Just the other day I was having a conversation with a key manager of a dealer group whose dealer was beating him up pretty badly about his average used car grosses being so low.
Like many dealers, the dealer has either seen numbers in his 20 group or heard of dealers doing big averages. Dealers will often say that they have dealer friends doing as much as $3,000 and higher on the front.
Achieving $3,000 on the front is easy enough to do. It really is. You can do it overnight. Yes, all of you can. I believe in you and I know you can do it.
When dealers are screaming about low grosses they often point to the fact that their cars are priced too low on the internet and therefore the easiest solution is to increase the prices.
The fact is you can improve your grosses dramatically overnight by increasing your prices. I mean really if you don’t ask for it how do you ever think you will get it? Remember you can always go down but it’s impossible to go up.
Yep, that works for me. Raise your prices, ask for more and you will get more. Gross has always been a state of mind. Whatever mindset you are in then you can achieve it.
So, right now, right this minute, right this second, all of you need to stop giving your cars away, raise your prices and the grosses will go up.
Oops, there are a number of little problems with raising your prices.
1. Your used car volume is going immediately in the tank.
2. Your total gross is also going so far south you will lose your butt.
3. Your profits are going to be pooh pooh because you have totally cut off the spigot of cars going through service.
4. New car volume will go into the tank because you are reluctant to step up on trades since you need to steal them to make gross on.
I’ve said this before and I’m going to say it again, doing used car volume and achieving high used car average gross goes against the laws of nature. I’m not saying you can’t improve your grosses, but the days of doing $3,000, $2,500 and in some cases $2,000 are history.
Your best opportunity to improve your overall business is to improve your volume. Improving volume improves business in all your departments.
You can’t spend average gross profit. You can spend total gross profit. That’s all I’m gonna say. Tommy Gibbs