Someone Needs To Hear From You

This business is never easy. One of the most interesting things about it is you don’t get to enjoy the wins for very long.

If you’re like me, you love the challenges it brings to the table each and every day. I always look forward to getting up in the morning and “getting after it.”

The number one thing I miss about being a car dealer is connecting with the team members and the energy I get from them each day. That’s really hard for many of you to do right now.

Since I’ve been in the speaking, training and coaching business I primarily work alone. It can be challenging at times since I only have myself to rely on.

Your situation right now is different, yet similar. I like the mindset of “staying after myself.”

You’re now being challenged to stay after yourself. It’s easy to feel despair and quit. I don’t mean that you’ve actually quit, except maybe inside your head.

Even under normal circumstances, it doesn’t matter if you
work alone or work with 500 people, you still have to “stay after yourself.” It’s something you can actually get better at.

“Staying after yourself” requires planning and discipline.

Some key elements to “staying after yourself” include reading, writing, listening, doing research and finding positive things on YouTube to view and share with your team.

Those things open your mind and help you see what the possibilities might be.

I’ve become a firm believer that writing is a bigger component to success than one might think.

I don’t mean that you have to be an award winning author; writing your thoughts down each day helps to open your brain up to where you’ve been and where you can go.

Writing helps you “stay after yourself.” It will help you self-evaluate your actions, your behavior and how well you are accomplishing those “continuous goals” you should be writing down. You have to constantly evaluate, tweak and adjust your goals so you are always moving forward.

A big part of staying after yourself is to “stay after others.”

The more you encourage others, the more you are encouraging yourself. There is nothing you can do that is more important than helping others along the way.

You text or private message others, but can you imagine the impact you can have right now with a simple phone call? You have a powerful voice. Now is the time to use it.

The person on the other end needs that call. You may need it even more.

Since you can make a difference, go make a difference.

That’s all I’m gonna say.Tommy Gibbs

Be Tough

We’ve all heard the saying, “When the going gets tough, the tough get going.” Those words were never truer than they are today.

I actually started writing this a few weeks ago, but my spin on the subject is spot on depending on your definition of the word “competition.”

Right now you’re not just competing against other dealers, you’re competing against the media’s spin and unknown factors that are upsetting you, your team, and the market.

We’ve had some good years so it’s easy to feel somewhat satisfied.

You can never be satisfied. Those sounds you hear behind you are the competition coming to gobble you up. If you take just one little break, take your eye off the ball for one second, or have one little hiccup, it could be the very thing that starts a downward spiral.

As Starbucks CEO Howard Schultz reminds us, “Seek to renew yourself, even when you’re hitting home runs.” How appropriate is that in today’s market?

Tough times and competition always make you better. Those competitors running behind you are a good thing. Learn to appreciate your competitors and make it a point to learn from them. Use them to scare you into more heightened motivation and a stronger competitive mind-set.

Successful people often succeed out of fear. The fear of failure. The fear of falling back. The fear of giving up all they have worked so hard for. It’s that fear that causes the successful ones to keep pushing and to keep looking for new and better ways of doing things.

Scott McNealy, CEO of Sun Microsystems, once said, “You either eat someone for lunch, or you can be lunch.”

Competition is the very lifeblood of a driven business leader. Study it. Embrace it. Love it. Use it as success fuel. Use it to take you to the top of your mental game.

Develop an unstoppable competitive mindset, and it will push you so far ahead of the competition that you won’t have to worry about looking over your shoulder.

Competition is an extra spice that keeps life interesting, keeps us on our toes, and stimulates us to greater creativity and productivity.

The best leaders realize that when they are having success it’s easy for the team to become satisfied and complacent and it’s the leader’s job never to let that happen.

A leader’s job is to push the team through the good times to the next level, and the next level, and the next level.

Pushing through the good times was my original thought on this newsletter. Real leadership shows up when times are tough.

Make sure you show up. That’s all I’m gonna say.Tommy Gibbs

Pandemic Panic: A Scary Time to Be In Business? March 2020

As you are all aware by now there’s quite a bit of unease looming in the air with the one-two punch of COVID-19 and the current Oil Price War. We’ve taken some time to pull together information that we thought could be useful for your planning process as we navigate these shaky times.

I know I don’t need to remind most of you what we went through back in 2008-2009, but there’s no more resilient group of people in the world than the automobile dealers in the USA. We will push through this just like we’ve always done.

Our thoughts are summarized below.

Current Status

Dealers across the nation are reporting that demand is on target with prior expectations at the moment, but it is a much different picture in localized regions and likely to move downward. Local areas that have been more affected by the spread of coronavirus are seeing a decline in sales. Seattle, for example, saw a 20% decline in auto sales last week.

