Archive for May 2013

History Lesson

I wasn’t a very good history student. I couldn’t rationalize why I needed to know what had happened a hundred years ago. I could not have cared less. Actually, I hated history.

As an adult I have come to appreciate history and wish I had paid more attention in my history classes as I now find it amazingly interesting.

George Santayana, a Spanish-born philosopher wrote in his book, The Life of Reason, “Those who cannot remember the past are condemned to repeat it.”

Many in the car business keep repeating the same mistakes and don’t understand why they are always fighting with the same issues. If you are not willing to change, what else can you expect?

The two things I hear dealers complain about the most are the mistakes in their used car inventory and how difficult it is to hire people.

The reason you can’t hire people is because of the type of people you keep going after. You’re trying to hire the same type of people that you did back in the 70s and 80s. Paying on gross profit has very little appeal to generation X, Y and Z.

As a matter of fact it’s starting to having less and less appeal to all sales people as they have come to understand just how little control they actually have over gross profit these days. When you combine the old way of paying with a tired and worn out selling system it’s easy to see why it’s hard to hire people in this day and age.

By and large the way many dealers manage their used car inventory is the same as it was 20 years ago. Dealers (buyers/used car managers) buy cars based on a combination of gut instinct and a little pretending that they are using some software to guide them. Their emotions still control what they buy, what they keep and how long they keep them.

I often hear comments like “Why should I get rid of that car when I can’t replace it?” Really, really…you want some more of that? If it hasn’t sold in 45 days why would you want to go out and buy some more cars that you haven’t been able to sell?

Many dealers want to stay with the “old way of doing things.” They price cars at a certain amount of gross and then want to hold the line on those prices as long as possible. As I stated in a previous article, it’s ok to go for the home run, but you also need to know when it’s important to get on base any way you can.

Because you don’t adjust the pricing fast enough (and you’re not using my Life Cycle Management Program) you wake up one day, wholesale those units and lose your shirt. History keeps on repeating itself and you wonder why?

If through your history you keep finding yourself struggling with these same problems over and over again what’s it going to take for you to change? Yes, change is hard; it’s never easy to go down a different path. To do so you have to clear out a lot of old debris. It takes time, patience and commitment. The alternative is for you to keep repeating history.

You cannot control the past, but you can control your future and you can make your own history by having the guts and courage to change those things you know you need to do. That’s all I’m gonna say. Tommy Gibbs

Are you Changing because you see the light or feel the heat?

Key Words For Leaders…

1. I need your help.
2. What can I do to make your job easier?
3. What do you think?
4. We can fix this!
5. How are you? (And mean it.)
6. Let’s get our heads together!
7. I trust your good judgment.
8. You’re the best!
9. Let’s make something happen!
10. You rock!
11. It’s not a problem, it’s an opportunity.
12. Gimme a high five!
13. Love ‘ya.

Have you got a key word? Come on, share it with me…
That’s all I’m gonna say, Tommy Gibbs

A Lost Art…

Back in the good old days we used to hit some homeruns on used cars. There have always been a few deals each month with some big time grosses on them. Sorta like hitting a 500 foot homerun. Not easy to do, and not that many, but there were always a few that were knocked out of the park. Those homeruns went a long way toward improving overall average gross.

For sure we would be better off with a consistent $2500 per copy, but we can all attest to how difficult that can be. Most dealers have become very price conscious when posting units on the Internet and thus have gotten away from swinging for the fences once in a while.

Many dealers are using a “bucket system,” which I do like as it gives you a solid discipline for making systematic price changes. The downside is every unit on your lot isn’t the same and you cannot price them all based on a bucket concept of 95% of market for the first bucket for 20 days. There are some units you need to be under the market and some over the market regardless of which bucket they might be in. To say they are all the same will cost you both unit sales and gross profit.

When considering which units to go for the fences on you have to use the data available to you and some good common sense. When you’ve seen hundreds of horses over the course of time you should be able to spot a Zebra (homerun car) once in a while.

