Make a list and attack your 10 most expensive units every day. With one exception, make sure they are priced really, really right. The one exception is if you know you always make money on a unit that’s on the list then use some common sense, don’t give it away.

Consider putting bonus money on those 10 units regardless of the number of days they have been in stock. Sooner rather than later. Most dealers bonus their sales staff when the units have aged. Do it early, you will be much better off.

Make sure the service manager gets a copy of the list every day. If one of those units happens to be in the service department, the service manager has to understand they must get it out of the shop in a hurry because it’s one of your 10 most expensive units.

Also give copies to the sales managers and F&I managers every day. The entire team needs to have top of mind awareness that these vehicles need to go.

In many cases your top ten most expensive are also some of your oldest units in stock. Duh…that’s because there are fewer butts that can fit in those seats. That’s all I’m gonna say, Tommy Gibbs

A number of months ago, I wrote an article comparing constipation to aged inventory, or to be more clear, those units over 60 days old.

When you’re constipated, it’s virtually impossible to be as productive as you might otherwise be. Having units over 60 days is the same as being constipated.

Exercise, drinking lots of water and in some really bad cases taking a strong laxative can often relieve the problem and get you back on your “A Game.” You can never perform your best when you’re all stopped up.

Until you get the water out of your used car inventory you will never be but so good. You will have a few good months, but unless you commit to a good diet of solid processes you will always struggle.

One of the best ways to fix the problem is to reappraise the entire inventory, extract the water, give each unit a new birthday and put in my “Life Cycle Management Process.”

As long as you have aged units aging, then you’re going to have a lot of water. When you have lots of water, the more the sales people will walk around the aged units.

They don’t want to sell a unit they can’t make any money on. Believe it or not, the managers don’t want to sell them either. They would much rather sell something that they can make some gross on. This isn’t rocket science.

Here’s the tip of the day. If you ever decide to write your inventory down, you have to change your overall strategy of how you’re going to manage your used car department moving forward. It does little or no good to write down your inventory and go back to your stinky old ways.

Constipation is fixable. Aged inventory is fixable. When you fix it, you feel better. When you feel better, you make more money. That’s all I’m gonna say, Tommy Gibbs

I’ve always been a big believer in trying to retail everything that has a breath of life left in it. Certainly you have state safety laws to abide by and of course you may have your own standards for safety and reconditioning.

Often dealers draw the conclusion that they don’t want to mess with the older used vehicles because they don’t want to damage their reputation. I’ve never understood that part. The customers buying the older, cheaper units are thrilled to have that vehicle. It’s not going to hurt your reputation.

In case you’re sitting on the fence on a “Budget Center,” ask yourself these simple questions.

1. What about all the parts and service gross that would have been generated on the less expensive cars going through service and reconditioning?

2. What about the fact that you could have put more money in some trades because you intend to retail them vs. wholesale them? How many more car deals do you end up making because you have a better plan?

3. Does the increase in volume from the less expensive units impact the attitude of the sales staff and their ability to earn additional income? Isn’t it true the best time to sell a car is when you just sold a car?

4. What’s the benefit of having someone driving a car, any car, high dollar, low dollar, that they purchased from you?

5. Is there a chance you just sold a car to someone who might never have set foot in your store simply because you had a vehicle at a price point they could afford to pay?

6. Is it possible that this new customer has a friend or relative who might one day come buy something because of the way this new customer was treated during the buying experience?

7. Are the odds in your favor that they may come back for an oil change or other service?

8. Does doing business generate business?

9. What’s the “Return on Investment” on selling these less expensive cars? Relative to the amount of money tied up, aren’t they a far better investment than what you would make with a $25,000 car? How many times in a year can you turn over a $7,000 to $10,000 investment vs. a $25,000 investment?

10. Doesn’t it make sense that if you can sell more cars with less money tied up that it’s a good thing? There really isn’t much of a downside to increasing volume and decreasing investment.

It’s found money, that’s all I’m gonna say, Tommy Gibbs

In a recent workshop, a conversation came up about selling used cars and trucks in volume versus selling for high grosses.

Depending on your definition of high grosses and high volume, the concept of doing both goes against Tommy’s laws of nature.

That’s not to say that there isn’t a happy medium, because if you do a lot of little things right you can achieve a respectable volume and higher gross profits at the same time.
(Life Cycle Management will change your world.)

It’s petty much a sure bet that you’re not going to do $3,000 on the front and sell 300 used vehicles a month, which most people would agree are pretty strong numbers.

Think about it this way; at the beginning of the month you start out with zero gross on the books. It takes a lot of gross to pay all the bills. The name of the game is how fast and how much gross we can pile up.

Does it really matter how we get there?

You can sell 50 units at $1,500 which equals $75,000 or you can sell 25 units at $3,000 a copy and you still get to the $75,000.

I think you know where this is going. In both cases these numbers are plus F&I, plus trade-ins, plus the parts and service work. Plus you now have another customer in your family of customers, who are likely to purchase other vehicles, parts and service from you.

When you think volume, you work harder to step up on more trades at the front door. When you work harder to buy more deals at the front door, you sell more new and used vehicles. When you sell more new and used vehicles, you pile up more gross in all departments including parts and service.

When you pile up more gross you make more money.

Let the piling up begin. That’s all I’m gonna say, Tommy Gibbs