Dealership Factory Accounting
“You cannot effectively run, buy or sell a dealership without understanding your dealership’s factory financial statement.
Although there are similarities with all statements, manufacturers also have significant differences.
A General Motors store, for example, is capitalized differently than a Ford or Toyota store.
Blue Sky is treated differently amongst the factories and financial companies.”
– John Pico
Understanding Dealership Factory Accounting
During more than five decades of consulting with automobile dealerships nationwide, I have found that many costly mistakes result from a misunderstanding of factory accounting rather than poor business decisions.
Automobile dealership accounting differs significantly from accounting systems used in most other industries. Manufacturers have their own accounting requirements, financial statement formats, capitalization standards and performance measurements. Lenders may evaluate those statements differently, and buyers may overlook accounting issues that materially affect a dealership’s value.
Understanding those differences is essential when buying, selling, financing, valuing or managing a dealership.
Dealership Accounting Resources
As a service to members of the industry, Advising Automobile Dealers LLC has compiled the following resources to promote a better understanding of dealership accounting and financial reporting.
IRS Dealership Audit Guide
The IRS Retail Industry Audit Technique Guide (ATG) is the reference used by IRS agents when auditing retail businesses, including independent automobile dealerships.
Accounting methods
Cost of goods sold
Inventory accounting
Balance sheets
Expense issues
Related finance companies
Tax compliance
Resources for Controllers & Business Managers
And, as an aid to Controllers and Business Managers, we have the following:
- NADA 2026 Definitions & Guides
- ATD Definitions & Guides
- Ford Financial Statements
- Toyota Dealership Financial Statement: An In-Depth Overview
- American Honda Motor Co. Inc. Dealer Standard Accounting Manual
- Honda Financial Statement – Autosoft Dealer Management System
Additional Manufacturer Accounting Resources
We have access to additional manufacturer accounting manuals and reference materials that we use in our consulting work; however, publication or reproduction of certain materials is not permitted.
Why Understanding Factory Accounting Matters
Understanding factory accounting is also essential in dealership valuations, business plans, fraud investigations, litigation support, and financial turnarounds.
Dealership Valuations
Business Plans
Fraud Investigations
Financial Turnarounds
Litigation Support
Need Help Understanding Your Dealership's Financial Statements?
Our understanding of factory accounting can make a difference when you’re valuing, buying, selling, financing or managing a dealership.