Just as in baseball, you need to know the count and the game situation before you swing from your heels and you need to be smart enough to know when to swing for the homerun on certain cars. Swinging for the fences on the wrong cars and for too long a time period will only make matters worse.

So, keep hitting singles, doubles, triples and you will score some runs. Crashing a home run once in a while feels good and sure helps the overall gross average.

Time to swing….Batter up…That’s all I’m gonna say, Tommy Gibbs.

How Fast Are You?

The number one killer of your ability to improve gross and volume is your lack of speed. Your inability to move fast is a killer for your used car business. Moving fast puts you in the winner’s circle. Not moving fast puts you in the loser’s circle.

The speed of your service department has a direct impact on your ability to produce gross in the used car department.

I’d be preaching to the choir, if I went over all the reasons the service department needs to cooperate and get your used cars through service just as quickly as possible. Unfortunately most service managers don’t have a clear understanding of what’s supposed to be happening or don’t care that your inventory is costing you a lot of money when it’s sitting.

Don’t misinterpret my message here about your service manager. I have the utmost respect for the very difficult job they do. The bottom line is they are only doing what they have been trained to do and what they perceive is in the best interest of the company. The problem is that it’s not been explained to them what’s really in the best interest of the company.

In some cases they get caught up in the day-to-day issues with your retail customers and they don’t pay attention to what’s going on with your used cars. They need to be continuously educated about how fast the market can change on a used car and what it does to your bottom line.

Delays in your service, clean up and the taking of photos are often compounded and tied to your poor display of used cars on your website. It is not unusual to have used cars in inventory for a week or two and they are still not properly represented on your website.

When I look at the websites of some of the top used car performers around the country most of their websites are very easy to maneuver through with only a couple of clicks. That is not the case for most new car dealer’s websites.

How many of you actually click onto your own website and attempt to shop for a used car? I will bet in most cases you are not going to be pleased. My research tells me that most of the time you require far too many clicks for me to see what I want to see.
Some of the typical issues are:

1. The lack of quality pictures. (You need your own photo booth!)
2. The lack of quantity. You need 40 plus pictures for each car to be competitive in today’s market.
3. Too many clicks to see each individual photo? Do your customers have to click on each photo or can they proceed from one to another by clicking the arrow? The arrow is much more effective.
4. The posting of stock photos. (You’ve got to be kidding!)
5. Description of cars with no photos or saying “photos coming soon.” (Another you’ve got to be kidding!)

These issues are often because someone doesn’t care, someone is lazy or someone just doesn’t have a clue. Regardless of the reason, it gets back to lack of speed being the killer and speed making you a winner.

You have to decide how serious you are about this business. If you’re dead serious you will get off your duff and get these things fixed. If you’re not then you and your business will continue to ride along in the slow lane. That’s all I’m gonna say, Tommy Gibbs

What’s Important To You?

Great leaders guard what’s important. In their own special way they are anal about what’s important. As you progress through the stages of leadership what’s important to you may actually change or become refined.

Here are 4 of the top things that leaders most often conclude to be important.

1. The Team-those who they surround themselves with. I often hear top leaders say the reason for their success is picking the right people for their team. There is no denying that’s true. Picking the right people is critical but more importantly being committed to developing those people is as important if not more so.

2. Evaluating performance-there has to be a performance standard for the leader and the team. A team who is not held accountable for their performance is a team going nowhere.

3. Principles-Leaders have principles or core beliefs that they are not willing to bend on. They are smart enough to know that there are times when those principles may need adjusting, but to the core they never deviate very far.

4. Profit-is no doubt the ultimate measuring stick. As important as profit is to an organization great leaders know that how the profit is achieved is more important than the profit itself. An atmosphere of profit at any and all cost will jeopardize the company’s reputation and long-term success.

So, what are you guarding today? That’s all I’m gonna ask. Tommy Gibbs

Continuous Improvement

How Long Should You Keep Them?