I lot of what I write about involves improving your average gross profit, total gross profit and of course volume. And, as is often the case, is based on some issue that has surfaced over the past week. Today is no different.

Historically in this business we’ve given up on average gross, focused on volume and been able to ring the bell with total gross. Doing it that way has allowed us to pay the bills and come away with a nice bottom line.

If you’ve ever heard me speak, you know I’m a big proponent of identifying your most problematic units on day one and having a plan to make them go away quickly. More and more dealers are adapting my life-cycle management process.

When done correctly, and with discipline, dealers have
discovered that average gross and volume will go up by using life-cycle management.

That being said, nationwide dealers have resorted to an overall turn and burn philosophy which is starting to have a negative effect on the bottom line. Volume has always been able to overcome a lot of our ills, but there is a point of “oh crap” that you need to be aware of.

In this day of Internet pricing, the selling strategy of turning and burning is starting to impact the bottom line in a negative manner, if for no other reason than our ability to find cars has gotten that much more competitive.

Competitive internet pricing has caused a major thirst for more inventory by new car and stand-alone used car dealers throughout the country.

The Carvanas and CarMaxs of the world will continue to challenge you when it comes to vehicle acquisition. It’s going to get a lot worse before it gets better. Actually, I don’t see any relief when it comes to finding more inventory.

You might first read this as your ability to find more units at the auctions is what is being impacted. If so, you’re reading it half wrong. You’re going to feel it at the front door with trades as more and more people are chasing those cars your customer used to trade-in.

So, when inventory becomes shorter and shorter doesn’t it stand to reason we need to figure out which units have the greatest profit potential and get all we can?

You should have a mindset that your inventory is nothing but a bunch of investments. Offload the bad investments ASAP and make sure you hold and make a bunch of money on the better investments.

My UpYourGross software allows me and my team to analyze numbers we would not normally see in the course of doing business with dealers.

I’m seeing far too many units being given away that shouldn’t.

Here’s a classic example of where a dealer sold a good investment short:

A dealer sold a 14-day old car and made $1807 on the front. Sold it for the Internet price. The numbers on this unit all lined up in favor of the dealer. Days supply, cost to market, etc. If you’re using vAuto’s Profit Time this unit would have scored as a Platinum unit.

Often when we see a unit that’s been sold short, it’s because it was heavily discounted from the Internet price. That’s usually a case of the salesman doing a better job of selling the sales manager than the customer. That wasn’t the case on this unit.

This one was priced too low based on its favorable rating.
At the very least this dealer left an additional $1000 on the table.

To this dealer’s credit, he never has anything over 60 days old, but you have to ask yourself if the dealer is too focused on age rather than making the most profit he can on every unit in stock.

All units are not created equal. They are unequal investments. You need to manage them as such and make all you can on the ones that you can.

That’s all I’m gonna say,Tommy Gibbs

Every week several people contact me about volume and gross.

No one will disagree that we need to be focused on inventory turn, and no one will disagree that we still have to generate X dollars in total gross to pay the bills.

There is often a disconnect between the desired goals and the skill level of those who have been put in charge of obtaining the volume and the gross.

I could go on and on about this skill level, but let me give you just one key point that goes into play when trying to determine what’s what. Are you ready? Are you really ready?

It’s “knowing what you deserve” for any given car or truck on your lot. It’s part understanding the data and part common sense. It’s really that simple.

Knowing what you deserve means having a true understanding of the market and the unit you’re staring at. It’s having the “cojones” to ask what you deserve for a given unit. And, it’s also knowing what not to ask and when to fish or cut bait.

Here are 5 more thoughts to help you:

1. Redundant Training- It ain’t redundant until you’re perfect. You ain’t perfect. If your sales staff isn’t polished enough to be able to justify the price then you are not going to get the desired gross. It’s just that simple. Get busy training and you’ll get more gross. (If you have a bunch of knuckleheads working with you then all the training in the world isn’t going to make a difference.) At the very least, you should have a lot walk once a week with all managers and all salespeople. The more your people know about your inventory, the more your gross goes up. (Training Proposal.)

2. Ask For More On The Right Units- There are some that you need to start way high. Some very low. vAuto’s Profit Time and my UpYourGross are great software tools to help you know which units are which.

Once in a while you gotta “ask for it all.” Since the beginning of this business, high average gross profit has been achieved by hitting a home run once in a while. You can’t hit it if you don’t take a full swing. If it’s a low mileage, really nice car you deserve more money for it. You don’t deserve more money for an edgy one and you have to be smart enough to know which is which. And without a doubt, you have every right to ask more money for a certified car. But that doesn’t mean you sit on the “more money” pricing forever. Change the pricing daily.

3. Not selling in Today’s Market-Your most profitable car is a 20-day car. If you are retailing a lot of cars at the 30, 45, 60 plus day mark, you don’t have a chance. Speed wins; the lack of speed kills. Why don’t you try charting those units that you sell at 45 days and beyond to see what they are doing to your average gross profit? In the movie “A Few Good Men,” Jack Nicholson might have been talking about you. You can’t handle the truth.

4. Lack of quantity and quality of photos –stop reading this. Go look at the used cars on your website. Now go look at Ttexasdirectauto.com or Carvana.com. If yours don’t look as good as theirs then you don’t have a chance. If you don’t have a photo booth, you need to step up and make the investment.

5. No Early Warning Radar-You’re asleep at the wheel. You have to be able to spot a problem child on day one, not day 44 or day 59. Every one of your aged units has a story to go with it. That story started back on day one.

You have to be smart enough to have an “Early Warning Radar” system in your arsenal. Fix your Radar system and your grosses will improve. I invented “Early Warning Radar.” You should steal it and use it.

You get what you deserve, when you do the work to deserve what you get. That’s all I’m gonna say,Tommy Gibbs

I’m often asked by managers and others what it takes to be successful in business and how to move to the next level.

They will often imply that they do a good job, but feel frustrated by the lack of forward progress.

Doing a good job doesn’t ensure you of anything except you get to keep doing a good job…until someone else comes along who can do it better and then you may be looking for another job that you can do a good job at.

It takes more than doing a good job to get you noticed and to the next level.

20 Tips For Getting Noticed:

1. Come early.
2. Stay late.
3. Come to work to work.
4. Stay busy.
5. Seek information and education.
6. Understand you are owed nothing.
7. Do more than you are asked.
8. Be tenacious.
9. Steal someone’s ball and run with it.
10. Force the passion. You may not be in the perfect job or perfect place. It’s up to you to make it the perfect job at the perfect place.
11. If you do these things, someone will notice.
12. If you get noticed, you have a ladder to the top.
13. If you don’t get noticed or this isn’t the place for you, then you are developing some skills that will eventually get you noticed.
14. Do it at the next place and the next place until you get noticed.
15. Be so good that you can’t be denied.
16. Pull others up. and up you go with them.
17. Set an example for others.
18. Get up, walk around, be nice.
19. Be enthusiastic, even on your worst day.
20. Dress up to the next level. Don’t dress like the rest.

Thanks for noticing. That’s all I’m gonna say, Tommy Gibbs