I want to talk to you about pricing and how dealers post prices on their used cars.

Some dealers do not post any prices on the cars sitting on their lot. A few don’t even post a price on the Internet. Some have an Internet price, but they don’t have an actual price on the cars. A few have the price coded on the car for the sales person. Some dealers require the sales person to get a price from the sales manager or they may have a price sheet in their pocket from which they will quote. About 1/3 of all dealers have a price on the vehicles on the lot that is different than the price on the Internet.

Dealers who follow any part of these procedures have an array of excuses for doing so. Some dealers will say they don’t want to post prices on their cars because they don’t want customers coming on the lot when they are closed, getting a price and being able to shop them. Really? Look Einstein, they’re gonna get a price one way or the other. Can you say Internet? (If you’re big in the Subprime business that’s a whole other subject.)

They will also say it’s because they want to give the sales person a chance to hit a homerun on the drunk that staggers into the dealership who doesn’t own a computer. Ok, they don’t actually say it that way, but that’s my real world way of putting it into language we all understand.

Let’s all raise our hands and agree that more than 80% of the people shopping a used car shop on the Internet. Now that I’ve gotten you to agree to that then let me give you another number that you might not want to agree with but it’s absolutely true. Here you go: 65% of the people who show up on your lot to look at a used car have been online, looked at your prices and don’t tell you so.

No doubt, a skilled sales person will attempt to find out such a critical piece of information, but you need to know going in that when you play the pricing game with your customers you are going to lose the game more times than you win.

Your credibility goes down the tubes as oftentimes the customer won’t say anything to you and just leaves because you quoted them something different than the internet price.

I’m going to share with you what I believe is the best way to achieve the maximum gross and sell the most cars with the minimum loss of deals.

Without a doubt your Internet price and the price of the cars on your lot need to match. You should consider a window sticker on the side of the car with all the equipment and a "Retail Price." Use whatever source you want to determine the retail price. Just make it a real big price.

Use an attractive hang tag (CLICK HERE FOR HANGTAG) to show the Internet price. The hangtag makes it very easy for you to make price adjustments whenever you make an Internet pricing change.

In today’s market there is no logical reason to approach the pricing of your used cars in any other manner. You must continue to do a better job of training your sales staff so they can justify that the Internet price you have posted is fair market value and your dealership is the place the customer needs to do business.

When the sales staff stops selling the price and starts selling the value you will sell more cars, make more money and have happier customers.

So, have I changed your mind about your pricing? Just remember "only canned sardines can’t change their minds." That’s all I’m gonna say, Tommy Gibbs

When I was in college we used to mix an alcoholic drink called purple passion. The way I remember it the formula was 190 proof grain alcohol mixed with grape juice. Not that I was ever a heavy drinker but I probably lost some serious brain cells drinking that stuff.

The appeal of that drink wasn’t just the alcohol content; it was the name "Purple Passion." More the word passion than purple! There’s something about the word passion that brings out excitement and enthusiasm in most people.

Organization like Zappos Shoes, Starbucks, and Apple will point to the passion of their employees as a driving force in the culture, which contributes greatly to their success.

People and organizations don’t necessarily fail because they are stupid or don’t know what to do. They fail because of the lack of passion. Passion is not something that can actually be taught. I’d love to hold a workshop on passion, but I doubt it can be done. Besides, most people wouldn’t feel they need a workshop on passion. They think they already have it, but the reality is most don’t.

I can show you what passion looks like. I do my workshop with great passion. You won’t agree with everything I teach, but you will agree that I do it with passion.

Passion is created when you’re doing something you love to do. That’s the problem, for many people are doing whatever they do for a check.

The number one reason companies like Apple succeed is because they hire people who are passionate about the business they are in. The greatest challenge for most businesses is to take the time to find people who are passionate about their work or at least have a slight flame burning that can be set on fire when shown the way.

Passion is multiplied in any organization by finding "like-minded" people. Passionate leadership will establish standards that are of the Ritz Carlton/Disney type. These standards have to be fed to the masses everyday by the passionate ones to the extent that people either eat it or move on. If passion scares non-believers away, how can that be such a bad thing? You should expect people to become believers and if they can’t, then it’s time to make a change.

There’s a massive connection between passion and goals. If you don’t have goals then it’s pretty unlikely you will ever have a passion for anything. Your goals have to be constantly changing. Passionate people are not successful because they achieve their goals. They are successful because they keep changing their goals. Setting goals too low or too high doesn’t work. Setting goals just a tick out of reach is the key. You hit that just out of reach goal, set another and the passion burns on.

I’ve often said that one of the worst things to happen is when people get in a comfort zone somewhere between two and three years in a given job. The lack of passion is easy to spot. It’s that person who says "Oh, I’m very happy being an F&I manager and I look forward to retiring doing this job."

