What Options Do You Have?

The odds are pretty good that gross profit from new car sales isn’t going to get any easier. There’s a greater supply of inventory hitting most lots than in recent years. As supplies increase there will be more incentives put on the table and even more pressure to “turn and burn.”

As inventories increase, the greater the heat there will be on dealers to turn the inventory. That pressure will become magnified with the demand from the manufacturers to capture market share.

Dealers will feel the stress of being put on probation by their represented franchises. Maybe it’s not called probation for your brand, but we all know the heat the factory can put on us.

Floor plan interest rates may be headed up, which will add to the angst of many.

Every day the consumer gains an advantage, as technology is added to assist them with their price search of new vehicles.

The stress to turn more new units will cause more and more dealers to put new car prices online. Dealers will compete that much harder via pricing, and grosses will continue to suffer.

Many models will be sold for zero gross with a heavy reliance on F&I, doc fees, trades, etc. Many dealers are already selling new cars at cost or below.

Most dealers are tuned into fixed operations and many are already at full capacity due to facilities and the lack of qualified technicians.

The best bet for many of you is to improve your used car business.

If you don’t believe that to be true all you need to do is look no further than the movement of the public companies such as Sonic, AutoNation and others. You will see that they are ramping up their used car operations by setting up stand alone operations, much along the same model as CarMax.

Improving your used car business has many challenges tied to it; none any greater than improving front gross profit, which isn’t likely to happen given the state of used car pricing online.

Your best opportunity to improve your used car business is to improve your volume. Clearly understand that to improve your volume means your average gross profit is likely to go down.

Keep the following in mind:

You cannot spend average gross profit.
You can spend total gross profit.

That’s all I’m gonna say. Tommy Gibbs

Top Ten Reasons

Top 10 Reasons You Should Schedule a Workshop With Me:

1. You’ve had evaporation. Regardless of how good you are or how well disciplined you are, there’s going to be an evaporation of processes over a period of time. Bam! I can fix that!

2. You’ve had some turnover. Most people do. Turnover isn’t a sin. What’s a sin is not ensuring that the new guys and gals get it. If you don’t give them the right tools, they don’t have a chance. Bam! I can fix that!

3. The business is changing. Your team needs to understand the changes taking place and how to attack them. Bam! I can fix that!

4. Your team has gotten a little complacent, either because business has been pretty darn good or they have accepted
the status quo. They need to be re-energized and see the possibilities. Bam! I can fix that!

5. Your average grosses continue to decline. Mostly they decline because someone’s not paying attention to the little things. Bam! I can fix that!

6. You have aged inventory and wholesale losses. Aged inventory helps create #5. Aged inventory causes wholesale losses. Bam! I can fix that!

7. You have a team that struggles to get on the same page. You have old school thinking. You have new school thinking. You have no thinking. Bam! I can fix that!

8. The number of days it takes to get a car online and on the line is killing you. Bam! I can fix that!

9. You’re sick and tired of listening to the bickering, excuses and lack of forward movement. Bam! I can fix that!

10. You need a coach. You need someone to lean on. You need another set of eyes on the subject. Bam! I can fix that!

A quote worth remembering: “The purpose of training is to tighten up the slack, toughen the body, and polish the spirit.” Morihei Ueshiba

Is now the time? That’s all I’m gonna ask, Tommy Gibbs

Is Your Business Great?

I’m thinking your business has been pretty darn good.

One of the more interesting dynamics of the automobile business is dealers make the most money when they are coming off tough times.

When things are tough, dealers get back to the basics and grinding it out. As business gets better, they are in a great position to make a lot of money because they have cut out all the fat.

As business gets better, dealers tend to add this and that to the expense line and get further away from the basics. From where I sit, I’m seeing dealers making good money, but many have started to get lax with spending, processes and their daily disciplines.

The standard in the business has been that we should make at least 2% net profit to sales dollars generated. If you are only making 2% right now while business is good you may be in trouble when business goes south.

Right now you should be making 4 to 6% net to sales. It stands to reason that if you can get the percentage up during the good times, then in the worst of times you can still maintain the 2% plus number.

If you’re in the 2% bracket or less, then you are missing something somewhere and need to re-evaluate your operation and do what you have to do to get it fixed.

Here are 11 things to think about as you move forward into the spring and summer:

1. Refine and stick to your basics.
2. Don’t get stupid with your expenses.
3. Keep the inventory turning.
4. Evaluate the inventory on hand vs. anticipated selling rate.
5. Examine every process from front to back.
6. Eliminate Legacy Thinking.
7. Get out of your little world and join a 20 group.
8. Don’t be afraid to fail; try something different.
9. Study the best of the best.
10. Improve your coaching and leadership skills.
11. Don’t think you have it figured out because you don’t.

Only you can make it great. That’s all I’m gonna say, Tommy Gibbs

Can You Improve Your Success?

One of my early goals as a new car dealer was that I wanted our dealership to be a place where everybody in town wanted to go to work.

