What Does The Term "Fixed Ops" Really Mean?

Maddy Low

We have variable ops and fixed ops in the dealership, in your opinion what do each of these mean and why do we differentiate them? 

Joe Tareen

I think the term 'Fixed Operations" comes from the fact that long time ago service & parts profits were supposed to cover all the fixed costs of the dealership. I would like to see other expert opinions as well on this subject. I think that is also where the "Service Absorption Rate" terminology stems from.

Thanks

Joe Tareen

Robert Simpson

in my opinion, the income from parts and service is generally more fixed in nature.  To have a wildly profitable month or a very bad month is not the norm, whereas in variable ops, the profit is far more variable in nature.  bottom lines can swing by large amounts of money from month to month depending on the smallest of factors.

You could also classify the personality types that work in each department.  Service and Parts personnel are set in their ways, generally speaking, while sales people are more willing to try new things.

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