We expect these localized trends to continue as consumers will be likely to exhibit behavior change when things get “close to home”. Also, on a national level, as more celebrities/influencers contract the virus and more organizations/governments take measures to contain it, media coverage will expand and consumers will likely take it more personally, even if it is not yet local. This will likely help propel a downward trend nationally.

Morgan Stanley analyst Adam Jonas says he expects the outbreak to send U.S. auto sales down 9% this year as consumers delay large purchases. Prior to the virus he expected a decline of 1-2%.

It’s unclear at this time whether this will be a quick event or something that plays out over a longer period of time.

Recommendation: Plan for a Range of Scenarios

Right now there is a ton of uncertainty and doom and gloom in the media. Don’t get too caught up in the worst-case scenario and remember to think rationally. Good leadership should plan for a range of scenarios, not just one. We recommend reading the attached report published by McKinsey & Company. This report does a great job of briefing the current situation and range of possible scenarios at a global economic level based on the current facts.

Also, stay informed and pay attention to news and trends for your local market around containment efforts impacting your customers like school/work closures or remote work mandates. Let your leading indicators, like floor traffic, help guide you in your decision making.



Recommendation: Be Hyper-focused on Inventory Levels

If things do slowdown it’s important that you maintain appropriate inventory levels and don’t get stuck with too many units that are destined to age out. Similarly, you don’t want to miss out on a quick recovery because you are too short on inventory right at tax refund time.

To help manage this balance, pay particular attention to units sold vs units acquired at a more granular level than you typically would. We’d recommend your team touch base on this daily as long as market volatility is high and be a touch towards the short side on how many units you’re stocking to accommodate for a likely slowdown. The closer you are to these numbers the quicker you will be able to take corrective action if needed.

A good tactic here could be to pay attention to daily sales compared to prior periods and to project 7-day rolling sales, 14-day rolling sales, and 21-day rolling sales into monthly sales rates. For example, if you sold 10 units in the last 7 days, that would translate to 42 units (10/7 x 30) in a month. Similarly, if you sold 25 units in the last 14 days and 38 units in the last 21 days that would equate to monthly rates of 53 units (25/14 x 30) and 54 units (38/21 x 30), respectively.

You would compute these values for every rolling category every day (i.e. 7-day rolling monthly rate, 14-day rolling monthly rate, etc.). You could then plot each of these rolling monthly rates each day to see if things are slowing down. This would be good to review in the daily meeting mentioned above.

A good rule of thumb would be that your current inventory should not greatly exceed those monthly values. So if you 7-day rolling sales equates to a sales rate of 42 units a month, and you currently have 70 units on hand, you’re likely going to experience unwanted aging on at least 20 of these units.

Note that if things are changing fast in your area, it will take time for the longer rolling periods to pick them up, so pay particular attention to the fluctuations in the 7 and 14-day values. You could use even shorter rolling periods as well, just know that they will be a little more all over the place as they could relate to the day of the week and are just generally have more noise as they are a single data point.

Also, if you do see signs of the virus becoming a bigger concern locally (school closures, spike in cases, local quarantines, cancelation of activities), be sure to adjust levels and cut back on auction purchases in anticipation of things slowing down a little. The 20% decline in Seattle might be a good reference point if things start to hit closer to home for you. (Note this number can change over time, so it would be a good idea to keep an eye on places that are harder hit and see what they are experiencing as you are planning to have a concept of the downside)

Recommendation: Preserving Cash is King in Uncertain Times, Be Hyper-focused on Advertising ROI

In times of great uncertainty and fear, retail marketing effectiveness can take a huge hit as consumers can become distracted and too worried about “bigger problems” to pay attention to your marketing efforts. This is a large variable expense that you should become hyper-focused on now. We’d recommend setting up a daily meeting to touch base on advertising spend and performance as long as market volatility is high.

We’ve attached a report from Dealer Teamwork that has some good comments on short-term branding and consumer behavior due to the virus that is worth a read.

Future Status

While things may slow down initially, we do believe that there will be a post-panic boom. This is likely to be fueled by pent-up demand and historically low rates. Its too early to make any comments on the timing here but do believe these conditions will prove to be favorable in the future. Stay the course and use any downtime to focus on all your basics that have served you so well in the past. Tommy Gibbs & Jarrod Tanton

We’re here to help

We wish you and your team the best during this uncertainty. Be safe, use common sense, and protect your health. Don’t hesitate to reach out if we can be of any assistance in any way.


Breath of Life?

I received a call the other day from a dealer raving about how great his used car business is.

Over the years his increase in used car sales has been astonishing. In part, because he became a believer in a lot of my concepts and philosophies; none more important than retailing anything that has a breath of life in it.

