Odd as it may seem we often put a lot of energy and wasted effort into trying to control the things we don’t have control over and miss a real opportunity to control the things we can control.

I often like to compare the car business to the coaching field. Coaches never have total control over the game, but they do have control over the things they do to prepare for the game. You can take control by preparing the team.

If you are the dealer, you should think of yourself as the head coach or the team owner. If you are in management, you’re an assistant coach. If you’re the General Manager or General Sales Manager, consider yourself an offensive or defensive coordinator of a professional football team.

Great coaches study the game 24/7/365. If you don’t live, eat and sleep the car business, then you will never be able to control what you can control.

Successful coaches understand that to control the game they have to teach the game. They make an investment in time and resources to ensure the team understands the plan and how best to execute it.

Any dealer who has half a brain takes as many of his/her people as possible to training meetings and conventions. More important though, is what happens after the training sessions and meetings.

Whenever you or any manager goes to any type of meeting or training, there should be a de-briefing within 24 hours of your return to determine what you/your team learned and what you are going to put into play at your store.

The same is true for Twenty Groups (if you are not in one, you should be) and the NADA Convention. You should take as many members of your management team as possible to these functions with the purpose of bringing back real ideas to put into play.

Your mission as a coach is to create an ongoing environment that demonstrates you are committed to training and developing your staff at all levels; "Controlling what you can control."

There is no way you can become a well-rounded student of the game and compete effectively in today’s market without understanding the high tech side of the business. Making use of the right software like vAuto and tools like Auto Count USA gives you a huge advantage when it comes to controlling your inventory.

You cannot control the price of gas, the stock market or the world economy. You can control the speed by which you turn your inventory.

Knowing and understanding the necessity of controlling your inventory is a major step toward controlling what you can control. That’s all I’m gonna say. Tommy Gibbs

I know it’s a very strange title and I know some of you may be thinking you would like to help me with it. Have you ever actually known something and a light bulb goes off and then you really know it? It’s one of those revelations that makes you wanna reach up and slap yourself.

I, like many of you, continue to put part of the blame on the lack of average gross profit on the Internet and the stress it creates on pricing. There is no doubt it’s a factor in bringing your average gross profit down, but it’s not the most important one.

But before I share my “slap myself in the face” revelation with you, I have some questions for you:

1. How many of you struggle to make gross on those units over 45 to 60 days old?

2. Is it fair to say the grosses on 45 to 60 day old units pull your average down?

3. What if you could eliminate 45 to 60 day old units?

4. What would the impact be?

5. Have you taken the time to analyze the average grosses on 20 day old cars vs. grosses on 45 to 60+ day old cars?

Shazam…Bingo…Hallelujah!!!

Why hasn’t your light bulb gone off? Why haven’t you smacked yourself?

Don’t we all know that the lack of speed kills your used car business? Don’t we all know that if you have speed you win? What’s it gonna take for you to realize it’s not just the price on the Internet that’s killing your grosses, but the slowness of your processes and marketing.

I write and speak to groups about “Life Cycle Management” with the passion of a Baptist preacher at a church rival on a hot day in July.

If someone said to me, “Tommy name the top three things dealers must understand to improve their used car business” it would be:

1. Get more involved

2. Press your cost down

2. Life Cycle Management

Since I’ve often written and spoken about all three, I’m not going to take up any more of your time writing about them and especially “Life Cycle Management” in this article.

I think you know what it’s all about and since you do, and since you keep struggling with average gross profit, this might be a good time for you to reach up and slap yourself upside the head. That’s all I’m gonna say. Tommy Gibbs

A dealer friend of mine recently went through some really bad publicity. The highlight of this bad publicity is that they sold a car and a day later the customer came back and wanted a different color which they allowed him to do as an even swap.

Within a day or so the dealership discovered they had made a $5600 mistake. Management attempted to contact the customer in order to collect the additional money. When they were not able to find the customer they had him arrested for theft of a motor vehicle. Eweeee. (Charges have been dropped.)

There is some debate over who said what involving the actual arrest. So, you guessed it. When all is said and done they have a multi-million dollar lawsuit and many millions of dollars worth of bad publicity.

I know that the managers involved in this deal are really good people. I also know they were trying to do what they believed to be the right thing and in the best interest of the dealership.

The bottom line is that somewhere in the equation there was a massive screw up. If you’ve been in this business for any number of years you’ve either seen this scene before or have been a part of such an incident. Maybe not this severe, but you’ve seen it.

Situations like this don’t just happen in the sales department, they happen in all departments and in all businesses. With the auto industry being such a heavily regulated industry many people want to take a shot at us.

When these things happen you have to ask yourself what could you have done differently?

