When I’m in town I work out at a small 24-hour gym on Treasure Island in a little strip mall.

Three doors down from the gym is a real barbershop.

Looks and feels like one from yesteryear complete with the barber’s pole that can be traced back to the Middle Ages.

The other morning, I couldn’t help but notice the barber was sitting in his barber’s chair staring at the front door. Immediately it flashed through my mind that’s what I often see in dealerships today.

I see two types of people staring at the door.

1. Salespeople staring at the door waiting for that special up that the dealership has been so kind to advertise for. (Will we ever fix this?)

2. Management staring at two doors.

A. The old school door.
B. The you might fail door.

The might fail door can be pretty scary. Every once in a while, you walk over, crack the door, and take a peek. Your body starts shaking with fear because of what you’re seeing.

You’re seeing volume going south and of late you’re starting to see your front gross heading the same way. It’s interesting how quickly the market of supply and demand can change on you.

When you focus on your retail sales number over the last 30 days, you’re in much better control of the laws of supply and demand.

You’re seeing today’s pay plans not working, and you’re seeing today’s new hires leaving as fast as Superman and a speeding bullet.

They aren’t buying into your hours and your selling processes which aren’t much different than they were 25 years ago.

And, they hate your pay plan.

Aside from being prettier, the physical work environment is about the same. You still have desks and you’ve fancied them up by putting computers on them. It’s sort of the lipstick on a pig theory. When the customer walks in, they still see a pig.

You’re also seeing the approach of some of the public companies and bigger dealer groups by changing their hiring practices and hours and adding iPads, sofas, and kiosks in the showroom.

You’re starting to wonder if you’ll still be around 10 years from now.

But you’re making a profit so why change? You need to change while you can afford to change.

You’re sort of like that barbershop. The only thing that’s changed for the owner is the chair is a little different and there’s no strap to sharpen the straight razor with.

That’s a really nice chair you’re sitting in. Enjoy your seat.

That’s all I’m gonna say, Tommy Gibbs

P.S. It’s that time of year when you’re dealing with used car writedowns. If you are going to write down your inventory let me coach you through it. It costs you nothing for me to help you.

Should You Write Your Inventory Down?

Don’t bother writing your inventory down.

Unless of course, you’re going to commit to some serious changes.

It’s not unusual at this time of the year for dealers to write their used car inventory down, take a big hit and a deep breath, and say “OK, done, let’s move forward.”

Many dealers lack the discipline to steer away from what got them there in the first place. Therefore, in six months or so, the owners are staring at the same hot mess they tried to fix back in December.

Used car managers and dealers fall back into the same old rut because of the fear of losses they will have by taking aged units to the auctions and dumping them.

It hurts me to say this, and I know it’s going to cause a few of you to unsubscribe from my newsletters but taking units to the auction and dumping them is just plain dumb.

If you thought enough of that 60-day old unit to bring it into your inventory as a retail piece, you should have been able to find a retail buyer for it at some number. There’s a number that every unit can be retailed at.

Therein lies the problem. You won’t retail it for what it’s actually worth, yet you’re willing to wholesale it for what it’s actually worth.

Hey Einstein, which way do you think you have the greatest opportunity to recover from a unit that was probably a bad decision from jump-street? Insanity.

The instances where you have to dump a previously assigned retail piece in the wholesale market should be very few. If you’re in the retail automobile business, then retail your units.

Yes, the grosses on all that aged stuff are going to hurt you for a while. Dumping in the wholesale market will hurt you worse. If you have a lick of discipline and stay with it, you will be fine and never, ever have another unit over 60.

My Life-Cycle management process gives you the disciplines and strategies that will keep you from saying, “More write-downs, here we go again.”

I’ve never met a dealer who has figured out the 60-day concept that said, “Geez, I’d like to go back to those days when we had units over 60.” I’ve met plenty of dealers that are disgusted that they have to deal with aged units and write-downs every year.

Enjoy your write-downs. That’s all I’m gonna say, Tommy Gibbs

P.S. If you are going to write down your inventory let me coach you through it. It costs you nothing for me to help you.

Do You Need More Used Car Inventory?

I’ve been guilty in the past of snickering when someone says, “We never miss a trade.” Everybody misses trades and if you don’t believe it, think of the deals you have made in the past where you stole a deal by stepping up. The same thing happens in reverse.

Keep in mind that you never really know what a unit is worth until you sell it.

That said, in the last 6 months or so I have to say that the majority of the dealers are working hard to step up and capture anything and everything that shows up at their front door.

Even so, dealers are still running short on used inventory and still missing opportunities.

Every week my senior software engineer and I discuss how we can come up with an ingenious way to help dealers find more used cars. We know that if we could, we would knock it out of the park and dealers would be standing in line to do business with us.

Since we’re not quite there yet I have some suggestions for you:

1. Set up a temporary buying center at a remote location such as a mall, strip mall, or a vacant piece of property for a weekend. If the laws permit, put it in your competitor’s backyard. Since you’re not going to be selling cars at this temporary site, I’m thinking you’ll be legal in most states. Put up a tent with banners around it that include “Free Written Appraisal in 15 Minutes.” Or better yet, if you have a box van, put some signage on it and get to work.

2. If the temporary buying center works well, consider setting up a permanent buying center. Sure, the issue is going to be finding the right spot with a favorable rent factor. And, of course, staffing. With the software available today you don’t necessarily need a high-paid rock star. Keep your cost down by setting the hours for what you know to be those peak traffic times such as 10 to 7.

