A Shifting Market

Within the last week or so you have probably seen a rise in used car wholesale prices. Now think about that.

Just 30 days ago the bottom had fallen out and people were talking about dumping inventory and going out and replacing them at lower numbers.

I’m not saying that was wrong. I’m just saying it proves once again, you have to stay on top of what’s going on and be nimble and quick to move at the right time.

As a sidebar, when you have aged inventory you are anything but nimble and quick.

What’s really going on? This business is very simple and it’s easy to understand.

Depending on the state you’re in and if you’ve been able to sell cars or not, you’re running low on new car inventory because the factories have been shut down. Nothing you didn’t already know.

Thus, dealers are trying to supplement their sales by getting into the “Program Car Business.” Call it what you want, but by and large, that means rental cars.

This is going to be interesting to watch. It was just 30 days or so ago that the rental car companies were starting to sell off inventory because they had a ton of units sitting.

Florida is leading the country in the turnaround and as that continues and Disney and others open back up, the demand for rental cars is likely to go up. In other words, they are going to hold inventory, not sell inventory. Less cars. More buyers. Higher prices.

And now to compound the issue Hertz is filing for bankruptcy. There will be some impact for sure, but nobody can predict what or for how long.

And, as other states allow their dealers to get back into the retail business, they too are going to run short of new and used inventories. Pent up demand will come into play.

Everything about our business is about supply and demand, which is all the more reason you need to pay attention, day by day, minute by minute. Having aged inventory means you will never control your destiny.

You can expect one of several things to happen:

1. The market continues with a little kick on the high side for 30 to 60 days.

2. The market finds its “watermark” and settles down quickly.

3. You’re going to overpay for some period of time. When you overpay, all the more reason to understand you still have to turn your inventory.

4. The virus has a surge and the market goes backward until things settle back down.

For the third time in this article; You cannot let your inventory age on you.

The market is always shifting. You cannot shift with it when you have aged inventory.

It has always been and will always be the Achilles heel of the automobile business.

You need to be ready to shift. That’s all I’m gonna say, Tommy Gibbs

You Can Do It Safely

I realize this may not be a fit for some of you. And yes, there are some who believe this is old school, old fashioned and outdated.

But, there are some who can make this work. And if it helps someone sell a few more units, I can handle a little criticism.
Memorial Day is just around the corner.

Consider Having An Onsite and Online Tent Sale:

1. Put the tent up as close to the road as possible. Pick the best strategic position on your lot.
2. Put tables and chairs at least 6′ apart in the tent & use plastic or plexiglass partitions to separate people.
3. Put ALL of your people in the tent.
4. Work all deals in the TENT!
5. Hang banners from the TENT saying “TENT SALE.”
6. Hang banners that say Social Distancing in Play.
7. Banners that say, Get Tent Sale Prices Online.
8. Offer free masks.
9. Make sure everyone is wearing a mask.
10. Lots and lots of spiffs for your salespeople and managers.
11. Send out memos and emails to all employees explaining in detail what’s going to be happening.
12. Rope off special parking for customers. Hire an off duty police officer or security guard to direct them.
13. Answer the phone XYZ Dealership Tent Sale in Progress.
14. Do a fundraiser at the same time for the local little league, homeless shelter, or whatever.
15. Post the event on your website.
16. Do an email blast to all your customers advising them of the sale. If your CRM system is sophisticated enough make sure you tell them you need their specific trade and will pay top dollar for it during the sale.
17. Giveaways generally don’t do much except cause people to show up to get their gift and leave, but having people register for a free car is a good way to get info on them when they show up. Pick out a $1000 or $2000 car and give it away.
18. Along that same line, give the salesman who registers the winning ticket some sort of prize. Gift card, $200, whatever floats your boat.
19. Make up a bunch of signs like real estate signs that say “Tent Sale in Progress” and “Social Distancing in Play.” Put along the grass in front of the dealership.

It’s not complicated and it’s not expensive. You just have to be creative. People need to know you’re back in business.

That’s all I’m gonna say, Tommy Gibbs

Should You Have Absolutes?

Absolutes are a powerful tool for creating a disciplined organization.

The downside of absolutes is it chokes off the potential to have an acceptable exception.

Exceptions break the rule of discipline. Exceptions soon become the norm.

When exceptions become the norm, chaos breaks out. The type of chaos I’m referencing isn’t actually like a bomb going off. This chaos is slow and gradual, often not recognized, and then – whamo – there it is, its ugly face screaming at you, “What the heck happened?”

Now here’s the real deal for those of you looking to become better leaders. You can have absolutes and exceptions in the same house.

They can actually hang out with each other once in a blue moon.

True leaders can use them both and chaos will never show its ugly face. Granting an exception and going back to absolutes is very doable.

The problem with leadership is that very few leaders have the skill to make effective use of them both.

Most people in leadership positions are stuck with one or the other.

At any given moment one is just as bad as the other. That’s all I’m gonna say. Tommy Gibbs

A Challenge For You

When I first got into the car business, we had a sales meeting every morning.

Yes, as in Monday through Saturday. Part of the meeting had a bit of rah, rah, and part of it was training, covering issues, sorting out details of what our production was relative to forecast, and so on and so on.

For the most part, daily meetings have gone out of style and daily training is gone…well, I don’t know where. At best, the management team has been assigned counseling duties to review the BDC activity. At worst management says hello to each salesperson.

From time to time the Dealer/GM gets all wired up and implements a new program/process that demands certain things are done. At best, it’s a 90-day excursion to futility.

It’s a given that those who consistently use positive best practices are the ones who achieve the most success and the ones that are less likely to have aging inventory problems.

One of the things that happened during those daily meetings back in the “good old days” was the used car manager would get up in the front of the room and tell everyone to get their “sheet” out of their back pocket so changes could be made.

The referenced sheet was the “used car list.” The used car manager would then say something like “draw a line through stock number 2345A. We sold that car last night.” Further saying “add to your sheet, stock number 4645A. Tommy would you stand up in the back of the room and tell everyone about the nice little car you traded in last night.”

As antiquated as that might seem to you it’s far better than most do today. If you want to sell more used cars you need to provide the team with more information about what you have in inventory.

A great method of doing that is to do a lot walk (Not to be confused with a trade-walk) once a week. At least once a week, when done right, the lot walk will generate some pretty amazing results.

The lot walk is done right after the “Save-a-Deal” meeting. I just know you’re doing a “Save-a-Deal” meeting so it shouldn’t be hard for you to add the lot walk at the end of that meeting.
Every salesperson and every manager goes on the lot walk. New, Used, they all go on the Lot Walk. Make sure the service manager is included in this walk.

You should stop and talk about each and every car on the lot. The conversations that come about will amaze you. A real byproduct of the lot walk is the salespeople will start to tell you why certain cars haven’t sold. They also gain so much more knowledge about what’s on the lot.

Do not leave the “Trade Line” out of the lot walk. They need to know what’s in the system and what’s about to become available.

This is a great time to inquire about what they think you need to stock. Of course, you can’t fulfill all their needs, wants, and desires, but it becomes a great opportunity to educate them about the law of supply and demand and why they need to sell the value of your current inventory.

When the team is educated, they tend to educate the customer. When the customer is educated as to the value of your product you sell more cars and make more money. Education for both starts with the information shared on the “Lot Walk.” Let’s Walk. That’s all I’m gonna say. Tommy Gibbs