What Does It Take?

When I’m in dealerships one of the first things I ask a dealer and the members of his/her management team is how many used cars are they selling each month. Then I ask them based on the “market” and based on what they know about their organization what they think their real potential might be.

For instance, it’s not unusual for a dealership selling 75 used a month to tell me they think their potential is 90 to 100. This same dealer tells me his competitor two blocks up the street is selling 200 units a month. And of course I’m scratching my head wondering if they can sell 200 why do you think your potential maxes out at 100?

As the conversation develops the dealer implies that I don’t understand his/her market. Really? Here’s a serious piece of reality for you; what makes your market different is your thinking, not so much your market.

When I further press the question about the dealer up the street selling 200 units a month these are some of the comments I frequently get:

1. The dealer up the street has a lot of Inventory. Answer: Go get more inventory. (What I’m really being told is we’re not committed to the used car business.)

2. The dealer up the street focuses on AutoTrader. Answer: Focus more on Auto Trader. (What I’m really being told is we’re not committed to the used car business.)

3. The dealer up the street has the right inventory. Answer: Buy the right inventory. (What I’m really being told is we’re not committed to the used car business.)

4. The dealer up the street pays more money for his/her cars. Answer: Start paying more for your cars. (What I’m really being told is we’re not committed to the used car business.)

5. The dealer up the street has better trained sales people. Answer: Do a better job of training your sales people. (What I’m really being told is we’re not committed to the used car business.)

6. The dealer up the street has better processes and gets his/her cars through service faster than we do. Answer: Fix the issues in your service department. (What I’m really being told is we’re not committed to the used car business.)

7. The dealer up the street has an awesome website and great looking photos. Answer: Get a better website and take some better photos. (What I’m really being told is we’re not committed to the used car business.)

8. The dealer up the street is a big vAuto Dealer. Answer: Become better at using vAuto. (What I’m really being told is we’re not committed to the used car business.)

Making a commitment to selling more used cars isn’t rocket science. No doubt there are a lot of little pieces to the equation, but the real deal is for you to be passionate about the commitment of doing so.

I know what it takes to be successful and that’s why I’m constantly stirring up your thinking. That’s all I’m gonna say. Tommy Gibbs

Does Being On Time Matter?

I don’t know if you follow pro football and it doesn’t matter all that much if you do or don’t. The Tampa Bay Buccaneers have lost their first two games on field goals at the end of the game. Man with clock A

There’s been a bit of controversy about their quarterback Josh Freeman. Last year Freeman was also the team Captain. This year his teammates chose not to elect him back to that position. There’s been a rumor that the coach rigged the voting because the coaching staff has lost confidence in Freeman’s play and leadership skills. I doubt that’s true. Or at least the part about rigging the votes.

A week ago this lack of confidence was further magnified when Freeman overslept and miss the team picture.

I want this to be as simple as I can make it. Regardless of your skill level, regardless of your talent, regardless of your position, regardless of how much money you make, you cannot be a leader if you can’t show up on time. That’s all I’m gonna say, Tommy Gibbs

Are Your Pay Plans Counter-productive?

Pay plans are a very touchy subject. I’m always being asked about pay plans. It’s one of those subjects like religion and politics. I’m brave so I’m jumping in.

There are as many different pay plans as there are dealerships. It’s fair to say that how much and how a manager is paid depends totally on the dealer’s philosophy of the business. More often than not the dealer’s philosophy was developed early based on what “worked” when the dealer himself (or herself) was actually a manager.

We tend to think that everyone thinks like we do, and so if the way we were paid when we started made us successful, then it will work for others along the way. Or we think it’s worked so well for the dealership over the years…so why change? Nothing could be further from the truth.

Let me point out that as a new car dealer for 20 plus years, I was always searching for the “right plan.” I’ve always felt there had to be a better way. I fully understood that just because it worked for me, or let me say I made it work for me, that did not in any way mean it was the perfect plan.

I believe that every manager in the front of the dealership should be paid based on the same bottom line. My definition of the same bottom line means to add up the used car gross, the new car gross and the net F&I and pay them all on the same number. To do anything else is counter productive in producing the maximum gross, teamwork and future growth.

However, the actual percentage they get paid is totally dependent on them achieving monthly performance levels which are adjusted each month based on a number of factors such as inventory availability, previous performance, forecasts, and staffing levels.

If you want to include a small salary, the salary levels for each manager might be different depending on a number of factors, such as responsibility, years on the job, etc.

To keep it simple, assign each manager no more than three or four levels of achievement to shoot for. This concept is designed to put maximum gross on the books and at the same time push each manager to make sure they are achieving maximum performance in their individual department.

