I think my first experience using the “V” word was when I went on a camping trip. Ok, it wasn’t a camping trip as such. I was actually having the time of my life at the Marine Corps boot camp, Parris Island, SC. It was there that I first used the “V” word.

The M14 rifle has a muzzle velocity of 2,800 feet per second.

Up to that point in my life I had never used the word. Heck, I probably didn’t even know what it meant. Speaking of meaning, since it’s become such an ugly word to some, I decided to look it up.

VELOCITY:

1. Rapidity of motion or operation; swiftness; speed: a high wind velocity.
2. Mechanics. The time rate of change of position of a body in a specified direction.
3. The rate of speed with which something happens; rapidity of action or reaction.

To keep things simple, my takeaway is that velocity simply means speed. There’s a book out by Jason Jennings and Laurence Haughton that has the perfect title for the automobile business, “It’s Not the Big that Eat the Small…It’s the Fast that Eat The Slow.”

I could not find anywhere in the many definitions I looked up where it said:

“Velocity-a method of giving your cars away so as to impact your gross to a point of a substandard amount that will make you want to throw up your hands, beat yourself over the head, and barf.”

I have a new definition for the word velocity; the whipping boy of the auto industry that can be blamed when we use software pricing tools as the bible, don’t use our brains and don’t use the tool as it was intended in the first place.

This nasty “V” word often comes up in 20 group meetings and beyond. The complainers are the ones who want to blame someone else for their woes such as a lack of front gross profit.

You can make one of two choices.
1. Hold high gross profit per unit.
2. Do lots of volume at a little lower gross.

Which way do you think is going to pile up the most gross to pay the bills at the end of the month?

Back in my day if you shot an M14 rifle and you didn’t hit the target, you didn’t blame the velocity of the rifle. You blamed the poor marksmanship.

Dealers have been known to complain that when they went on the velocity method of pricing their used cars to market, their grosses went south. Well duh, of course they did. You had to fix your sins first.

One of the main reasons the gross went south, especially in the beginning, is they had aged units on hand. And, lo and behold, when they finally priced them correctly to the market they got killed. Well, no kidding, of course the grosses went down. Those dealers were buried in the cars and they finally priced them right. What else could they have expected?

When you first buy into the velocity concept there’s going to be some pain. It’s the prolonged pain you have been putting off. You’re now paying for the sins of your ways.

And there will continue to be pain unless you use your brain. I like that, “Pain, if you don’t use your brain.”

You cannot have the mindset that the software is going to save your butt. You have to use your head in order to hit the target.

It’s just like shooting the rifle. The bullet traveling at a high rate of speed is only going to hit the target based on the shooter’s skill.

If you’ve been missing the target using the velocity method maybe you need to sharpen your skills. That’s all I’m gonna say, Tommy Gibbs

Many dealers struggle with reconditioning, either that it takes too long to get a car done and through the system or they are paying too much to get it done. Often they complain about both.

I’ve said it before and I’ll say it again, most of these problems can be fixed if the dealer really wants to fix them. The dealer has the power to fix anything they want to fix. A simple step to improve the situation is to hire a “Chaser.”

A “Chaser” will gain you a few days in recon and reduce your recon expense by a couple hundred dollars per car. Maybe even more on both ends.

A Chaser is someone who does just that. They chase the used cars through the system. This is not a high paid position; somewhere in the $3000 range per month. It’s a person who has solid mechanical knowledge, good people skills, attention to detail and the ability to communicate with the sales department and the service department.

Think of them as being in an assistant manager category. It is not the same as having a dedicated service advisor or used car technician.

The chaser has a single minded focus with no other agenda. They will never let a car sit for even one day while it waits to go from service to clean up. If clean up is backed up they will start kicking and screaming to find a solution, whereas the service adviser is thinking “next” in terms of his/her own next repair order opportunity to make some money.

The Chaser is an employee of the sales department but spends most of their time in service. They need to have a certain amount of approval authority so they can speed things up for you.

I often hear dealers say they already have that, as they give the service department the latitude of spending X dollars per car without having to get approval.

Really? Let’s say you give them $800 without asking any questions. I can promise you you’re going to get a lot of $800 tickets. It’s human nature. That’s like the sales manager who says I’m only going to accept a $1000 deal. Well, you’re going to get a lot of $1000 deals. People take the route of least resistance. You won’t see too many $500 deals and you’re not going see too many $2000 deals.

The Chaser needs to have enough mechanical knowledge to know when to hold them and when to fold them. They won’t let the wool get pulled over your eyes.

They are there, in part, to protect and assist the used car department with the ultimate goal of speeding things up.

Part of their pay plan might be based on average recon cost and the average number of days to get a car to the front line. Of course you have to be careful that they don’t go too far on the saving money part. You’ll be able to tell if your policy account and complaints go up, so don’t be too concerned if you elect to make it part of their pay plan.

The chaser is going to gain you some days in recon by doing…well, just that. They are chasing the cars through service. They chase the cars and they push the cars through each station. If things get backed up they are looking for a solution on how to make it happen.

