Do You Have A Buyer

As we all know, there are as many pay plans as there are dealerships. If you’ve ever heard me speak, you know I’m not a big fan of having buyers out on the streets running around buying cars and trucks.

My evidence is most of the time the units that end up aging on you are those that you purchased from the auctions by your buyers or those units brought to you by “Bubba,” the wholesaler. Those are always your biggest wholesale losses.

The odds of you being successful with these purchase units would go way up if you used my lifecycle management process. But, that’s not the subject of today’s article.

The subject today is that if you’re going to have outside buyers, what’s the best way to pay them?

Most outside buyers are paid based on so much per unit purchased. If you are of that mindset, here’s my suggestion:

The buyer only gets paid when you retail it at a profit or breakeven. They get nothing for buying the unit. They only get paid when you retail the unit.

Trust me, here’s what’s going to happen:

A. At first, your buyer isn’t going to like the new plan. To make it a little easier to swallow, up the ante on what you’re now paying your buyer. If you’re paying $200 a unit, make it $300.

B. Your buyer is going to take an even more serious interest in every unit that’s on the lot that’s in his/her inventory.

If it’s tied up in service, your buyer is going to be pushing it through.

If it’s dirty, they are going to be getting out the washrags.

If it doesn’t have fuel, they are going to get fuel in it.

If its photos are lousy, they are going to start taking pictures.

If the pricing isn’t getting changed, they are going to be having a conversation with the price changing person.

I would further suggest that you add the fee to the cost of each unit that’s purchased. Thus when you retail it and pay your buyer, you’ve already expensed your acquisition cost.

You can apply this concept to a company employee/buyer or a true outside buyer.

If you’re gonna have a buyer, turn them into a retail buyer. That’s all I’m gonna say, Tommy Gibbs

Is There a Tariff Tornado?

Here’s the headline and first sentence from Automotive News published on July 2, 2018:

“Tariff tornado: Prepare for impact”

“A 25 percent tariff on imported vehicles could chill new-car sales, devastate dealership profits and trigger job losses at stores, dealers and their advocates say.”

Let’s assume that this is true. Let’s assume that tariffs of any type have the potential to hurt the automobile business.

Isn’t a pack a self-imposed tax? Aren’t you adding a cost to your unit that does nothing for the unit?

It doesn’t make it prettier.
It does make it run better.
It doesn’t add one lick of value.
It doesn’t help you sell the unit.

I fully understand all the “whys” of adding packs. They have served us well over the years prior to the advent of the Internet, and prior to dealers using pricing tools to market their inventories online.

Every day that goes by, you’re moving more and more toward becoming a one-price dealer whether you want to or not. And, whether you like it or not, you’re moving closer and closer to not paying sales people on gross profit.

Paying sales people on gross profit doesn’t make a lot of sense when management has already set the price online and there’s less and less negotiation going on.

If either or all of those statements are true for you, then please tell me how taxing yourself makes good business sense?

If you find a shred of truth in what the media has been reporting, then you must agree to the following: tariffs have the potential to hurt sales because of the added cost to items.

That being true, then how can you deny that your “Pack Tariff” isn’t hurting you when it comes to buying and selling used cars?

Let’s assume that you’re in a state that has a sales or titling tax. And, let’s assume the state drops the sales tax for all dealers except you. Would you be at a disadvantage? Of course you would.

So why do you want to keep putting yourself at a disadvantage by having a “Pack Tariff?”

Think how much you can help morale and help your sales if you could do away with taxes. Stop taxing yourself. That’s all I’m gonna say, Tommy Gibbs

It’s Over

Can you believe it? The year is half over. Time really does fly, doesn’t it?

How was your June? How have your first six months been? It’s July. Half the year is gone. Kinda scary isn’t it?

Some of you have had a great first half. Some of you, not so much.

Some of you have been running full speed ahead. Some of you have been dragging through the sand.

Something has been holding you back. There may be some legitimate excuses, but maybe you just had the wrong plan in place. Just because you had the wrong plan does not mean it’s too late to fix it. You’ve still got 6 more months to go.

Those of you who have had a good first 6 months need to be cautious of becoming complacent. Even though things have been going well, you would be very smart to review how you can make things better as you tackle the second half.

Everything we do is about choices. You can choose to let things be as they are or you can choose to dial it up a notch or two.
To do so means to review your plan and the strategies you have in place. And, make the changes that are necessary to get you where you know you need to go.

Your other choice is to do nothing. Go sit in your office and stare at the wall. Enjoy your seat and pretty soon it will be over, Tommy Gibbs