We all know the saying, “Happy employees equals happy customers.” And, no doubt, the more happy customers we have, the happier our bottom-line.

A more hip term or fancier way of saying that is you want to build an “Irresistible Organization.”

To build an irresistible organization you must engage your team to the point that they own the culture. Only when the team owns the culture will you feel the super glue effect. It’s sticking and it’s not going to evaporate into the atmosphere.

Part of engaging your team includes creating an exciting work environment that’s fulfilling and meaningful, and where everyone feels a sense of purpose in their jobs.

Research has proven that people want:

1. To be relevant.
2. An opportunity to advance.
3. A stable & disciplined work environment.
4. Excellent teammates.
5. Training that’s relevant and helps them perform their jobs efficiently and effectively.

People want to be a part of something bigger than they are. The No. 1 thing employees cite as their strongest motivator at work is peer motivation that is, the drive to help their team succeed.

As a leader you should never lose sight of the fact that everybody wants to be on a winning team.

You improve the odds of your team succeeding when you improve your focus on the 5 bullet points listed above. That’s all I’m gonna say, Tommy Gibbs

You’ve Got The Magic Bullet

The magic bullet for your used car operation is your brain and the software you stare at each day.

It’s that simple. You’re smart and you’ve got a world of information to work with.
One without the other will create frustration, stress and low profits.

I often see one or two things in my travels. I see management that’s still relying on “gut instinct/common sense” or management that “thinks” their software will take them to the promised land.

Either of those by itself is a bad bet.

You increase your odds when you realize that your software is a tool and the combination of using software with critical thinking has the potential to improve your business faster than a speeding bullet.

Having the magic bullet doesn’t do much good if you don’t load the chamber correctly. Let the brain loading begin. That’s all I’m gonna say, Tommy Gibbs

Is There A Better Way?

I frequently hear CEOs of dealer groups talk about how hard it is to find GSMs & GMs for their stores. More often than not, the missing skill set for those that have failed them is they just aren’t very good leaders.

The moment they come on board, they have all these amazing things they want to change
and “make it better.” They do have skills, but they don’t have “leadership skills,” so from day one they tend to struggle.

A savvy CEO should be as much interested in how many people they have developed as they are in the number of units over the curb. If you focus on the numbers, you may get a little surge, but it’s not going to be consistent and it’s going to be a little short-term gain and a whole lot of long-term pain.

Far too often the strategy of new leadership is to unload in rapid fire a bunch of new ideas, bring some new rock stars in and drain the swamp. (ha, ha)

That strategy will generally create hate and discontent, and put you that much further behind.

Soon you’ll be looking for a new GSM or GM and repeating the process of hoping the new one works out.

The first question that should be asked of your potential rock star is how do they intend to rally the troops?

The most important part of that answer is, “How do they intend to rally the individuals?” You cannot rally the troops until you capture the hearts and minds of the individual team members.

If I were your new hire, here’s what I would do:

1. I’d meet with every team member one-on-one. During the course of these one-on-ones I would be asking questions, getting opinions, and asking every team member, “If this were your business, what would you do differently?”

The more I can learn about each team member’s family, hobbies, and their life’s journey, all the better. I’d get dialed in on the conversation by taking notes…lots and lots of notes.

2. I’d start every morning spending additional one-on-one time with as many people as I could come into contact with. These are casual conversations done on the fly. Building relationships is what is going to create profound change and a new direction.

3. Throughout the day I would look for opportunities to create “power moments.”

Moments to coach.
Moments that matter.
Moments to encourage.
Moments to pick people up.
Moments to push them forward.
Moments to guard the processes.

It’s a whole lot easier to implement change and solid strategies when you get the team on the same page.

My way is a better way, that’s all I’m gonna say, Tommy Gibbs

What’s Your Intent?

There are a lot of common problems when it comes to the used car operations for new car dealers. But of all the problems and challenges that dealers face, the number one problem is that dealers trade or buy a unit and have a lack of “intent.”

Most would say, “Of course I have intent. I intend to sell this unit and make some money.” That makes total sense, but the problem is, it’s far too general.

That’s like saying you’re going to drive from NY to LA without a plan on how you intend to get there. How many of you have ever heard the saying, “Every used car has to stand on its own?” If you’ve been around long enough you understand the term and can probably agree with the statement.

That being true, how can you give them all the same shelf life? How can you not have a specific intent for each unit? Most managers don’t think, “What’s my intent,” when a unit comes into their inventory. They paint them all with the same broad brush, which doesn’t make a lot of sense.

Intent starts with the appraisal and is finalized during the trade walk, where the “final intent” is determined. If dealership managers would look at each unit and clearly state their intent, they would have fewer inventory problems, turn would improve, and average gross, volume and ROI would go up.

I’m not going to go into the details here in this newsletter, but my life cycle management process gives you the disciplines to determine and carry out your “intent.”

My intent with this article is not to try to sell you something. My intent is to get you to think harder about what your own intent happens to be when you bring units into your inventory.

That’s all I’m gonna say, Tommy Gibbs