How About Some Old School?

More and more, dealers are admitting that whether they want to be a one-price dealer or not that they are sort of being forced into it because of the pressures from today’s market. That being said, there’s a very small percentage of dealers who have made a commitment to being a one-price dealer.

If you’re one of those dealers who still negotiate the price of your new and used cars let me suggest you go back to some old-school of under-allowing on trades. Not just some of them. All of them.

When I ask the question of managers if they under-allow, most will say yes, some of the time. Bad idea. If you’re going to do it, go all in and do it with all of your customers, not just those you think are stupid or drunk. That may be a little harsh, but I want you to get the point. Stop picking and choosing.

I’ve attached my world famous under-allowance grid. You may not like mine and that’s fine. Come up with your own. Then come up with the discipline to serve it up to everyone that has a trade.

If you do so, one of three things will happen:

1. The customer says “yes.” Bam, you made some gross you would have never made.
2. You have to peel the customer off the ceiling. No problem. That’s why you get paid the big bucks.
3. You have now checked the customer’s temperature and gotten their thinking in line.

Don’t act all righteous and say you don’t want to do this because you want to be transparent. If you wanted to be transparent you would stop negotiating and show everyone the invoice.

If you’re going to negotiate in today’s market you need every tool or advantage you can get.

Let the old-school gang smile again. That’s all I’m gonna say. Tommy Gibbs

Gross profit improvement grid

Re-Think Some Things

It’s Thanksgiving and time to give thanks. If you’re like me for sure you have a lot to be thankful for. Among many things I’m thankful for are your friendship and support.

Thanksgiving also starts the closeout of the year. It centers around Black Friday and rolls through the last week of the year. Like it or not, 2018 is already here.

I’ve listed some very basic ideas you need to take into consideration that will help you finish strong and get ready for your best year ever.

A. Re-commit yourself- and your thinking towards being the very best you can be. Take stock of all those great ideas running around in your head. Write them down and make a commitment to get them done by certain dates. Post it on the wall in several places that you will see frequently. If you have a private restroom, put it on the mirror.

The dealers and GMs with the most successful used car operations are those who have taken ownership of the used car department. The more involved you get, the more success your dealership will have. If you’re not committed to the used car business, it’s a safe bet your team isn’t either.

B. Re-evaluate-the appearance of your inventory. Let’s do a little checklist:

1. Look at your inventory online. Are they all there? 40 + pictures & prices posted?
2. Take a lot walk. Are the vehicles in straight lines?
3. When was the last time the entire lot was rotated?
4. Are you using angles to display your inventory?
5. Do you have hang tags? If so, do they all have hang tags?
6. Are they nasty, dirty on the outside?

C. Refocus Your Disciplines-To be successful in the used car business you have to have daily/weekly/monthly disciplines that you live and breath by.

One of those disciplines might be to do a weekly lot walk. Every car in your inventory must be touched. If it’s in service, touch it. If it’s in prep, touch it. If it’s in the budget center, touch it. Everybody touches it. Even if you think you have your disciplines well defined inside your head, you’d be well served to make a written list and check them off from time to time.

D. Re-Recon-Take every unit over 30 days old back through a recon process. (You’ve already missed your best window of opportunity to make gross; that would be the first 20 days.)

E. Re-Invest-in yourself and your management team. Do something to gain some knowledge. Hire me, visit CarMax, or visit a dealer friend in another state that does a good job in used. Attend a workshop. Join a Twenty Group. Join a Used Car Twenty Group. Do something besides sitting there and waiting for something to happen.

F. Re-think- your management team. Do you have the right person running your used car operation? Yes, that person may have been with you for years. Loyalty sometimes equals mediocrity. Maybe they have some great skills, but the fact is that you may not be making the best use of their talents.

I’m thankful for lots of things this holiday season and I’m especially thankful that you’ve taken the time to read my little Zingers. That’s all I’m gonna say, Tommy Gibbs

What Time Is It?

Time To Dig Into The Numbers

By now you’ve closed out October, twisted over the numbers and gone back to work.

Not so fast.

October is the perfect month. “Perfect for what?” you say. Perfect for figuring out where you’ve been and where you want to go.

I can’t say that math was one of my best subjects, but I can divide by 10 real easy. At a glance, I know what the averages are for any line item expenses, sales volume, and gross profit.

What also makes October a perfect time is it sets the stage for the next year. Now is the time to start planning for 2018. Waiting until the last week in December to get your plan together is a really bad strategy.

This is the perfect time to dig in and firm up your fundamentals in all departments. This is the time to get back to basics. This is not the time to cut back on your training.

This is when you need to amp up your thinking, stretch your organization and stretch your imagination. If you don’t have a solid foundation of basic processes you will never maximize your success.

This is the time to take control of the “evaporation factor” that’s been occurring all year long. This is the time to stop the “process bleeding.”

Your long-term plan should include joining a Twenty Group and attending the NADA convention.

We all get lazy and get caught up in our daily routines. Attending these meetings gets you revitalized. It gets you outside of your daily box and opens your eyes up to what the possibilities might be. Seems like a no-brainer.

This is the time to make those plans. Teamwork is critical if you’re going to maximize your bottom line. To keep your team on the same page you have to constantly communicate to them what the expectations are and what processes they are expected to follow.

There is no “shake ‘n bake” solution. You don’t fix it and walk away. You fix it and re-fix it.

What to do?

1. Ask yourself if you can improve your processes? If you focus on revamping your processes, what effect do you think it will have on your business? It is an absolute fact that regardless of how well disciplined you are, over time your processes are going to evaporate.

The best piece of advice I can give you is to lock yourself and your management team in a room and review every detail of your selling processes. Be brutally honest with yourself. Then take the necessary action to get yourself back on track.

2. Can you improve your team? Got the wrong players? Now is the time to make the changes. If you already have the right team in place then it’s time to let them know what your expectations are and show them the plan and the path to achieving those expectations.

3. Don’t think of your planning as “you now having
a plan.” Think of it as a “mission.” Plans can fall apart. When you’re on a mission you stay after it until you succeed and then you stay after it some more.

I’m on a mission to get you to re-think what you’re doing. I’m on a mission to get you ready. That’s all I’m gonna say, Tommy Gibbs

The Will To Prepare

Great leaders know that in order to win it takes constant preparation. They know there is no single strategy they can execute that will make the team a consistent winner.

They know and understand the need for ongoing preparation. They are constantly exploring new strategies, concepts, and ideas.

Winning in any sport requires preparation. Most great coaches will tell you the game isn’t won on game day. It’s won during the week on practice days. It’s the preparation that makes the biggest difference.

It’s a given that most people want to be part of a winning team. Winners are drawn to those organizations that are willing to pay the price with preparation. I believe there are three types of people:

1. Those who want to get better and embrace preparation.

2. Those who don’t care if they get better and will do everything they can to avoid preparation.

3. Those who are just confused and looking for someone to show them the way.

If you’re not winning as much as you would like it’s either a not knowing or a not doing issue. If you don’t know, then you need to figure it out. If you’re not doing, then you need to do it.

In either case, your will to prepare is what will put more “Ws” on the board.

Preparation breeds confidence.
Confidence creates a can-do spirit.
A can-do spirit creates momentum.
Momentum keeps the ball rolling.
Winning is constant preparation.

That’s all I’m gonna say, Tommy Gibbs

You Can Fix It

There’s not a week that goes by that I don’t get several calls from dealers struggling with reconditioning of used vehicles.

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.

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. Far better.

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. Most 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 ask, Tommy Gibbs