I often have conversations with dealers and managers about units they have had in their inventory too long or those vehicles that might be in the $25,000 to $35,000 range.
I question whether they are profitable or not. For those managers who want to keep units until they can retail them I sorta agree in that I’d like to see you retail them, but faster. I hate dumping retail pieces in the wholesale market.
I’m convinced that keeping them past 45 to 60 days probably doesn’t make you money unless of course you make a killer gross. I’m also convinced that the longer you keep the more expensive vehicles, the further you erode your profits unless of course you make some awesome grosses which isn’t too likely.
So, here’s the deal…if you disagree with me “prove it.” Yep prove it. Start tracking the ROI on any unit you retail over 60 days old and any unit that you have over $25,000 in.
Come on, bring it on. Prove it to me. Prove it to yourself. Remember when calculating ROI, the standard is to use only front gross and the sweet spot is 110 to 120%. You can use my ROI calculator. Go to FixRoi.Com.
I’m looking forward to you proving me wrong. That’s all I’m gonna say. Tommy Gibbs
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In a recent 60 Minutes interview Nick Saban, head football coach at the University of Alabama, was talking about what makes him and the University of Alabama so successful.
There are a lot of take-aways in the attached 60 Minutes interview. My favorite is his point that one of the reasons for not being able to create effective teamwork is that “High achievers don’t like mediocre people and mediocre people don’t like high achievers.”
Mediocre people don’t want to see others succeed as it makes them look even worse than they are and high achievers have no use for the mediocre ones and want nothing to do with them.
The achievers view the non-achievers as losers just hanging around absorbing perfectly good oxygen they don’t deserve. They see them making little or no effort. They don’t really want to help them and want them to go away.
Often, leadership has excuses as to why they keep non-achievers around and in the end the non-achievers either destroy the organization and/or run off the performers who finally reach a point of, “I don’t need to deal with this.”
Just in case you don’t want to take time to watch the video here are some of the key points:
1. The team has a chant: “Get Your Mind Right.” (Does your team have their mind right?)
2. As the leader, have you created a standard for your organization?
3. Are you watching the scoreboard more than you are watching the processes? Keeping the focus on your processes and making sure they don’t evaporate keeps you on the winning track.
4. If you and your team focus on doing your jobs at the highest level, the wins will follow.
5. Great leaders are coaching all the time and are determined to get it right.
6. Chasing Perfection makes you a winner even if you never catch it.
7.The number one thing is to be on time. Being on time shows you care.
8. Do your job on every play. Every down. Every deal. Every situation.
By the way, Nick Saban originally thought he wanted to run a car dealership when he graduated from Kent State. He would have made an awesome car dealer. That’s all I’m gonna say,Tommy Gibbs
I was talking to a dealer last week about the challenge of playing the “race to the bottom” and how much he wants to stop pricing his inventory so aggressively. He wants to move to a model of selling the value of his product and organization. He believes that if he stops chasing price that he will achieve a higher average gross profit. He thinks the velocity mindset is hurting his average gross profit. He’s tired of playing his competitors pricing war games.
If you’ve followed my thoughts on this subject you know that I’m pretty convinced that if you pull back on your pricing that your grosses will go up….and, and, and…you know what’s coming don’t you? Your traffic will go down.
Screaming from the rooftops that you are a great place to buy a car won’t work for you unless you can scream it loud and clear and for a very long period of time. Your ultimate knee jerk of back to price wars would occur probably before you ran out of money.
If you follow CarMax you know they are the number one seller of used cars and don’t play much of the pricing game. Their cars are usually more expensive than yours. They have done a consistently good job of telling people, this is a great place to do business, we have lots of inventory and we will buy your car even if you don’t buy ours. That’s pretty much what they do. And, they don’t negotiate the price or the value of the trade.
We can all agree they have a totally different model than most new car dealers. Unless you are willing to convert to one-price, change your culture and are willing to spend a lot of bucks it’s not going to work for you taking the approach of “Buy here, ’cause we are great.”
I really do think one of the biggest problems in the industry (though it is getting better) is that when the customer shows up at the front door we still discount the car. This applies to new as well as used. The number one thing you can do to improve your operation and your gross profit is to learn to say “no.” Say it by presenting all those reasons why a customer should buy your car and do business with your dealership. You can only do this by preaching the message to your team every month, every week, every day. The entire team has to believe.
