Are There Too Many Dealerships?

I’ve been saying since the 1980s that there are too many dealerships. If you’ve been around that long, you probably have too. The law of supply and demand has always worked to our disfavor when it has come to making the kind of money we should make based on the amount of money and risk we have in play.

I believe the over-dealerization (A word I made up, go with it) started in the 1970s as the Japanese imports started to come onto the scene. Those franchises followed the footprint of the domestics with a strategy of, well there are three Chevy or Ford stores in the market, so we need three Toyota, Honda, Datsun, etc.

As more and more importers discovered our thirst for inexpensive, gas efficient, and higher quality vehicles, the number of new car dealerships mushroomed. Even to this day, dealers are willing to stand in line and spend big bucks for a chance at an open point that might just turn out to be the next great Honda franchise.

Those domestic franchises had been set in place many years before when the road systems made traveling from one store to the next, a bit time consuming and often not worth the ride.

Today in some markets you can go to 5 Chevrolet dealerships within 5-minute intervals. Or, can now you can make that same journey in 2 seconds with the click of a mouse.

Saturn had the right idea. Give a dealer multiple points in a specific market and let the dealer decide the if, where and when. Setting up a non-negotiating selling process and selling everything for full window sticker was the rule of the day. In the end, they just didn’t have the product to be competitive.

The last few months have been the equivalent of having fewer dealerships because of less product availability.

Individual dealers and dealer groups are reporting record profits nationwide. Do you think it’s because dealers have all of sudden gotten that much smarter?

That’s not to say that the smartest of the smart haven’t done a lot to maximize their profit potential, but there is a tendency to ignore the reality of the situation and to think, “hot dang, we got this thing figured out.”

The only thing that’s been figured out is the law of supply and demand which works every time. When you have a low supply of vehicles and an ample number of buyers, your gross and net profit goes up. The reverse is also true.

This honeymoon won’t last forever. Fewer dealers will. That’s all I’m gonna say,

10 Tips-Others Want to See You Fail

1. EMBRACE ANXIETY– It’s motivation to take action.

2. GET AFTER IT-Focus your energy on making positive change. Crank up the intensity and aggravate the competition!

3. PUT FEAR IN PERSPECTIVE-What’s the worst that can happen?

4. BE READY-Preparation breeds Confidence.

5. DON’T DWELL-Forget minor setbacks; learn and move on. (Don’t let the setback become the standard!)

6. HEALTHY DISCONTENT-for people or things blocking your progress. (Continue to surround yourself with losers and you will continue to lose.)

7. INSPIRATIONALLY DISSATISFIED-with yourself…YOU have to step it up! (YOU must set the example!)

8. DAILY DOSE-of paranoia…fix yourself… (We’re back to you again. You must set the example!)

9. CONTINUE-to look for answers. (Continuous Improvement-You never get it right!)

10. NEVER– ever give up. Other people want to see you fail! Don’t let others control your thinking!

That’s all I’m gonna say. Tommy Gibbs

Money & Power

One of the most interesting things about the automobile business is the dealer has “the power” to fix anything that needs to be fixed.

That being the case, the only real question becomes if the dealer has the will and the money to fix what needs to be fixed then why don’t the fix the things that need fixing?

Think about that for just a moment. They have the power. They often have the money.

But, more often than not they don’t have the will.

So, there you have it. It’s not money or power. It’s a matter of having the will to fix what needs fixing.

Having the will means dealing with all the messy details to get it done.

Where there’s a will, there’s a way. That’s all I’m gonna say, Tommy Gibbs, Tommy Gibbs

Fat Grosses & Paychecks

I’m thinking your salespeople’s paychecks have been pretty good of late.

Especially if you’re paying on gross. Good for them. I’m an advocate for salespeople making more money.

But, wait…what did they actually do to earn those bigger grosses and paychecks?

I’m thinking they are a victims of a good set of circumstances which in part has been the law of supply and demand and the way you have priced and held the line on little or no negotiating of prices.

You have to ask yourself does it really make sense to be paying them on all that gross when they haven’t had much of an impact on it?

The same holds true for paying on gross in the overall scheme of things.

When you’re giving cars away, it’s not the salespeople giving them away. It’s the way you’re pricing them because you have too much inventory or need to make something go away.

This may not be a good time to change your pay plan. But, it’s a good time to ask yourself why are you still paying on gross? That’s all I’m gonna ask, Tommy Gibbs

Stop Training

One of the things I remember about advertising is it’s hard to gain momentum, but really easy to lose it.

In the good ole days, if you were pounding the airwaves and decided to take a break, it was really difficult to get it going again.

When things are rocking is not the time to pull the plug; it’s the time to crank it up.

It’s that way with training too. My business is always good, but it’s even better when times tighten up. When times are tough dealers are looking for answers.

Right now, most dealers are busy selling cars, having record months in gross and their bottom lines.

I don’t train salespeople, but why would you spend money on sales training when Johnny 7 car is now selling 15 and his grosses are $500 more than they have ever been?

I wouldn’t worry about it. This is going to last forever. That’s all I’m gonna say, Tommy Gibbs