If you’re in the car business, you better like math. I was watching the latest Marcus Lemonis show called The Fixer. The owner of one of the businesses he was considering working with made a comment after Marcus was asking about his business’ numbers: “That’s why we have you here, we’re not good with math.”
As you can imagine, that didn’t go over very well. Marcus is a car guy (he’s also a very successful entrepreneur) and in true car guy fashion, “That’s one of the worst answers you could’ve given me. If you’re in business, you better like math.”
If You’re a Dealership Leader, You Better Like Math
Running a dealership is like juggling chainsaws – thrilling, dangerous, and much more impressive when you make it look easy. The sales board might be full, the showroom buzzing, and the weekend numbers looking strong, but none of that matters if you don’t really know whether you’re making money. The truth is, selling cars is only half the job. The other half is buried in the financial statement, quietly keeping score while everyone else celebrates the big weekend.
Too many leaders treat the numbers like that unread book on the nightstand – they know it’s important, they mean to get to it, but somehow it never happens. And while focusing on sales feels more exciting, ignoring the deeper story the numbers tell can slowly, and silently, drain profits.
The Reluctant Mathematician
Most dealership leaders know some of the numbers. You can talk front-end gross, F&I penetration, and maybe even throw out a service absorption percentage if you’ve had your coffee. But beyond that, the monthly financial statement becomes more of a polite acquaintance than a close friend. You wave to it in the hallway, maybe exchange small talk, but you’ve never really sat down for a deep, meaningful conversation.
And who can blame you? Selling cars is fun. The thrill of the deal, the rush of a great weekend – it’s intoxicating. Reviewing statements, by comparison, is about as exciting as sitting through a timeshare presentation. But here’s the thing: if you’re the leader, the numbers aren’t optional. They’re the compass that tells you if you’re killing it, bleeding cash, or just treading water while everyone nods politely and pretends you have a plan.
The “I Don’t Do Numbers” Myth
Some dealership leaders treat the financial statement the way most of us treat IKEA instructions: confusing, unnecessary, and best left to someone else who looks more capable with an Allen wrench.
So the coping strategy becomes selective engagement: review the high-level numbers, nod during the controller’s report, and move on to talking about incentives, CSI scores, and that hot new model everyone wants on the lot.
The problem? Everyone around you knows where your focus is—and when leadership doesn’t go deep on the numbers, the team won’t either.
It’s the equivalent of closing your eyes while eating cake and convincing yourself the calories don’t count. The problem isn’t that they dislike numbers…it’s that the dealership pays the price for their aversion.
The Slow Profit Leak You Can’t See (But Definitely Feel)
When leaders don’t understand the numbers, bad decisions become the norm:
- Chasing sales volume without realizing each deal loses money.
- Letting expenses grow like weeds because “we’ve always done it this way.”
- Living in a state of financial hope, not strategy.
From the outside, everything can look fine: vehicles on the lot, deals happening, service bays buzzing. But behind the scenes? Profit is quietly slipping out the back door. Eventually, someone notices. Cue the frantic emails, emergency meetings, and a lot of “we’ll get it figured out next month” optimism.
Math: The Plus-One You Can’t Ignore
Margins aren’t what they used to be. OEM stair-step programs, higher interest rates, and unpredictable inventory mean you can’t just “sell your way out” of a bad month anymore.
Today, profitability depends on knowing your KPIs inside and out: average gross per unit, expense-to-gross ratios, net-to-gross percentages, cash flow trends. These aren’t just nice-to-have stats, they’re the difference between running a thriving dealership and being a cautionary tale at the next 20 Group meeting.
Financial Literacy Isn’t Calculus, It’s Survival
Here’s the good news: You don’t have to be a CFO to understand your numbers. Financial literacy isn’t about solving for x; it’s about knowing how to read your financial statement without feeling like you’re decoding the Dead Sea Scrolls.
At its core, financial literacy for dealership leaders means:
- Understanding how gross profit turns into net profit (or doesn’t).
- Knowing your expenses, incentives and cash flow.
- Spotting issues before they become emergencies.
