166

9.3%

$354

4.2%

$160

28.4%

$1,081

9.8%

$627

3.8%

19.4%

$242

8.6%

$554

4.0%

$257

26.1%

$1,680

VOLUME IMPORT FRANCHISES

LUXURYFRANCHISES

DOMESTICFRANCHISES

Front Gross Profit $PVR*

F&I Net Income $PVR**

Other Sales Department Gross Profit $PVR***

Adjusted or All-In Gross Profit $PVR (sum of #1-#3)

1

2

3

4

*Fleet Gross Profit, New Vehicle Dealer Exchange Income, Used Vehicle Wholesale Profit [Loss], and any Cost of Sale Adjustments and Manufacturer/Distributor Incentives that are identifiable to departmental gross are to be included in “Front” Gross Profit for your dealership.

**Per Retail and Lease Unit, Net of Adjustments and Chargebacks, but before any Financial Services Compensation.

***Doc. Fees, Hard Packs, Manufacturer/Distributor Incentives that are not identifiable to Departmental Gross and any other reported “Below-the-Line” Income [Net Additions & Deductions] related to Vehicle Sales should be included in “Other” Gross Profit.

SALES AND GROSS PROFIT

$2,110

$1,390

$840

$4,340

$1,802

$1,252

$746

$3,800

$3,986

$1,580

$867

$6,433

Revised January 1, 2021. Proprietary and confidential.COMBINED VEHICLE DEPARTMENTS

U.S. RETAIL PERFORMANCE GUIDELINESFOR VARIABLE OPERATIONS

1

Revised January 1, 2021. Proprietary and confidential.COMBINED VEHICLE DEPARTMENTS

(Continued)

VOLUME IMPORT FRANCHISES

LUXURYFRANCHISES

DOMESTICFRANCHISES

Opportunities per Salesperson per Month1 2

Units per Salesperson per Month

Ranges for Staffing Level1

Adjusted Gross per Salesperson per Month

# of Salespersons per Mgr. (includes Closers and/or Team Leaders)

Units per Manager per Month

Adjusted Gross per Department Mgr. per Month (includes F&I)

Gross per Assigned Department Employee per Month*

EMPLOYEE PRODUCTIVITY

55-65

11.4

11-14

$49,476

3.8

40.1

$174,034

$19,953

≈60

65-80

12.9

11-14

$49,020

3.5

41.7

$158,460

$17,450

≈60

65-80

10.7

11-14

$68,833

3.7

38.3

$246,384

$28,685

≈60

16

17

18

19

20

21

22

23

24

VOLUME IMPORT FRANCHISES

LUXURYFRANCHISES

DOMESTICFRANCHISES

Net Advertising & Promotion Expense % of Adjusted Gross

Net Advertising & Promotion Expense per Vehicle Retailed

Net Floorplan Interest Expense % of Adjusted Gross

Net Floorplan Interest Expense per Vehicle Retailed

Demo Expense % of Adjusted Gross

Demo Expense per Vehicle Retailed

Net Delivery Expense % of Adjusted Gross

Net Delivery Expense per Vehicle Retailed

Vehicle Policy & Claims Expense % of Adjusted Gross

Vehicle Policy & Claims Expense per Vehicle Retailed

Total Controllable Dept. Expense (sum of #9-#14) % of Adjusted Gross

Total Controllable Dept. Expense (sum of #9-#14) per Vehicle Retailed

10

11

12

13

14

15

CONTROLLABLE EXPENSES (CONTINUED)

3.5%

$150

-4.0%

-$173

0.3%

$12

0.2%

$10

0.5%

$22

34.6%

$1,500

5.3%

$201

-2.2%

-$83

0.1%

$3

-0.1%

-$3

0.4%

$15

31.9%

$1,213

3.6%

$232

-2.7%

-$172

0.3%

$18

0.3%

$17

0.4%

$28

28.0%

$1,803

U.S. RETAIL PERFORMANCE GUIDELINESFOR VARIABLE OPERATIONS

2

Maximum Deals per F&I Manager (including Director) per Month1

1Based on industry best practice guidelines. All others are NCM Benchmarks®. 2Varies substantially based on sales structure in store. *Does not include below the line or incentives not identifiable to departmentalgross.

