Getting Back to Basics

I’m getting a lot of questions about inventory turn these days.

Many dealers admittedly expressing concerns about units they have let age.

Even though values remain high, dealers are starting to see a leveling off of the market and the upward spiral of values starting to come back to some sense of normalcy.

Lately I’ve been preparing for my NADA convention workshop titled, “Putting Common Sense Back Into Your Used Car Department.” As a reminder it’s in Dallas on January 26 thru January 29.

Just in case you’ve gotten a little lax, I’m going to share a few bullet points from that workshop that I’m confident will help you get back on track.

1. Press Your Cost Down-This is probably the simplest and most effective thing you can do to improve your business. Know what your average cost per unit is every day and do what you can to reduce it. If you are at $18,000 today, do what you can to get it to $17,500 and so on. There is no magical number.

It’s about keeping the less expensive units and making sure the more expensive ones turn fast. If you figure out how to reduce your recon cost on the cheaper units, then you’ll figure out a way to retail more. Having lower price used cars on your lot is going to becoming more and more challenging to do. Creating a great focus on this segment will pay huge dividends for you.

2. Attack the 10 Most Expensive Units in Stock-Make a list each day of your 10 most expensive units in stock. With one exception make sure they are priced really, really right. The one exception is if you know you always make money on a unit that’s on the list then use some common sense, don’t give it away.

Consider putting bonus money on those 10 units regardless of the number of days they have been in stock. Sooner rather than later. Make sure the service manager gets a copy of the list each day and create a sense of urgency to get any of those through the shop quickly.

3. Life Cycle Management-There is nothing, absolutely nothing, you can do that will improve all aspects of your used car business more than understanding my process of “Life Cycle Management.”

Think Fast, Be Fast-You are working with a depreciating asset. Yes, your inventory has gone up during these crazy times, but those days are likely to be behind us.

Everything, including decisions on what to keep and not keep has to be done fast. Pull the trigger quickly on units that you are suspicious about. Don’t hang on to them hoping and wishing something good is going to happen.Early losses are far better than late losses. If you are paying attention and recognizing problem units early in the life cycle then you will have a lot less need to take units to the auction and lose money on them at 45 or 60 days. There are certain “Trigger Points” you need to focus on during your daily “Trade Walk.” Knowing how to use EWR (Early Warning Radar) pays big dividends.

4. Lot Walk-If you do a lot walk once a week with all the members of your sales and management team then without a doubt you will sell more units. The lot walk gets your entire team to know and understand your used car inventory.
The more knowledge they have the more they sell. Don’t get confused between a lot walk and a trade walk. They are both different and they both play a major role in your success.

5. Daily Inventory Pricing-The market changes every day and so should your pricing. Sometimes you can ask more, sometimes you can ask less. You cannot and will not achieve maximum results by changing prices every 10 to 20 days. Pricing takes intense management. It’s not something you do when you get around to it. You would be far better off if someone priced the car who is not in charge of appraising and buying them.

“The Pain of Discipline or the Pain of Regret.”

Do the little things every day and you’re less likely to have much regret.
That’s all I’m gonna say, Tommy Gibbs.

Talking The Talk

One of the skills necessary to succeed in business or life for that matter is the ability to ask the right questions at the right time and be able to cut though the B.S.

Having the ability to read people is critical to your success in life and business. People do lie.

An easy clue that something isn’t right is when someone constantly tells you how great they are even when you didn’t ask. Key words here are “you didn’t ask.”

Have you ever met someone and within the first few minutes of the conversation they start telling you they are all this and that?

It’s one of those conversations where it’s all about them and nothing about you. Isn’t there a country song “I wanna talk all about me?

If someone is telling you about all his or her great accomplishments, then you should be really suspicious. It’s not unusual for people to inflate how wonderful they are, but there’s a point where it goes beyond a little exaggeration into the area of lying.

As I’ve gotten older, I was a far greater football and baseball player in college than I actually was. (Think on that one for a minute.)

I’ve interviewed hundreds if not thousands of people in my business career.

If a person starts telling me how honest they are I’m thinking they aren’t very honest. I don’t trust you because you say you’re honest, I trust you because you’ve earned it over a period of time. (Isn’t that what happens in relationships? Trust is earned by actions and deeds.)

When someone wants to be a name-dropper by telling you all the big-name people they have hung out with and all the great things they’ve done, I would suggest you be very leery and start checking them out. If they are truly all that great, their greatness will come through and they won’t have to tell you.

I continue to be amazed at just how gullible some people are. Even people who I respect and perceive to have their lives together are easily convinced by a smooth talker. There are a lot of people in prison today who are smooth talkers. They are called con men.

You will notice that those who can “do it” don’t tell you they can “do it,” they just go “do it.”

They don’t brag or boast about it and if anything, they are humble. They show up, roll their sleeves up and get with it. The Michael Jordans of the world don’t have to talk the talk, because they can walk the walk.

When you hear all that talking, start watching their walking.

That’s all I’m gonna say, Tommy Gibbs

Perception is Reality

Being a leader is often a challenge because of the workplace environment we find ourselves in.

Being a leader is like being a parent. For example, if one parent stays at home, it can be more difficult to discipline the children due to being around them all the time.

Most of my readers are in the automobile business and are often around the same people for 12 plus hours a day.
Most dealerships have systems and processes in place designed to create focus and discipline. Even under the best of circumstances processes are constantly breaking down which contributes to poor performance and a poor bottom line.

The reality is that it’s much easier to run a large dealership than a small one.

As a leader in a large dealership, you can delegate much more and separate yourself from some of the personalities that can cause the breakdown of discipline.

Do not take that to mean that you don’t need to be involved, friendly or whatever. It just means you have to separate yourself from the emotional side of the equation.

If you are in a smaller dealership the task of separating yourself from the staff is even more daunting.I’m often amazed that leaders feel that they can socialize with staff members and still be able to properly manage and lead them.

How can you

1. Have lunch with the same people all the time?
2. Have dinner with spouses and members of your team on a regular basis?
3. Have after work drinks with staff members?
4. Party with staff members?
5. Attend sporting events with staff members?
6. Play golf on weekends with staff members?

Any of these in and of themselves is not a bad thing.

But, to do any of this with the same person on a consistent basis does nothing but create problems for you and them.

Aside from the fact it makes it difficult for you to manage them (let alone fire them) it creates a perception of favoritism that will destroy morale and team spirit.

Never forget, perception is reality. If you perceive that I’m a jerk, then I’m a jerk. The only way for that to change is for me to work toward changing your perception of me.

The burden is on me, not you. That’s all I’m gonna say, Tommy Gibbs

What Should You Do Now?

How was your June?

How have your first six months been?

It’s been a crazy year and I know that most of you have set some all-time records.

I can understand why you might be beating your chest a little bit.

Your record-breaking pace may mean you’ve gotten lucky or it may mean you’ve got your act together.

Either way, you need to be cautious of becoming complacent.

Even though things have been going well, you would be very smart to review how you can make things better as you tackle the second half.

But let’s suppose you’ve not been setting records or maybe you recognize you’ve done well despite some flaws in your plan of attack.

Since we still have 6 more months to go, I have a couple of questions:

1. If you’re a record-breaker, what are you going to do to get better?

2.If you’ve not been breaking records or have broken some despite yourself, what are you going to do to get better?

Everything we do is about choices.

You can choose to let things be as they are, or you can choose to dial it up a notch or two.

Your other choice is to do nothing. Go sit in your office, stare at the wall and count your money.

If you do nothing, your pile of money will likely go down and the year will soon be over.

That’s all I’m gonna say, Tommy Gibbs