It’s simple enough to figure out by sitting down and determining how you feel about what levels of performance you find acceptable and backing into some highs and lows. If you feel 60 units a month is acceptable for your new car manager then maybe that job is worth X dollars a year. Maybe 75 units puts your thinking at XYZ dollars per year and so on. You can think about it in terms of gross or units.

A pay plan like this requires the GM to adjust the levels each month based on inventory, time of year, number of sales people on the staff, etc. It’s really not that hard. You sit down at the end of the month, review a few numbers, plug the new standards in and review them with each manager. Getting them to agree they are achievable is half the battle.

Here’s a sample. CLICK HERE

I need to go work on my own pay plan. That’s all I’m gonna say, Tommy Gibbs

The Speed Edge

What would you think is the number one issue used car managers complain about?

Ok, you got that right, the Service Department.

Let’s be more specific. Do you think they complain the most about the pricing they receive or the time it takes to get a car done?

Ok, you got that one right too. It’s the time it takes to get a car in and out of the service department. Road runner AB

I’d say in many ways the market has become “equalized.” What I mean by that is a large percentage of dealers are now using a pricing tool to manage their inventory. They know that if they price the cars “right” that the customers show up.

Not too many years ago only a small number of dealers used a “pricing tool”, thus they had the advantage. There is still an advantage to using it, especially if you do it right, but to continue to dominate your market there are some other elements you have to get an edge on.

I’m fascinated when I’m talking to dealers and managers about their challenges that in most cases whatever the issues they are struggling with are “fixable.” Someone, usually the dealer, just needs to want to “fix it.”

I doubt that there can be any disagreement that “speed” is critical in today’s market. We all understand we cannot let a car sit and that getting it on line and online as fast as possible is extremely important.

The why don’t we just go ahead and fix the speed issue in the service department? Is it because we’ve always done it that way and we don’t want to rock the boat?

Let me say this as nicely as I can. In today’s Internet-oriented, fast-paced world, if you don’t rock the boat, the boat will soon sink. You cannot and will not survive this business if you don’t speed your processes up.

Used Car flow in a typical Dealership:

2 days sitting before getting ticket written.

1 day before it goes into shop.

2 days in the shop.

2 days in and out of clean up.

2 days before the photos are taken and posted online.

You may be better or worse than this, but on average it takes most dealerships 7 to 10 days to get a car ready and out into the market. The reality is 99% of the dealerships don’t really know how long it takes. It’s a guess at best.

The number one excuse that we get from the shop is that they are too backed up and customers come first. I understand that. I really do. When you’ve got retail customers screaming at you, then of course it’s easy to set your best customer, the used car department, to the side. Doesn’t make it right, but I get it.

What other options do you have if the shop is truly backed up and you have 10 used cars you need to get done for a big sale this weekend? Let’s pretend it’s Wednesday and there is no way the shop is going to get it done.

Maybe that’s when dealer needs to step up and make some big boy/big girl decisions. Here are two options:

1. Pay
the technicians extra, lots of extra, to stay late and finish them up. The dealer has to make this happen because the service manager won’t do it. The reason they won’t do it is the training we have given them over the years. We’ve taught them to manage “the numbers.” They have been well schooled in controlling their cost of sale/labor. They have been taught they need to retain in excess of 70% of the sales number, so if they paid people extra to get your cars ready it would kill their numbers and they would be “bad managers.”

I’m just wondering whether the technicians would be willing to stay if you paid them double time. How about $100 bonus per car that they get out of the shop completed that night? Do those numbers scare you? So let’s do some math. If you had 10 cars to get out that cost you an extra $1000. What does it cost you if those same 10 cars don’t get on line this weekend? Hmmm…

2. Let’s say that’s a real bad idea. Why would you not sublet those cars out to a jobber? Oh, that’s right, I forgot. We want to keep all the revenue in house that we can and it’s against our policy to send cars out. One of the reasons a dealer gets to be the dealer is he makes the policy and he gets to break the policy. (or she, please….)

Of course we don’t want to lose the revenue and it’s not a good thing when you don’t have total control of the quality of the work, but sometimes you have to make an executive decision if you’re going to keep things moving. For me it’s far more important to get those 10 cars ready for sale this weekend than it is to sit on antiquated “company policy.”

Hey “Super Hero,” I didn’t say you allow just anyone to make these decisions. It’s the dealer or maybe the General Manager, but sometimes you have to do what you have to do to make things happen.

See, I started this article out saying that in most cases whatever the problem is in your store is fixable. You just have to want to “fix it.” Getting inventory on line fast is a very fixable issue. Speed is critical.

Realize that most dealers won’t “fix it.” They will find hundreds of reasons why they can’t or won’t “do it.” So, to get “the edge” all you have to do is be the exception to the rule. Making speed a priority will get you the edge.

