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Fixed Ops Business Versus Variable Ops Business

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Fixed Ops Business Versus Variable Ops Business

Fixed Ops and Variable Ops are terms used in the car dealership industry. They uniquely identify two main parts of a dealership. Making this distinction defines what role each of these parts plays in dealership success. It also determines dealership marketing strategies for each of these entities.

fixed ops versus variable ops

Definition of Fixed Ops

Stability is what sets fixed operations apart in dealerships. Both the expenses and the revenue in parts and services tend to be more stable (or fixed) than in sales because these departments have fewer variables.

Definition of Variable Ops

The term “variable operations” usually refers to the area of a dealership with multiple variables that affect the expenses and the revenue.

What part of the dealership is fixed ops?

Fixed operations would be everything involved with repairing a car. The fixed ops department consists of the service and parts department and has a more consistent base for expenses and income. Customers still utilize a dealer service business even during the variables that impact car sales.

So, the term fixed operations assumes that if you build it, they will come because there will always be a need for car service. If you have a repair facility and people know it, you can get a predictable amount of business. 

What part of the dealership is variable ops?

The car sales department is the variable operations portion of the dealership. The variables in car sales can range anywhere from weather and holidays to advertising and promotions. Of course, market conditions and inventory also have an impact on car sales success.

Importance of knowing the difference

Over the years, dealerships have viewed variable operations or sales operations as the primary breadwinner compared to fixed operations. However, the thinking has shifted in recent times as more dealerships understand the unique impact each area has. It is imperative to know the profit of variable ops and fixed ops for any period. It allows a dealership to identify trends in each department.

Marketing strategy differences between fixed and variable operations

Marketing strategies differ between fixed and variable because you’re selling two different things. So, it is necessary to market these separate parts of the business independently if you want overall success for the dealership.

Variable ops and fixed ops must market with their competitors in mind. Variable ops or car sales competition is no longer just the dealer down the road. On the contrary, it now includes a wide range of online delivery options for car buyers. The dealer must convince its audience that the visit to the dealership will be worth it.

And that competition for fixed ops has also expanded over the years: it now includes businesses from local independent garages to big chain quick lubes. Dealers must entice specific, targeted marketing customers to drive past these other options to create fixed ops success.

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