I’m not saying that’s totally a bad thing, but if this is the person that’s going to fire up the passion in your business you would be as well off drinking purple passion. Having people around you who think like this will cause you as much brain damage as a gallon of purple passion made with 190 proof grain alcohol. That’s all I’m gonna say, Tommy Gibbs

You may have heard these numbers by now, but just in case you didn’t I will share them with you. Last year there were 12.7 million new cars and trucks sold in this country. That’s a number you have probably read a lot about. A number that you’ve not heard much about is the 38.7 million used that were sold.

Both numbers are up from 2010. Roughly one million more new and two million more used were sold in 2011 than in 2010. Here’s the breakdown of the 38.7 M used.
New Car Dealers: 13.8 M
Independent Dealers: 13.7 M
Private Sales: 11.2 M

New car dealers and used car dealers were almost a split coming in around 36% each of the total market and private sales at about 28%.

Did you sell more used in 2011 than you did in 2010? If you didn’t, shame on you. With 2 million more used sold last year, your used car sales should have also increased.

Let’s assume you did sell more used in 2011 than 2010, the next question is did you get more than your fair share. I can’t define "more than your fair share." Only you can do that by taking a look at your total used car market.

There are a lot fewer new car dealers chasing the used car numbers than there were back in 2008, 2009. There are also fewer used car dealers competing for the used segment. In the big picture there are fewer dealers and more used cars being sold. If you’re not kicking butt in used you really need to have a chat with yourself.

I’m amazed at the 13.7 million used that the independent dealers sold. Can we agree that in one way or another most of their inventory comes from a new car dealer? They get most of their inventory from a new car dealer who sells them as a perceived wholesale piece either directly (I say perceived because a lot of them could have been a retail piece) or at an auction. So one way or another a large percentage of their inventory comes from a new car dealer. Talk about insanity!

Why do you let that happen? Oh, sure some of it is junk and you don’t want to deal with it. True story. But more often than not you have become prejudiced against certain vehicles you don’t want to mess with.

It’s not unusual for you to trade a car in and it might be the number one seller in the market. You keep it for 60 days, don’t retail it, dump it in the wholesale market, and lose $2000. So the next time that car comes to the front door you immediately have an attitude about it. You either don’t step up or if you do trade for it you wholesale it because you don’t want anymore of that "action." The truth of the matter is that the reason you didn’t retail it the first time was because you didn’t market it right. Had you priced it right on day one you wouldn’t have it on day 61.

Another very important piece of the equation is that you keep trading in those $5,000 to $10,000 cars and every time you take them into the shop they try to knock your head off with the repairs. You get tired of having your head knocked off, so you wholesale them.

But, wait, wait…you still need inventory so you go to the auction or ring up the Enterprise guy and you buy some late, late model stuff that you don’t have to spend a lot of money on. That’s what I call being in the NEWSCAR business. That’s when the average cost of your used cars keeps creeping up and up and gets real close to your new. Then you wake up one day with an average cost per unit in stock around $18,000 and you wonder why you’re not selling any used cars.

If you’re going to get more than your fair share of the used car market then you have to play unfair. Playing unfair means taking advantage of the massive amount of information available to you from vAuto, Auto Trader and Auto Count USA. You will not win the game unless you become a student of the game. That’s all I’m gonna say. Tommy Gibbs

Are you heading to or at the NADA Convention? I hope so. If you’re not going I’m wondering why? Why would you not go? Short on staff? I guess that’s a maybe. You went last year? Ugh, I guess that might be a maybe also. Can’t afford the expense? Another maybe goes up on the board. Those excuses and most others are not great reasons for not going.

Some of you live in a little box and wonder why things never change for you. If you’re like most dealers you spend the largest majority of your time in your dealership pushing yourself and encouraging your staff to do the things we all know are important.

The problem with being in the store every day is you end up in a "mental box." Your brain needs a shot of WD 40 once in a while to loosen things up and make the wheels turn faster.  It’s winter, it’s cold and if you’re not careful your brain will freeze up and not thaw until sometime in August.
It’s easy to say "the Convention is always the same, so why bother?" Not true. The only reason the Convention is the same is because you’re the same.

If you’ve gone to the Convention in the past to rub shoulders with the factory guys and attend the parties then I guess it would be the same for you. You get out of something what you put into it. If you go to the Convention and are determined to take real ideas back to your dealership and make things happen the odds will be in your favor of doing so.

It’s hard for your vision to change when you sit there and stare at those same walls and same people day after day. It’s a cancer that eats away at your soul. That’s why you need to go. You need inspiration. You need to see the possibilities. You need to go and learn something.

So, if you’ve not already made plans to go, it might be too late and that’s a shame. If you do go, you can stop by the vAuto booth #1558 and get a free copy of my "Little Used Car Book, Volume 3." My little book is not a cure all for your used car business but it’s guaranteed to give you some ideas and wisdom to help your bottom line.

Finally, I’d like to encourage you to attend your state or local association meeting and by all means consider joining a Twenty Group. You cannot expand your knowledge and your business by sitting in your office daydreaming about the possibilities. That’s all I’m gonna say. Tommy Gibbs