Using vAuto software gives you an edge when you’re pricing your inventory. Your “decisions” give you an edge when it comes to getting your inventory ready for sale. That’s all I’m gonna say. Tommy

How Good Is Your Stuff?

Are you giving good stuff, bad stuff, outstanding stuff, worthless stuff, amazing stuff, same old stuff? Are you giving your best stuff?

So really, what is it?

Great leaders understand the power of giving. They give their best performance everyday and they give back to others. They don’t hide their stuff. They put their best stuff on the table to share with others. They share stuff that makes others have better stuff. Then they teach others to share their stuff.

It’s full circle. Someone gave to you. Now it’s time for you to do the same. Just make sure you’re giving your very best stuff everyday. I’m always trying to give you great stuff. That’s all I’m gonna say, Tommy Gibbs.




The Problem With Power

“The two hardest things to handle in life are failure and success.” Anonymous 

Have you ever noticed that when some people get behind the wheel of a car, truck or SUV that they lose their minds? It’s not unusual to see someone driving really nutty, doing something really stupid and you pull up beside them and they look like normal people. They don’t have two heads, fangs, or horns sticking out of their heads.  Car A

What is it with people when they get behind the wheel of a car? They sorta lose their minds. Good people, nice people seem to go a bit postal.  As I’ve mentioned in the past at one time I drove race cars. I always found it interesting that some of the nicest guys outside of a race car were nuts once they got in the car.

It was as if their helmets squeezed their brains until stupid flowed out. I’m not excluding myself from that equation, as I was no different than the rest when I strapped mine on.  I believe it’s the power of the engine that makes them go off the deep end.

I see the same thing in business every day. Someone gets promoted and whamo, they get the “king of the hill” mentality. “I’m ‘da king, you ‘da peasants, and you will do as I say.” That type of mentality will soon be their downfall.

One of my father’s favorite sayings is, “Be nice to people on the way to the top because you never know who you will meet on your way down.”

That’s all I’m gonna say, Tommy Gibbs

Don’t Confuse Success With Perfect

Vince A
Vince Lombardi was a man in pursuit of perfection

Here’s what you have to understand, just because you are having success doing it your way, doesn’t make it perfect. Your way is not perfect. There are many ways to be successful in the car business.

Focus on new cars
Focus on used cars
Focus on both

No packs

Four square selling system
One price selling system
Do your own thing selling system
If I could…would you

Paying on gross
Paying on volume
Paying on a combination of the two
Paying a salary, plus

New car managers appraising cars
Only the used car manager appraising cars
Anybody can appraise cars

Trade walk
No trade walk

Lot walk
No lot walk

My Life Cycle Management Process
We will find a butt for every seat

Separate recon team
All cars go in the main shop

Buying cars online
Never buying cars online
Attending weekly auctions
Buying cars from the public

Separate used car sales building
Sell everything out of one building

Teams in the service department
Groups in the service department
Conventional service department

Newspaper advertising
Radio & TV
Little bit of everything

10 Photos per car
40 photos per car
100 photos per car

Charge the used car department full retail from the service department
Discount service work to the used car department
Charge a set fee to each car
Charge no recon to a used car and make it a line item

Using a menu in F&I
Not using a menu in F&I

Hiring only green peas
Hiring only experienced
Hiring anyone who can fog a mirror

And the list goes on and on.

You should want to be perfect, but you’re not. The only way to get close to perfect is to keep looking and to keep trying for perfection. If your store is making $1,000,000 a month you’re still not perfect.

There is always more to do and something to fix. That’s all I’m gonna say, Tommy Gibbs

Decision Making

Leaders like you make decisions. That’s why you get to be the leader. You are a decision maker. That’s why you get paid the big bucks. Embrace it, love it, groove on it.  Be cool about it.

How many people in leadership positions have you observed over the years that can’t make a decision? They have to ponder every little detail. Every little “what if?” There are very few decisions that you should have to do that with. QB 1

Your training, your knowledge and your confidence should be such that you do it, get on with it and if you screw it up, you fix it and move on.

Not being able to make quick decisions would be like a quarterback walking up to the line of scrimmage and thinking, “Now let me see, what could go wrong here, maybe I should do an audible, no maybe I shouldn’t, no maybe I should, or darn I really shouldn’t, not this time, oh pooh I’ll just run the play I started out with.”

By the time a decision gets made a penalty would be called. If the quarterback did this with consistency pretty soon the entire team would lose confidence in him.

That’s what goes on when the team knows you can’t or won’t make decisions. And when you do make a decision they have no confidence in you and the failure rate goes way up.

Knock it off. Make some decisions. Know your limits, and know when to ponder the few that need pondering.

In most cases,  just “get it on,” as in “I got this.” I’ve got this and that’s all I’m gonna say, Tommy Gibbs