The Pain of Efficiency

If you’re going to continue to make money, and hopefully make even more money, you will have to become more efficient.

Your processes will need to become more efficient.

Your management team will need to become more efficient.

Your entire dealership will need to become more efficient.

You must become more efficient when it comes to speed and cost of your reconditioning. I know it’s a sore subject for some of you, but the sooner you address it the sooner you will move forward.

There are many issues dealers are scrambling to deal with as we move into the most competitive environment in the history of the automobile business.

In order to do volume in used cars you need to have a “costing advantage.” By “costing advantage” I mean what’s added to the car once you own it, which includes packs and reconditioning.

To have a costing advantage you have to re-think your packs (which usually gets down to pay plans) and most importantly, what you charge the used car department from your shop.

Your sales managers don’t have control over gross as they did 20 years ago. The market conditions such as days supply are having an impact on how you price your vehicles.

More and more dealers are moving toward becoming one-price dealers and saying “no” when the customer shows up and wants a discount.

Becoming more efficient means improving the amount of time it takes to get a unit through recon and to the front line. Every day that a unit is not on your front line available for sale is costing you money. UpYourGross.Com

Sadly, most dealers do not actually know how long it takes. And even when they do, they turn a blind eye toward the problem.

They let the proverbial tail continue to wag the dog when it comes to fixing the service timeline problem.

If you’re going to do more volume you need to have an advantage when it comes to getting cars through your system and the cost tied to doing so. You must become more efficient.

The pain of efficiency, or the pain of regret. You’re going to have one or the other and the cool thing is you get to pick. That’s all I’m gonna say, Tommy Gibbs

6 Bullet Points

This is always a tricky time of the year.

It is not unusual for “Fall Optimism” to come back to haunt you when “Winter Reality” sets in.

After several record profit months, it’s easy to get high on our new founded mentality of standing tall and asking for “all the money.”

Sure, you can hold that unit longer…ahhh, maybe not.

Often there’s a disconnect between the desired goals and the skill level of those who have been put in charge of obtaining the numbers we need.

Are you ready? Is the team ready? Are you ready for the fall and winter?

It’s important to know what you deserve for any given car or truck on your lot. Knowing and understanding that is based on two parts:

Common sense.

Knowing and getting what you deserve means having a true understanding of the market and every unit on your lot. They are all different, yet we often treat them all the same. It’s knowing when to fish or cut bait.

Yes, even in this wacky market there’s a time to cash in and make certain units go away.

6 Bullet Points To Help You:

1. Redundant Training- It ain’t redundant until you’re perfect. You’re used car department isn’t perfect. Don’t confuse getting lucky and today’s unusual market with your management skills. You’d be far better off thinking you’ve recently gotten lucky than thinking you’ve figured it out. Maybe you have and maybe you haven’t. Now is the time to amp up the training for your entire team.

2. Rolling 30-Day Sales Travel Rate-Pay close attention to the number of units you currently have in stock vs. the number of units you have sold over the last 30 days. You may even want to view it over the last 15 days. Almost without exception, we are seeing inventories starting to outpace the sales travel rates. If you’re using our UpYourGross software tool, it’s right there on the scoreboard page for you to see.

3. Ask For More On The Right Units- Keep in mind the word lucky. You’ve recently gotten lucky on some units. Betting on lucky will not serve you well.

Yes, there are some that you need to start way high. Some very low. My UpYourGross software will help you know which units are which.

Once in a while, you gotta “ask for it all.” You can’t hit it out of the park if you don’t take a full swing. If it’s a low mileage, really nice car you deserve more money for it.

4. Not selling in Today’s Market-Your most profitable car is a 20-day car. If you are retailing a lot of cars at the 30, 45, 60 plus day mark, you don’t have a chance. Speed wins; the lack of speed kills.

Start charting those units that you sell at 45 days and beyond to see what they are doing to your average gross profit? In the movie “A Few Good Men,” Jack Nicholson might have been talking about you. You can’t handle the truth.

