Want To Improve Gross Profit?

1. Do a better job of training the sales people (and sales managers) to sell the value of your company and the value of the vehicle, and your grosses would be a lot better. The Team needs to learn to say “no” and to convince the customer that you have the best deal going.

2. Provide more information. The more information your sales people have about your inventory and how it’s priced to market, the more likely they are to do a better job of convincing the customers you’ve got the best car at the best price. You have to sell the sales staff before you sell the customer.

3. Do more and better research. The more research you do on what’s hot and what’s not in your market, the better off you will be. Grosses go up when you are selling a product that’s high in demand and low in supply. Key components for you to utilize are vAuto Stocking Tool and Auto Trader Data.

4. Rethink “Buckets.” Buckets are a solid discipline process, but you can’t take a position that all cars in the first 20 days are priced a certain way and at day 21 another way and so on. There are some that need to be over market and some under market, regardless of age. All cars have to be evaluated on their own merits and this must be done daily, not in 15 or 20 day windows. One of the biggest problems I observe is that cars don’t get re-priced soon enough. You might want to start to pay close attention to how often cars are re-priced. Some of your older inventory may have been ignored along the way.

5. Track GAP and ROI. Dealers who are tracking GAP and ROI are seeing a big difference in their average grosses. If you’ve not bought into this process then maybe it’s something you should take a hard look at. If you need the GAP/ROI spreadsheet, send me an email and I’ll get it right to you. (It’s Free!)

6. Fix your reconditioning timeline. If your most profitable car is a 20-day car (and it really is) how can you allow the service department to bog you down with it spending 7 to 10 days in the shop? This is one of those things that’s fixable, but it has to be done by the dealer. If the dealer wants to fix it then it gets fixed. Speed wins; the lack of speed kills. It’s as simple as that.

7. Re-do your website. How does your website look? Your website is the “New Showroom.” Do your pictures tell a good story? Do you have 12 to 20 photos? If that’s all you have then you are not in the game. You need at least 40 and they need to be done in a photo booth. If you don’t have a photo booth you need to make a commitment to get one. Saying you don’t have the space is a poor excuse. You can make it happen if you want to. Kind of like the issue in service. You can fix it. You just need to do it.

8. Install EWR into your “Trade Walk.” If you’re not familiar with Early Warning Radar, read this article. EWR will help you eliminate your problem cars. Even if you’ve read it before, read it again.

The used car department takes a lot of energy and effort to achieve the volume and gross you need to make big money. You can say that “gross is a state of mind” all you want, but what really creates gross is your mind getting in gear and fixing the things that impact gross, not sitting around thinking about it.

There’s no one big thing that’s going to improve your gross. It’s a lot of little things. That’s all I’m gonna say,Tommy Gibbs

“I Have Great People Skills”

Famous last words, “I have great people skills.” How many times have you interviewed someone and you ask them to name something they are really good at and they say, “I have great people skills.”

I often ask that question of people I meet and then I’m amazed to learn they can barely spell “people skills,” much less execute them.

Leaders understand that having great people skills requires them to grow those skills daily by building relationships of trust, respect and productive interactions.

Steven Covey stated it best when he said, “Trust is the glue of life. It’s the most essential ingredient in effective communication. It’s the foundational principle that holds all relationships.” Having people skills means building relationships.

You may think you are a great people person, but if you can’t be trusted then you’re a long way from having people skills.

Having great people skills involves the ability to communicate effectively with people in a friendly, positive and uplifting way.

President Dwight D. Eisenhower said, “You do not lead by hitting people over the head – that’s assault, not leadership.” That’s all I’m gonna say, Tommy Gibbs

Are You Out Of Touch?

I’m mainly talking to GMs, Dealers and Owner-Operators. I’m not saying you’re out of touch. I’m just asking if by chance you’re out of touch?

The view from a computer screen is very different than the view from the sales tower, the service write-up lane, the parts department back window, the technician’s work area and even the general office workspace.