I’d suggest you think of this expense in terms of advertising dollars. You’re already spending a ton so you could consider moving some money around.

3. Don’t miss a trade. I know, I know, you’re not missing many, but let’s add one more piece to the equation; make sure in your save-a-deal meeting that you bring in all the appraisals from yesterday that you didn’t make.

Have a manager call those customers and up the ante by at least $500. Even if you think you already put all the money in the world in the unit, give it one last shot. You have nothing to lose and you might just capture a trade or two. Also, you might find out the real reason why they didn’t do business with you.

4. Pay extra. Yep, consider paying the salespeople a little extra for every deal that has a trade attached to it. It’s hard to measure how much impact they have on capturing the trade, but anything you can do to keep them interested is going to be a good investment.

5. Pay salespeople to find units for you. This idea is old as dirt and still worthy of consideration. Have them work sites like Facebook Marketplace, etc. If they can create a buy for you, then pay them. And pay them well. Add the cost of acquisition to the cost of the unit and it doesn’t impact salesman’s compensation. Win-win.

6. If you currently have software in place to mine your customer base, get re-focused on it and work it harder. If you don’t have the software, then get it.

The number one issue with dealers that use the software is the processes for follow-through are less than desirable. And frequently they have the wrong person doing the job. People skills are far more important than used car skills when it comes to capturing these customer’s vehicles.

Far too often this is a sloppy and unpleasant experience for the customer. Part of mining your customer base should be your ASMs asking if the customer would like a written appraisal for the value of their car.

7. Work harder to buy cars from your service customers. You can either serve up an appraisal on every unit that comes into your service department or have your service writers ask the customer if they would like a free written appraisal on their vehicle. Pay the service writer a bonus for every unit you’re able to buy.

8. Work harder at buying from auctions & rental car companies. I know it goes without saying, but I’ll say it anyway. You’re still going to have to use these sources.

Yes, you’re going to overpay 90% of the time. If you work smart you can still make it work for you. Make sure you shorten the life-cycle on these units with a goal in mind of finding a retail buyer at some number sooner than later. In most cases, you have to have a turn and burn mindset on these units. There’s a bunch of benefits of doing so and I’m confident you know what they are.

Work harder. Work smarter. Work more. That’s all I’m gonna say, Tommy Gibbs

What Stage Are You In?

I’m going to be discussing and commenting on what’s commonly known as the “Four Stages Of Learning” plus two others that I know you have never heard of because I made them up. I don’t know where the first four originated, I just know I stole them

All 6 stages of learning apply regardless of the application. They can be applied in sports, business, social activities, and life in general.

1. Unconscious incompetence-The individual does not understand or know how to do something and does not necessarily recognize the deficit. The individual must recognize their own incompetence, and the value of the new skill, before moving on to the next stage.

The length of time an individual spends in this stage depends on the strength of the stimulus to learn. The more time they are willing to spend learning the skill or activity the faster they move to the next stage. Example: You decide to take up golf so you go out to the driving range, whack at a few balls. 1 out of 10 you make great contact, but you have no clue what you’re doing. You know you love the feeling and you know you want some more of it so you keep returning to the driving range and/or play a few rounds of awful golf.

2. Conscious incompetence-Though the individual does not understand or know how to do something, he or she does recognize the deficit, as well as the value of a new skill in addressing the deficit. The making of mistakes can be integral to the learning process at this stage. Example: After going to the driving range for a while and playing a few rounds you begin taking lessons with a golf pro and quickly realize how little you know. You observe others either at the golf course or on video, etc. and the realization of how much there is to this game starts to sink in.

3. Conscious competence-The individual understands or knows how to do something. However, demonstrating the skill or knowledge requires concentration. It may be broken down into steps, and there is heavy conscious involvement in executing the new skill. Example: More golf lessons, more golf rounds played and you are starting to understand the integral parts of the swing. You haven’t mastered the swing yet, but you are starting to strike the ball more consistently especially when you think it through. It’s not automatic, but your skills are improving as your knowledge starts to grow. This can be the most frustrating stage of the first four. You still have to think about it. When you do, your results are much better, and when you don’t you want to throw your clubs in the lake.

4. Unconscious competence-The individual has had so much practice with a skill that it has become “second nature” and can be performed easily. The individual may be able to teach it to others, depending upon how and when it was learned. Example: You’ve now repeated your golf swing enough times, played enough rounds, attempted enough different types of shots that you can break par or better, and have reached a very competitive level. You no longer have to think about the elements of your swing, you just do it. The physical and mental muscle memory is locked in.

5. Competent Incompetence-is the most dangerous of the six. It’s when you have years of experience, know your stuff and have become convinced you have nothing else to learn. Your success has convinced you that you are “the man” (or woman) and you are done learning. Seeking more knowledge is the last thing on your mind. What got you to where you are today is what you think is going to keep you where you are and beyond.

6. Learning to be competent-this stage never stops. It’s a life long journey that keeps life interesting and challenging. You know that learning is a journey, not a destination. (That would be you and I.)

The most successful people at any skill, business, or activity are the ones who continue to do two things:

1. They keep going back to the basics
2. They continue searching for answers even when they think they already have many of them.

What stage are you in? I’m in the “Learning To Be Competent” stage and I hope it never ends. That’s all I’m gonna say, Tommy Gibbs