Ok, I don’t hate them, but I’m becoming less and less of a fan of them and I question if they are working as well as you might think they are.

As a new car dealer for over 20 years I found packs to be a useful and profitable tool to increase profits and flexibility.

Dealers that have packs use them in a variety of ways.

My favorite as a dealer was to use the pack money to step up on trades when we needed to make a deal. We all think differently when it comes to how to make best use of them.

As for being against packs, if they are still working, stay with them. I just question if they are working as well
as some dealers think they are.

I believe that in the big picture they have outlived their usefulness. If you review the history of packs, they came about in part because managers worked from cost up. Dealers figured out that if the manager’s target for front gross was $1000, that they would hit that number if they had packs or not.

It’s very much in the family of why we charge full retail in the service department to the used car department. Over the course of time charging full retail and packs didn’t hurt front gross and it actually made the dealership more money. Over time packs have become their own profit center.

These theories and concepts have worked well for a long period of time. The Internet has dramatically changed the game. More and more dealers are pricing to market vs pricing based on what they have in the car.

They are not working from cost up like they did in the good old days. And, the salesperson has very little control over grosses, as the price has been set before the customer even shows up.

As more and more dealers move away from paying salespeople on gross it makes very little sense to add packs to your vehicles.

As my good friend Dale Pollak likes to point out, packs are
nothing but a tax on your vehicle. You are taxing yourself and making it that much more difficult to be competitive.

As more and more of the likes of CarMax, Varoom, Echo Park, Texas Direct, Carvana, Penske, Auto Nation USA get into the game, the less relevant packs (taxes) will become.

When you’re being charged full retail in service and you also have packs, you are adding additional cost to your inventory that others don’t have.

Every time you go to appraise a unit or go to the auction, those additional charges are running around in your head and are making it that much harder to acquire inventory.

I do believe that with better strategies dealers can improve their average gross profit…but, not by much…thus the only way to win the game today is to sell more used cars.

To sell more used cars you have to be able to get more used cars. To get more used cars you have to have an acquisition advantage. Packs create a disadvantage in today’s market.

If you’re still using packs keep using them if they are working.

But, you should keep asking yourself if they are really working as well as you think and if they are putting you at a disadvantage in the marketplace.

I don’t hate packs, but I do hate it when we lie to ourselves. That’s all I’m gonna say, Tommy Gibbs

Dealers are always asking “How can we sell more used cars?” The answer is “the dealer.” Yep, the dealer is the answer to selling more used cars. Always has been, always will be.

The definition I’m going to use for the dealer in this article is the PIC (Person in Charge.) In almost all cases the PIC has a used car manager or management team that they have high expectations of and continue to be frustrated with in terms of production and profits.

The common theme among dealerships is that they need a used car manager/used car department that can get the job done.

There are a few used car managers that can actually “get it done.” They understand both the technology side and the common sense side of the business and the dealer knows how to lead these special people. These are few and far between.

The answer to fixing your used car business is the PIC. The PIC is who can improve the used car numbers the fastest. Most PICs want to sit in their offices and push buttons. If you are the PIC and want to take a major leap with your used car business then you need to become the used car manager. You read that right, become the used car manager.

I don’t buy your excuse that you don’t have the time. Most dealers have a good Comptroller, a good Parts Manager, a good Body Shop Manager, a Good Service Manager, and a Good Sales Manager. Most of these departments run better when you keep your nose out of their business.

You have the time if you want to make the time. Far too often the PIC wants to be just that…the Person in Charge…they don’t want to dirty their little pawpaws with the day to day issues of the used car department and market.

In all my travels around the country, the number one common thread for the Cracker Jack used car operations is the PIC.

When you’re the PIC you know anything and everything that goes on in the used car department. When your typical used car manager makes a mistake he/she can’t always fix it without the wrath of the boss coming down on them.

If you’re the used car manager you are operating under a handicap. It’s called experience. Not your experience, but the experience of the PIC. The PIC has been burned so many times with other used car managers they have tied your hands to the point that no matter what you may think or want to do/try they just can’t turn you loose.

So, even though they themselves won’t dig in they won’t let you dig in but so much. But, they still have these grandiose expectations of what they want out of the used car department.

I can tell you until the PIC becomes the used car manager and actually takes the reins it’s never going to happen. And, knowing human nature the odds are about 90% that it’s not going to happen.

So Mr. or Ms. PIC it’s a matter of choice. You can choose to make it happen or sit around and wish for the “Superman Used Car Manager” to show up at your front door.

And even if they do show up, they will leap a few tall buildings, might even run faster than a speeding bullet, but for sure they will eventually hit a brick wall. They can’t jump as high as you and they can’t run as fast as you. That’s all I’m gonna say, Tommy Gibbs

You may remember when GM & Chrysler shut down a bunch of dealerships during the great auto depression in 2008 and 2009.

Odd as it may seem a lot of people have forgotten how difficult those years were. It’s amazing what a run of profitable years can do to one’s mind.

You might also remember back when GM shut down their Saturn operations.

As you may know or can imagine a lot of dealers tried to turn those empty showrooms into used car dealerships. With very few exceptions most of them failed.

Why did they fail? Because they didn’t know what they were doing.

It’s that simple. Many of them had spent their entire careers focusing on being great new car dealers with used cars being a necessary evil.

Clearly understand, the better you become in used, the more new you will sell. With the business being more competitive today than it has ever been it should be easy to understand the importance your used cars being a big part of your business model.

It should also be apparent to you that you can always survive and thrive if you know the used car business. It goes without saying, but I’ll say it, you can’t always survive and thrive with new. Just ask all those dealers that lost their franchises 10 years ago.

New car grosses continue to go south and it’s not going to get any better. If you’re not creating a massive focus on used, you’re making a big mistake.

Anybody can talk the talk. You need to start walking the walk. That’s all I’m gonna say, Tommy Gibbs