(Continued)

Revised January 1, 2021. Proprietary and con idential.COMBINED VEHICLE DEPARTMENTS

AVERAGE

Lead Response Time*1

Engagement Rate - 1st Day*1

Engagement Rate - 30 Day**1

Appointments - New Leads**1

Appointments Made1

Appointments Show of Made Appointments1

Close Rate of Shown Appointments1

Total Close Rate of All Leads1

Appointments - Sales Calls1

Appointments Made1

Appointments Show of Made Appointments1

Close Rate of Shown Appointments1

Total Close Rate of All Leads***1

Digital Sales as a % of Total Sales****1

Dealership Website Leads*****1

Manufacturer Website Leads1

3rd Party Leads (Including OEM 3rd Party)1

3rd Party Classified Used/New Vehicle Listings1

25

26

27

28

29

30

31

33

E-COMMERCE

15 Minutes 5 Minutes

U.S. RETAIL PERFORMANCE GUIDELINESFOR VARIABLE OPERATIONS

3

TARGET

*The minimum “connect” rate [phone or email conversation] from your internet leads.**The percentage of prospects that should come in to the dealership from internet hard leads and phone leads generated from

websites.***Number of attributable electronic, mobile, and telephone leads as a percentage of Unique Visitors to Dealership Website.****Includes dealership website, manufacturer leads, and third party leads.*****This is factored using typical lead sources commonly available in the market, including independent third party sources andmanufacturer-based lead sources, as well as the dealership website leads, excluding SEO and SEM.1Based on industry best practice guidelines. All others are NCM Benchmarks®.

Average Cost Per Lead1

Average Cost Per Internet Vehicle Sold1

"Fresh" Leads Distributed to Producing Employee Per Month1

Per Full-Time "A-Z" Internet Salesperson1

Per Full-Time Combination Internet and Floor Sales Person1

Website Conversion Rate1

Per Full-Time BDC or Internet Appointment Setting Specialist1

32

34

20.0%

60.0%

32.0%

60.0%

55.0%

11.0%

60.0%

60.0%55.0%

20.0%

40.0%

15-18%

11-13%

10-12%11-13%

2-5%

$30-35

$200-250

60-80

35-45150-200

ALL FRANCHISES

25.0%

70.0%

35.0%70.0%60.0%

15.0%

65.0%70.0%

65.0%30.0%

40.0%20-23%

13-16%

12-15%13-15%

5-7%

$30.00

$200.00

80

40

150.00

VOLUME IMPORT FRANCHISES

LUXURYFRANCHISES

DOMESTICFRANCHISES

Liquidation Policy1

Dollar Days’ Supply*1

Unit Days’ Supply**1

Reconditioning Cycle Time1

Annual Inventory Turn Rate1

Percent of Inventory Under 30 Days Old1

Stock Walk “Bucket Jumper” Touch Points (Days in Stock)1

ASSET MANAGEMENT—USED VEHICLES

Day 61

30-45 Days

16, 31, & 46

Day 61

30-45 Days

16, 31, & 46

Day 61

30-45 Days

16, 31, & 46

41

42

43

44

45

46

47

(Continued)

Revised January 1, 2021. Proprietary and confidential.COMBINED VEHICLE DEPARTMENTS

U.S. RETAIL PERFORMANCE GUIDELINESFOR VARIABLE OPERATIONS

4

*Wholesale Units are included in the Inventory Calculation but not in the Sales History or Sales Forecast.

**Same planning and calculation methodology used In Item Number 42.

1Based on industry best practice guidelines. All others are NCM Benchmarks®.

3-5 Days

8-12 Times

70-80%

3-5 Days

8-12 Times

70-80%

3-5 Days

8-12 Times

60-70%

30-45 Days 30-45 Days30-45 Days

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