I know what you’re thinking. The customer owed the money so what’s right is they needed to pay it. I don’t disagree with that statement. But, when the fire starts to burn someone has to have sense enough to put it out. All it’s going to do is get bigger and a whole lot hotter.

In the book titled “It’s Ok To Be The Boss,” the author makes a point that if you receive bad service at a restaurant it’s not the waiter or waitress’s fault. It’s management’s fault. In cases like this it’s upper management’s fault.

The dealership has apologized and offered to let the customer keep the car with no additional money to be paid. Too late, which is frequently the case. In most cases the problem is not recognized and/or dealt with soon enough.

Whoever initially gets a problem often tries to push it under the table, thinking they are doing the right thing. They often end up jerking the customer around due to pay plans or what they think is in the best interest of the dealership. It usually turns out that management is making a decision that is in the best interest of that individual manager. As in cover your butt.

During my dealership days we had great success with what I called “The Playbook.” Before I share that with you let’s see if we can come to an agreement on a few things.

1. More often than not when a major issue comes up management will hold a meeting to state what the new policy and/or procedures are going to be.

2. When the meeting is held, it is possible the entire staff is not present. Someone is off, with a customer, etc.

3. Sales people and sales managers come and go.

4. Most messages will evaporate over some period of time.

Therefore, if you can agree to the aforementioned you can see that the message that is delivered to the troops either has an incomplete audience and/or a short shelf life.

Now, the Playbook:

Make a list of company policies and legal issues you know to be a potential problem. Set them up on an excel spreadsheet with 12 months across the top and two columns under each month for the date and initials. (See Example)

Each person who attends the meeting will be given his or her sheet to sign off on at the conclusion. The meeting leader will use a book to discuss in great detail each item on the list. The “Playbook” is done once a month and once set up will take an hour to cover, depending on the length of your list.

With the technology we have today this could be done electronically but there is no substitute for a solid presentation by the GM or Dealer/Operator.

So, over the course of time you will have eliminated the excuses of “I didn’t know” or “I forgot.”

You will not eliminate all your problems with the “Playbook” but you will go a long way toward reducing about 90% of them and maybe avoid a multi-million dollar lawsuit and millions more in bad publicity. That’s all I’m gonna say, Tommy Gibbs

 

Wholesale losses and the lack of gross continue to plague dealers around the country. Speed and common sense go a long way toward improving these two major issues.

The reality is they are both closely connected. If you’re going to reduce wholesale losses you have to be geared to take fast action and make early decisions on cars and trucks. If you are paying attention, that decision is easy because potential losers are sending you a message the minute they show up on your lot.

If you would take the time to look, then you would see. Improving gross is doable if you focus on selling fresh inventory. Selling a fresh piece at a premium has always been the "gross makers." Buying and selling into "today’s market" is the key to your success.

The only way you will ever get control of these issues is to be honest with yourself about every car, purchased or traded, that comes into your inventory. This newfound honesty occurs when all the members of the management team go on the "trade walk" each morning. Make sure you include all purchased cars in the "trade walk line."

This is the beginning of "Life Cycle Management." Once you have decided to keep a car in your inventory you should give it an Expiration Date, "ED." Some cars will get 20, 30, 45 and maybe a few get 60 days. Some units should be designed as an EWR unit. That stands for "Early Warning Radar." These units only get 20 days in the "Life Cycle." There are a number of factors that create an EWR unit:

1. Equity position (You’re upside down from jump street)

2. Make-a-Deal Car (Did you step up to make another unit go away?)

3. Odd Equipment (As in this car really needs NAV)

4. Previous Sales History (You have never done well with it)

5. Bad Color (You should know it when you see it)

6. No Experience (You like it, but don’t know squat about it)

7. Service History (Traded a customer out of it because they were driving the service department nuts)

8. Potentially Large Repair Bill (That’s why the service manager needs to be on the walk)

9. High Miles (2 year old car with 45,000 miles, hmm)

10. Suspicious CarFax Report (Might be a problem)

11. Gut Feeling (Sometimes it just doesn’t feel right)

If you stop and think about your oldest unit in stock you will come to realize that the reason it aged, aside from not pricing it right in the very beginning, was that when it first came into your inventory it had one or more of these issues attached to it.

Look at the list and see if you can spot one or more of those items on the list tattooed on the hood of your oldest unit in stock. It was there on day one, but because you didn’t exercise "Life Cycle Management" as a daily discipline you either didn’t see it or you ignored it. If you had utilized "Early Warning Radar" on day one, then it would have been gone by day 20.

When you assign all units an ED date and start the count down on day one, your intensity toward making that unit turn goes way up. It’s far different to view a unit as having 15 days left on its "life cycle" as opposed to it being 45 days old.

If you want to reduce wholesale loses and improve gross profit you need to pay attention to "Life Cycle Management." That’s all I’m gonna say, Tommy Gibbs