Source: www.mcdonaldgroupinc.com The absolute number representing “Recovery Rate” is interesting but not a call to action. It only indicates your current position relative to the target score of 100% Absorption Rate. Managers look at it and say WOW with little insight into how to make any improvements. Fixed Operating Expenses are those dealer expenses that do not change or vary with sales volume. So, Sales Commissions are variable and are not included in Absorption Rate calculation. The formula below illustrates inputs to Absorption Rate from Service, Parts and Rentals. Absorption Rate Formula Absorption Rate = Profit from Parts, Service Labor and Rentals / Fixed Operating Expenses Above line (numerator) items that can be controlled to improve Absorption Rate score include: READ FULL ARTICLE>>