Are you spending any real quality time in these areas? Do you really know what the team is up against?

I fully realize that when you visit these areas things are not always as they appear. Everyone is on good behavior when you are there. But, if you really pay attention you will soon see what they are up against minute by minute.

One of the things that will probably jump out at you is how much time your team members spend being unproductive. If nothing else, you will observe that you’ve turned your sales managers into clerks.

If they spent half as much time each day developing sales people and selling cars as they do chasing paper issues you’d sell a lot more cars and have a much better bottom line.

For gosh sakes, hire them a clerk. That’s all I’m gonna say, Tommy Gibbs

Eventually or Immediately?

I was reading an article recently on the retirement of the University of Florida’s Athletic Director, Jeremy Foley. Foley is finishing up a forty year career at UF.

You can well imagine the number of people Jeremy Foley has had to fire over the years. Of course he’s not always made the perfect decision when hiring and firing, but based on the school’s success, he’s been right far more times than he’s been wrong.

One of Foley’s sayings is, “If something needs to be done eventually, it needs to be done immediately.”

You will often find that to be a characteristic and trait of exceptional leaders. They see what needs to be done and they do it immediately.

You as a leader know there are things you eventually need to do, but for whatever reason you keep putting it off.

You know there are people you need to eventually replace. If you know you need to eventually replace them, then you need to do it immediately.

You know you need to eventually change your pay plans. If you know you need to eventually change pay plans, then you need to do it immediately.

You know you need to eventually get rid of packs. If you know you need to eventually get rid of them, then you need to do it immediately.

There’s a long list of things you know you need to eventually do.
If you want to be a better leader, you would do them immediately.

That’s all I’m gonna say, Tommy Gibbs

Try Some Old School

The more involved you can get your entire sales staff in your used car department, the more likely they are to sell a few more used cars for you.

Back in the ’80s, I stole the idea of Adopt-a-Car from my good friend Tim Deese, who’s been a used car guru for about the last 35 years.

It works very well when you have the discipline to work it. It has the potential to evaporate quickly so I suggest you consider trying it for 60 days. When I say try it, I mean announce that you’re only going to do it for 60 days so you don’t look stupid when the evaporation factor bites you in the butt. You can always renew it.

The fundamental adopt-a-car program is that each sales person has their own used car inventory and they get paid extra money if they sell their own units. If another sales person sells one of their cars they still get paid on it.

I’d recommend it be $100/$50. It’s easy extra money. If it would make you feel better, then add another $100 to the cost of each unit as it comes into your inventory so that when you finally pay it you’ve already expensed it.

If a sales person trades a car in, that car is part of his/her inventory. All other inventory is distributed on a rotating basis to the entire staff. When you first start the program you will have some orphan cars that you would do the same with.

In order to make this work you have to have the discipline to take cars away when a sales person doesn’t adhere to the program. The main reason we are going to pay them to sell their own inventory is to get them to help us make sure the car is standing tall at all times.

Here are some reasons to take a car away:

1. Cosmetic problems
2. Trash in the interior
3. Gas on empty
4. FTC and/or window stickers edgy
5. Hang tags not properly displayed

And now for the lot walk kicker. During the course of the lot walk, the sales people must be able to recite the following on their inventory:

1. Year, make and model of the car
2. Mileage of the car
3. How long we have owned it
4. The Internet Price and Last price change
5. Something they know about this car. It may be one owner or something they looked up about this model on the Internet.

You can come up with your own list, but if you are going to pay them to sell their own inventory then you need to require them to know something about it.

Make sure that when you do the lot walk you take a copy of the inventory with you and check them off as you go. “Voila,” there will be some missing cars and the used car manager and sales staff need to have an answer.

Adopt-a-Car is old school. Creating accountability is old school. Try some old school, that’s all I’m gonna say, Tommy Gibbs

Did You Play Sports?

I think that a large percentage of successful people played a sport or two along the way.