It’s a bit like finally learning to program your car’s infotainment system after years of just listening to whatever station came on. The world opens up. Suddenly, you have control.
Why GMs and Controllers Need to Speak the Same Language
The GM and Controller are supposed to be the dealership’s financial dynamic duo. But when neither speaks the language of numbers, it’s like asking two people who get lost in their own neighborhood to plan a cross-country road trip.
But when both the GM and Controller lack financial literacy, it’s like asking two people who get lost in their own neighborhood to plan a cross-country road trip. They’ll take wrong turns with total confidence, burn through the budget on unnecessary detours, and ultimately arrive at a place that looks nothing like the brochure.
The Secret Fear No One Talks About
Here’s something I’ve learned after years of working in dealerships: some of the most confident, charismatic leaders – the ones who can close a deal with a handshake and a smile – are secretly terrified of their own financial statements.
It’s not that they don’t care. It’s that they’re afraid someone will discover they don’t know what they’re looking at.
So, they nod along in meetings, scribble notes to look engaged, and hope the Controller doesn’t ask for their opinion on gross-to-expense ratios. It’s the automotive retail version of pretending you understand the wine list so you don’t have to admit you’ve never heard of half the terms on it.
This fear leads to two big problems:
- No one asks questions. The GM doesn’t want to look uninformed, the Controller assumes the GM knows more than they do, and everyone stays silent while profit quietly leaks out the back door.
- Bad decisions happen by default. If you don’t understand the numbers, you rely on gut instinct…and gut instinct is a terrible accountant.
The irony? The quickest way to look like you know what you’re doing is to ask questions. A simple “Walk me through this” or “Help me understand why this expense jumped” does two things: it gives you real insight and earns respect.
Because in a dealership, the real risk isn’t looking dumb – it’s staying in the dark while the numbers run the show.
Learning to Like Math (Even Just a Little)
If “liking math” feels like too much to ask, try this instead: just get familiar enough that you’re not guessing.
- Review the financial statement every month (not just when your owner or regional manager forces you to).
- Ask questions, even if you think they’re dumb. Odds are, other people in the room are wondering the same thing.
- Set goals based on actual numbers, not vibes.
Math is a bit like flossing. No one really enjoys it, but the alternative is a lot more painful and expensive.
Sidebar: 5 Key Metrics Every GM Should Know
1. Net-to-Gross Percentage
This measures how much of your gross profit actually makes it to the bottom line as net profit. It’s the ultimate reality check on expense control and operational efficiency.
2. Expense-to-Gross Ratio
Knowing your expenses as a percentage of gross profit helps you see if overhead is eating away at your profits. High gross means nothing if expenses are just as high.
3. Service Absorption Rate
This tells you how much of your dealership’s fixed expenses are covered by service, parts, and body shop profits. A strong absorption rate can help weather sales downturns.
4. Average Gross Per Unit (Front and Back)
Understanding both front-end and total gross per vehicle retailed highlights profitability beyond just sales volume.
5. Cash Flow Position
Profitability is one thing, cash is another. Knowing where you stand on cash flow ensures you can pay bills, flooring, and employees without sleepless nights.
The Big Reveal: Math as a Leadership Superpower
Once you start really understanding the story your numbers are telling, everything changes. Decisions get sharper. Opportunities stand out. And suddenly, you’re not just running a dealership, you’re steering it with purpose.
Your team will notice, too. When the boss digs into the details, the culture shifts. Financial discipline becomes contagious, and suddenly everyone starts caring about profitability as much as you do.
You Don’t Have to Love Numbers, But You Can’t Ignore Them
At the end of the day, understanding the numbers isn’t about becoming a financial wizard. It’s about taking ownership of your dealership’s future instead of just hoping everything works out.
Financial literacy is power. It gives you control, confidence, and the ability to avoid those late-night “Where did all the cash go?” emails. And if you’re in business, especially the dealership business, math isn’t optional. You don’t have to love it, but you do have to respect it.
Because the numbers don’t lie. They always add up, whether you’re paying attention or not.
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