Many dealerships rely on the used car manager, service writer or, in some cases, the service manager to handle these duties. And, for the most part they don’t have the time, expertise or focus to make it happen.

You may be sitting there reading this thinking, geez, I don’t want to have to hire any more people. I get that, I understand that. I have a question for you. How much do you have to save per car in recon or gain in days through recon for the Chaser to more than pay for themselves? That’s all I’m gonna say, Tommy Gibbs

“It doesn’t take talent to play hard.”
Derek Jeter

Some of the most successful dealerships have an all out assault on trying to buy cars from the public and their customer base.

Buying cars at the auction can help you fill some holes, but the reality is you need to turn those units pretty darn fast. More often than not, you’re paying more for them than you are for those at the front door.

Mark O’Neil, the former CEO of CarMax, told me a few years ago, the number one thing that turned the CarMax operation around was when they started a big push on buying cars from the public.

Are you focused on stepping up when a customer has something to trade? Are you really putting “all the money” on it?

Have you upped the intensity with the concept of buying more used cars from the public?

Have you upped the intensity of buying more used cars from your customer base?

Are you really making the effort? Do you have signs in the customer lounge telling the customers you want to buy their cars?

Do you have a board posted in the lounge advising your customers of the cars you’re looking for?

Have you put a process in place for the sales people on how to handle customers that want an appraisal on their cars? I mean a real process with a real appraisal they can take with them good for 7 days?

1. Step up on the trades.
2. Make sure you have processes in place to handle those customers trying to sell to you.
3. Make sure you are mining your customer base for cars you can sell.
4. Post signs in the customer lounge that tell your customers you want their cars.

None of this is rocket science, but with a little more focus, and a whole lot more effort, you will find some of your most profitable used cars located right under your nose.

Start playing a little harder. And a little smarter. That’s all I’m gonna say. Tommy Gibbs

So, how was your June? How have your first six months been? It’s July. Half the year is gone. Kinda scary isn’t it?

Some of you have had a great first half. Some of you, not so much.

Some of you have been running full speed ahead. Some of you have been dragging through the sand.

Something has been holding you back. There may be some legitimate excuses, but maybe you just had the wrong plan in place. Just because you had the wrong plan does not mean it’s too late to fix it. You’ve still got 6 more months to go.

Those of you who have had a good first 6 months need to be cautious of becoming complacent. Even though things have been going well, you would be very smart to review how you can make things better as you tackle the second half.

Everything we do is about choices. You can choose to let things be as they are or you can choose to dial it up a notch or two.

To do so means to review your plan and the strategies you have in place. And, make the changes that are necessary to get you where you know you need to go. That’s all I’m gonna say, Tommy Gibbs

The most misunderstood topic I discuss in my workshops are SETS & SUBSETS. If you’re anti SETS & SUBSETS you might want to read just a bit further.

I will be the first to agree SETS and SUBSETS are not for everybody. They are especially not for you if you haven’t solved a lot of your other used car issues.

I’m not going to try to sell you on SETS & SUBSETS, but I do want to show you that first, it’s not all that complicated and second, it’s something you’ve done with success in the past in one way or another.

SETS & SUBSETS are all about setting up a price leader to drive traffic to the store.

What’s so bad about that? Don’t you do that right now? I have to believe that in one way or another you do it with your new car business, so why not do it with used?

The lead or number 1 car is the most important car in the SET. You can do SETS in 2, 3, 4, or 5 car SETS. Experience has taught me that going deeper than 5 just confuses the issue and makes it much more difficult to manage.

If you had 5 similar cars and you wanted to advertise them as a group (you did this back in the program car days), wouldn’t it make sense to advertise the least desirable of the 5 as a price leader in hopes of driving traffic to the other 4, or better yet, to your store?

The lead car is simply the least nice of the group. Make it safe, but don’t make it too pretty. This is not about bait and switch. It’s about the customers transferring themselves to another car in the SET or to one out on the perimeter.

The key to SETS is picking the right lead car. It needs to be desirable in the “public’s mind,” and most important is that it should be the latest model you can find for that SET.

Two of the biggest mistakes that dealers make are trying to make a profit on the lead car and picking too nice of a car to be the lead.

The lead car is a “loss leader.” More often than not the car that dealers pick to be a lead is really a number 2 car. A 2 car is a profit maker and one that you’ve fully reconditioned, so you would want to make sure you haven’t made it the lead.

If you want SETS to work, you have to advertise your lead car at what you have in it or less. If you try to make a profit on the lead car the traffic probably isn’t going to show up. The sole purpose of the lead car is to drive traffic to the dealership.

When done correctly one of three things will happen:

1. The customer shows up and buys the lead car.

2. The customers transfer themselves to the 2, 3, 4 or 5 car.

3. The customers buy something out on the perimeter.

The key is that the customers showed up on your lot today and you have a chance to sell them something.

So, there it is. SETS described in its simplest form. It’s not all that complicated or any great trickery with the consumer. You’re just advertising a price leader and giving the customers some other choices when they show up.

That’s all I’m gonna say, Tommy Gibbs