5. Lack of quantity and quality of photos –stop reading this. Go look at the used cars on your website. How hard is it to maneuver through your website? And, if you don’t have a photo booth, you cannot be competitive in today’s market. It’s an investment you can no longer afford to avoid.

6. Use Early Warning Radar-You have to be able to spot a problem child on day one, not day 61. Every one of your aged units (Your oldest unit is an aged unit) has a story to go with it. That story started back on day one and somebody wasn’t paying attention.

Fix your Radar system and your used car operation will become more efficient and more profitable.

You get what you deserve when you do the work to deserve what you get.

That’s all I’m gonna say, Tommy Gibbs

When Should You Do It?

Jeremy Foley is the former Athletic Director at the University of Florida. Foley had a 40 year career in leadership positions in collegiate athletics.

You can well imagine the number of people Jeremy Foley has had to fire over the years.

Of course he’s not always made the perfect decision when hiring and firing, but based on the school’s success, he’s been right far more times than he’s been wrong.

One of Foley’s sayings is, “If something needs to be done eventually, it needs to be done immediately.”

You will often find that to be a characteristic and trait of exceptional leaders. They see what needs to be done and they do it immediately.

You as a leader know there are things you eventually need to do, but for whatever reason, you keep putting it off.

You know there are people you need to eventually replace. If you know you need to eventually replace them, then you need to do it immediately.

You know you need to eventually change your pay plans. If you know you need to eventually change pay plans, then you need to do it immediately.

You know you need to eventually get rid of packs. If you know you need to eventually get rid of them, then you need to do it immediately.

There’s a long list of things you know you need to eventually do.

If you want to be a better leader, you would do them immediately.

That’s all I’m gonna say, Tommy Gibbs

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

You’re Not As Smart As You Think You Are

A number of years ago I came up with a saying, “You’re never as smart as you think you are and you are never as dumb as you appear.” Some of you are feeling pretty smart right now.

It could be that you are really smart, or it could be that you got lucky because of a once in a lifetime market shift in your favor. (Dale Pollak’s Article)

And of course there are times when you feel pretty dumb. Even that may or may not be true. You might be a victim of a bad set of circumstances. Some of you have had bad franchises in bad locations or it could be that you’re a newer used car manager that inherited a hot mess for a used car inventory.

Or it could be you’re just dumb.

In any given set of circumstances, it’s important to maximize whatever you have. Right now, you may be maximizing things in spite of yourself or maybe you’ve been smart enough to make some good moves.

It could have been you didn’t know what to do and by doing nothing you got lucky.

The most important thing right now is recognizing where you are, how you got there and how to stay on this magical course you’ve discovered.

Even with all that said, this business continues to be:

All about the basics.
All about the fundamentals.
All about your disciplines.
All about the processes.
All about understanding the data.
All about common sense.
All about your focus.

There’s your roadmap to staying the course. Stay the course. That’s all I’m gonna say. Tommy Gibbs

Did That Fall Out of The Sky?

Everyone has problem cars from time to time. You know the ones I’m talking about.

The ones that want to stick around forever. The ones you haven’t yet found a buyer for.

But where did they come from? How did they all of a sudden end up on your lot? Did they just fall out of the sky?

Can you imagine how much better off you would be if you could identify problem cars on day 1 vs. day 61? Suppose you had a strategy in place to deal with them sooner rather than later?

The number one problem in the industry is we just don’t pay attention. We don’t pay attention soon enough. By the time we realize we have a problem, it’s too late.

Take the time to do a “trade walk” which includes all purchase units, and be blatantly honest about what you’re staring at.

Then put a strategic plan in place to deal with the more problematic units.

If you did nothing more than that, you’d have a lot less units falling from the sky, hitting you in the head and giving you a headache.

And, you would have a lot better bottom line. That’s all I’m gonna say, Tommy Gibbs