I’ve always been a big believer in trying to retail everything that has a breath of life left in it. Certainly, you have state safety laws to abide by and of course, you may have your own standards for safety and reconditioning.

Often dealers conclude that they don’t want to mess with the older used vehicles because they don’t want to damage their reputation. I’ve never understood that part. The customers buying the older, cheaper units are thrilled to have that vehicle. It’s not going to hurt your reputation.

In case you’re sitting on the fence on a “Budget Center,” ask yourself these simple questions.

1. What about all the parts and service gross that would have been generated on the less expensive cars going through service and reconditioning?

2. What about the fact that you could have put more money in some trades because you intend to retail them vs. wholesale them? How many more car deals do you end up making because you have a better plan?

3. Does the increase in volume from the less expensive units impact the attitude of the sales staff and their ability to earn additional income? Isn’t it true the best time to sell a car is when you just sold a car?

4. What’s the benefit of having someone driving a car, any car, high dollar, low dollar, that they purchased from you?

5. Is there a chance you just sold a car to someone who might never have set foot in your store simply because you had a vehicle at a price point they could afford to pay?

6. Is it possible that this new customer has a friend or relative who might one day come buy something because of the way this new customer was treated during the buying experience?

7. Are the odds in your favor that they may come back for an oil change or another service?

8. Does doing business generate business?

9. What’s the “Return on Investment” on selling these less expensive cars? Relative to the amount of money tied up, aren’t they a far better investment than what you would make with a $25,000 car?

How many times in a year can you turn over a $7,000 to $10,000 investment vs. a $25,000 investment?

10. Doesn’t it make sense that if you can sell more cars with less money tied up that it’s a good thing? There isn’t much of a downside to increasing volume and decreasing investment.

It’s found money, that’s all I’m gonna say, Tommy Gibbs

Your First Kiss

The first of anything is always the best. Coffee is a great example. I highly anticipate each morning the first taste of my cup of coffee.

It’s amazingly the best. Most things are like that.

The first time you kissed your wife, husband, girlfriend or boyfriend is far better than the smooches you’ve most recently got.

The first lick of your ice cream cone is better than the last and so on. It’s called the law of stuff tastes better at first. (Yes, I made that up.)

Used cars are that way too. Selling one in the first 10 days tastes a lot better than selling it on day 50. The biggest difference between selling a used car and getting a kiss is that selling a used car is based on math. Kissing is based on kissing. Imagine that?

There are two problems going on in today’s market.

1. We failed to recognize those units that need to be first, as in sold really fast.

Those will be your most problematic units such as ones you’ve buried yourself in, bad color, auction purchases, high dollar unit, etc. These are units that you do not have a favorable cost to market or days supply.

You have to accept the fact that you’re not going to make a ton of gross on them, but they serve a very worthwhile purpose in your business model. There are benefits galore at turning and burning these units.

2. The bigger problem is dealers often think turn and burn on everything, with little or no regard for an attractive market position.

If you have a favorable cost to market and days supply why do you need to blow that unit out so fast? Yes, you’ve made a profit, but you left a bunch on the table.

If you want to improve gross profit, you have to know which ones to hold and which ones to fold and never forget all kisses are not equal.

That’s all I’m gonna say.Tommy Gibbs

You’re Not Ready

You’re not ready. That’s different than being not prepared. You’re never ready.

But, no one is ever ready for the next step.

You’re not ready for the next promotion.

You’re not ready for your next business venture.

Just because you’re not ready doesn’t mean you don’t prepare.

Not being prepared means you haven’t studied enough. You haven’t read enough.

You haven’t sought the right mentors.

You haven’t listened enough.

You haven’t asked enough of the right questions.

You haven’t explored the Internet enough.

Not being prepared means you just haven’t done enough, Tommy Gibbs

Would You Like an Open Point?

Given the chance, most people I know would jump at the chance to get an open point.

If you have the assets to make it happen, the only drawback for you would be staffing and no units in operation to support your fixed operations.

Even with those obstacles, most people will figure a way to make it happen

This type of opportunity doesn’t come along often so your decision is understandable.

Since the odds are not in your favor of getting an open point, why not invest in your used car operation?

Your new car volume isn’t likely to improve all that much with the numbers nationally hovering around 17 million. Cranking up used cars makes a lot of sense.

Of course, I think you should invest in my training and invest in increasing your enthusiasm and passion for the used car business.

That said, perhaps the best investment for you would be in a standalone recon/service center. Your first reaction is it doesn’t make financial sense. Let’s look a little deeper.

If you have two or more stores or if your stand-alone store is selling 100 plus used a month maybe it’s an investment you need to give serious consideration to.