I recently visited with a very successful used car dealer who specializes in high line cars. He retails about 250 units a month and he gets about 1500 hits a day on his website. He said that he has noticed a trend over the last few years that people are driving shorter and shorter distances to purchase. His analysis of that is that more dealers are doing a better job of marketing their inventory online and therefore the customer can find what they want much closer to home.
As you may know Texas Direct has always used eBay as its website. In the early days they sold a large number of their vehicles online through eBay. A few years ago they relocated to an old Auto Nation Used Car Superstore facility and now sell a lot of cars to more of the local public. Yes, people still go online to find the price and car they want, but they are doing it in a shorter distant. Here’s a recent article on eBay losing traction that more or less backs up this thought process. Article
Strategy to consider:
1. Price your vehicles smarter. Everything doesn’t have to be at market price on the first day. Some should be over. Some should be below.
2. Re-price your inventory faster. Don’t let “buckets” rule your world.
3. Train and re-train your staff on selling the value of your vehicles and your organization.
4. You have to learn to say “no,” when the customer wants to negotiate when you know you are holding the winning cards. (Cars.)
Never give up on creating value, but if you give up on aggressive pricing you will be giving up a lot of traffic. That’s all I’m gonna say, Tommy Gibbs
In a recent interview, Jimbo Fisher, the head coach of the 6-0 Florida State Seminoles football team was asked how he kept his team focused on the next game.
He said it’s about managing the clutter that goes on around him and the team. Clutter for him means the media and the distractions that keep things stirred up as they go about the task of getting ready for their next opponent.
Managing clutter is one of your biggest challenges as you go through your day. There are things coming at you from left and right. At times, you feel like you are being attacked by a swarm of bees. Your ability to swat those bees one by one will often determine your progress and results on any given day.
You cannot let the clutter get you off your progressive track. The more you can do to control clutter the better. Clutter is just a bunch of little stuff that slows you down, moves you off your center, gets you off track, discombobulates you and messes up your entire day. You cannot let clutter control your production and performance.
Clutter is best dealt with by making sure you take a few minutes at the end of the day or first thing in the morning to map out your major tasks for that day. Swatting those little bees one by one and having an attitude of “next” will keep you on task and moving forward.
Staying on task and swatting the “clutter bees” at the same time is what separates the bee killers from the killer bees. Start swatting. That’s all I’m gonna say. Tommy Gibbs
What if you owned the Tampa Bay Buccaneers and every day you opened the paper or turned on the sports talk shows and the headline was “Fire Schiano?” As you may know Greg Schiano is the coach of the NFL football team the Tampa Bay Bucs. As I write this article his team is 0-7. If you owned the Tampa Bay Bucs would you fire him?
You may very well have your own Greg Schiano working for you right now. Why haven’t you fired him/her? Is it the fear that you could do worse? Is it the fear that you may have to work a little harder? Is it the fear of what your staff might think?
Greg Schiano may be a really good guy. Your guy may be a really good guy. How long are you willing to endure the pain of your own Greg Schiano going 0-7? Is it 0-8, 0-9 or will it be 0-10 when you finally do the right thing?
0-7 for you might be a sales person who averages 7 cars a month.
0-7 for you might be a new car manager who can’t desk a deal or take a “TO.”
0-7 for you might be a service manager who keeps running your techs and customers off.
0-7 for you might be a used car manager who just doesn’t get “turn.”
0-7 for you might be a controller who can’t work with people.
0-7 for you might be a parts manager who always has to have it his/her way.
I can’t tell you who your 0-7 actually is. You know who it is and you just won’t do anything about it.
If you have someone who is 0-7 it’s probably due to one of two reasons. (I’m stealing a Dave Anderson quote with my own little touch.) Are they stupid? In other words if they are stupid they just don’t know. If they don’t know how to do the job it’s because you haven’t taught them how and/or they don’t care enough to learn it on their own.
Or they may be ignorant, meaning they know how, but just won’t do what they actually know how to do.
I hope you’re not staring at 0-7. I doubt it because if you were that would make you stupid or ignorant. I know you’re not stupid or ignorant because you read my material.
I’m betting you know someone who’s got some 0-7 going on. You might want to give them a wake-up call by forwarding this to them. That’s all I’m gonna say, Tommy Gibbs