When I was growing up in Richmond, VA my dad was in and out of the used car and nightclub business. My father has always been a bit of a hustler. I don’t mean that he would hustle you. (Well, he might.) I mean that he was always scrambling to make a living.
One of the bad habits my father had was he loved to gamble. He loved the “action” that gambling brought to his brain, the adrenaline rush or whatever. To this day, at age 89, he still loves going to the auction. It’s all about the thrill of the kill for him. It’s the “action,” not the auction that turns him on.
When growing up in the 60s I often observed my father gambling, playing cards and shooting craps with a bunch of his used car cronies. It wasn’t unusual for him to go to the Windsor Auto Auction in Windsor, VA with no cars. He would register some late numbers, buy a few early cars and then assign them to his numbers. He would make money without investing a penny of his own and then turn around and lose it all at the end of the day shooting craps on the back of a pickup truck.
My dad and his friends would often rent a hotel room at a downtown hotel in Richmond and have really big poker games. One of the characters that played with him was a used car dealer by the name of Howard Hughes who went by the name “Mad Man Dapper Dan.” Dapper’s slogan was “I’d give ’em away, but my wife won’t let me.”
Dapper nicknamed my dad “Nervous” because when they would have these gambling sessions my father was always nervous about the cops showing up and putting them in jail.
I’ve come to believe that I inherited my dad’s nervous gene. Used cars have always made me nervous. In the early 80s when Ashton Lewis and I first partnered up at Parkway Pontiac Volvo in Chesapeake, VA it was a real struggle to make any money. Jimmy Carter was president and floor plan interest rates were over 20%.
It was not an easy time and we were struggling along without much cash on hand. Turning used cars was not a strategy, it was a necessity.
My nervousness was in part due to GMAC being such a pain to deal with and the magical word called “curtailment.” Curtailing used cars was a real drain on cash, so whenever any, and I mean any, used cars came on the lot I was a “Nervous Nellie.”
This is the time of the year when you need to be nervous for a number of reasons:
1. If you’ve not already started to plan for the first quarter of 2013 you are already behind.
2. This is such a critical time of the year to make sure your inventory is under control which will put you in the driver’s seat as 2013 kicks off.
3. The “Hurricane Sandy” hangover. With a shortage of used cars in the northeast it will be easy to get lulled into a false sense of “let’s keep ’em longer cause the values are going up.” It’s a really bad bet that used car values will stay up very long.
This cycle is a repeat performance from a few years ago. Back then some dealers said “Wow, I can take my inventory to the auctions and make money therefore I can keep them longer.” Not! Stay nervous, there is no substitute for turning your inventory.
If you have units in the 60-day-old range you should be super nervous because you’re not buying and selling in “today’s market.” You are getting ready to get your head handed to you on a platter. Don’t for one minute bet or structure your game plan based on a used car shortage and values going up. If it happens it’s temporary and a really bad model to base your business on.
I’m getting more nervous by the minute. That’s all I’m gonna say. Tommy Gibbs