It’s not imperative for someone to have a sports background, but it sure does help. Here are some reasons why you should give consideration to hiring people with a sports background:

They know how to win.
They know how to lose.
They love big moments.
They want to learn more.
They know how to compete.
They always give their best.
They understand preparation.
They stay focused on the basics.
They get up when knocked down.
They coach and like to be coached.
They will get down in the trenches.
They know how to run the score up.
They understand mental conditioning.
They understand physical conditioning.
They know they must maintain discipline.
They like being on the team and understand teamwork.
They have drive, determination and the will to win.
They are eager to get off the bench and into the game.
They think fast. They react fast. They can react on the fly.
They have great peripheral vision, thus they always know what’s going on around them.

Hire more people with a sports background, That’s all I’m gonna say, Tommy Gibbs

Do You Know These 10 Things?

1. Your oldest unit?
2. Where is it parked?
3. Your look-to-book?
4. Your most expensive unit?
5. What’s your wholesale to retail ratio?
6. Who owns your used car department?
7. How many turns are you getting a year?
8. What’s your average cost per unit in stock?
9. How many clicks does it take to get from A to B on your website?
10. How many days does it take to get a unit through recon and on the line?

There are lots of things you need to know. I’m just pointing out 10 of them. That’s all I’m gonna ask, Tommy Gibbs

When Good People Leave?

Don’t you just hate it when people leave your organization? Oh, I’m not talking so much about those who you know need to go. I’m talking about those that have done a pretty good job and will be hard to replace.

One of the things that good leadership clearly understands is that it’s ok for people to pass through their organization. It’s ok for them to steal the great skills, culture and attributes you’ve helped them develop.

Good leaderships says, “We know there are going to be people passing through our organization but while you are here, do your best, and learn all you can so you can take some of those skills you learned with us to your next adventure. It’s ok, we wish you luck.” Win-win.

No doubt, you want to build an organization of great people that will stay with you for years and years. But, you shouldn’t be angry when they leave.

You should never be angry when people leave. You should ask yourself what could we have done better to retain those good people?

That’s all I’m gonna say, Tommy Gibbs

Who Owns It?

Did you ever wonder why you can’t achieve and maintain maximum success in your used car department?

When you analyze it you have a pretty good inventory. You’re not short on operating capital. The amount of space you have is ok and most of the management staff seems to have a pretty good understanding of the importance of having a good used car department. You have great software that you use to stock and price your inventory and you do a nice job of reconditioning your inventory.

So what could it possibly be?
I’m gonna tell you.
Are you ready?
Are you really ready?
Here it comes…hang on.
I’m gonna tell you.
I won’t lie to you.
I have the answer——“nobody owns the department.” It’s that simple.

Until you or somebody takes ownership, it ain’t gonna happen. I realize every dealership has some restrictions on the amount of management staff that can be allocated to any one department, but far too often used cars are an add-on for someone on the team.

Maybe it’s sorta the GM’s responsibility.
Maybe it’s sorta the GSM’s responsibility.
Maybe it’s sorta the Desk Manager’s responsibility.
Maybe it’s sorta the Sales Manager’s responsibility.
Maybe it’s sorta the combination used car manager/sales manager’s responsibility.

See what I mean? Nobody owns it. Yes, the duties of a used car manager today are far different than they were 20 years ago. There are some situations where we are asking some “used car managers” to do things they don’t have the skills to do. Just because someone understands the wholesale market doesn’t mean they understand the retail market.

When somebody owns the used car department they come to work every day on a mission:

On a mission to make it happen.
On a mission to get people excited.
On a mission to ensure units aren’t aging.
On a mission to get units through the system.
On a mission to make sure the inventory is turning.
On a mission to get cars online and on the line ASAP.
On a mission to build a team that gets after the used car market.
On a mission to study the best of the best and make the department the best it can be.
On a mission to identify and have a strategic plan in place to make the problematic units go away.
On a mission to sell everyone on the role the used car department plays in the overall success of the dealership.

Who owns your used car department? That’s all I’m gonna ask, Tommy Gibbs