If your current service department is operating at close to 100% efficiency, you are more than likely losing customer pay because you’re not able to service those customers in a timely manner.

We live in a world of “now.” If you can’t get them in right now, you may very well lose them forever.

With your used cars not clogging up your service operation, you should be able to quickly work your way back to 100% efficiency in the service department.

By having a separate recon car operation you’re going to shave a number of days off the number of days tied up in recon.

Every day you save makes you money. Forget about the savings in holding costs. Your grosses are the best in the first 10 days you sell a car. Faster is better.

With a recon car operation, you’re likely to be more flexible about how you price labor and parts to the used car department.

That’s especially true when it comes to keeping some of the older, cheaper, high mileage stuff, etc.

Retailing a unit vs. wholesaling a unit is always a winning proposition for you.

If you don’t have room to build a building, then look for something you can rent or buy within a 5-mile radius of your store or stores. Yes, you will have to shuffle them back and forth, but you can figure that out.

Some questions you should ask:

How much internal work are you now doing?

What’s the impact of moving that from your service department?

Can your service department make up the difference?

How many additional units will you have to sell for the recon center to more than pay for itself?

By opening a separate recon center what’s the message you are sending your organization?

Now is the time to invest in your used car operation. That’s all I’m gonna say, Tommy Gibbs



“The overeducated are worse off than the undereducated, having traded common sense for the illusion of knowledge.” Naval Ravikant

I saw this quote and it was a good reminder that we have to be careful in the automobile business to not let data be the only decision-making factor to determine a strategy for each used car in our stock portfolio.

I’m constantly reminding my audiences that every used car is different and has to be fully evaluated as the unique beast it is.

Your skill, your knowledge, your experience, and good common sense play a major role in your success.

Never sell yourself short. Then on the other hand never sell yourself on being too smart.

Software is a tool and a guide that should help point you in the right direction, but at the end of the day, it’s your decision making that’s going to make a big difference.

Show me someone that “gets” the car business and understands how to analyze data, and I’ll show you someone managing a used car department that’s rocking.

Rock your used car department by using common sense and technology. That’s all I’m gonna say, Tommy Gibbs


If what you’re doing isn’t working, why do you keep doing what you’re doing?

Maybe you don’t know it’s not working? Nah.

Could it be you know it’s not working, but keep thinking if you stay the course that it eventually will work?

I’m all for staying the course, but how long can you stand to stay the course? The sad part of this story is there are those around you, some not even as smart as you, and they know it’s not working.

They are embarrassed for you, but they are afraid to speak up.

They know you already know it’s not working, but they don’t want to make you mad by telling you something they think you already know.

Only an idiot stays the course when they know it’s the wrong course. You’re not an idiot. For gosh sakes, do the right thing and change directions.

The worst that can happen is it doesn’t work. What you’re doing ain’t working.

Changing the miserable course that you are on will energize your team and when you energize the team anything is possible.

Be energized, That’s all I’m gonna say, Tommy

Speed & Leadership

There’s a lot of discussions these days about the number of days it’s reasonable to hold a used unit before retailing it.

In the past, 60 days was the timeline most successful dealers worked with. Dale Pollak wrote recently about the new normal being 30 days.

Every piece of data I’ve looked at over the past 17 years validates that Dale is spot on.

If nothing else, dealers have come to understand the necessity of the Velocity concept and turning inventory. Of course, today dealers are working a tick harder to ensure they make the most money possible on units that they have a favorable cost to market and day’s supply in their favor.

That being said, any way you want to slice and dice it, speed to the front-line has never been more important than it is today.

If you’re not using a recon tool to track and zero in on where you’re not efficient and where you need to make some improvements, then it’s doubtful you will ever get close to the new normal of 30 days and gone. 30 days and gone doesn’t mean dumping units in the wholesale market. It means finding a retail buyer within that 30-day time frame.

There’s an underlying problem when it comes to 30, 60 or whatever. It’s the failure of upper management to communicate to service management the importance of the relationship and impact the entire recon operation has on the success of the used car department.

The reality is that lack of understanding also impacts the new car department. The used car department will miss trades and lose new car deals when they have a lack of confidence in the support of service management.

Issues will come and go in your recon operation. Lifts break down, technician shortages, a slug of used cars hit the ground, and an overload of retail customers are things that are going to occur.

The strategy of upper management should be to keep everyone informed and educated about what’s going on and what the expectations happen to be.

Everything that happens in your dealership, good and bad, is a result of great leadership.

Great leadership understands the need for speed, daily communication and keeping the team on the same page.

Great leadership doesn’t just talk the talk.

Great leadership walks the walk.

Be Great. Start walking or in the case of recon, you need to start running. That’s all I’m gonna say, Tommy Gibbs