There’s a lot of lip service going on these days.  That, along with the loyalty factor, may very well be the demise of some dealerships. Many dealerships have key personnel saying, “Yea, yea, I get it, I understand and will make the necessary changes.” They are saying one thing and doing another. More often than not these people have been with us a long time and we are convinced they are loyal to us and will take us to the promised land.

For the most part the changes that need to be made involve the utilization of technology and the role the internet plays in our business. For many, they just cannot make the change because of bad muscle memory. Here are some examples of muscle memory involving sports:

Shooting a basketball

Throwing a baseball or football

Swinging a baseball bat

Hitting a tennis ball

Swinging a golf club

The action of doing any of these is based on muscle memory.  It is extremely difficult to make changes to any of these actions due to old muscle memory. The changes can be made in a practice or coaching session, but as soon as you get into the game, your old muscle memory wants to kick back in.

The same thing happens every day in your dealership. You have people saying “yes, yes, now I get it,” but as each day goes by muscle memory wants to kick back in to the old way of doing business. Employees give us Lip service and in return we reward them with undeserved loyalty. We truly believe these people are trying and wanting to make the changes, but the fact is most can’t and won’t. Our thinking is that they are loyal to us and we need to be loyal to them.

The dictionary defines loyalty as “being faithful in allegiance to one’s lawful sovereign or government; faithful to a private person to whom fidelity is due; faithful to a cause, ideal or custom.”  Your dealership is neither sovereign nor government.  Nor is it a person, a cause, an ideal, or a custom.

We all go to work each day, and we are expected to put out our best efforts and use our talents to their fullest.  Perhaps we are even expected to serve above and beyond the call of duty (or at least beyond what we feel our current pay justifies!).  In turn, we expect a fair wage, or at least an agreed upon wage.  That is where loyalty begins and ends; we give our service, and the company pays us for it.

People work hard and extend themselves because they expect something in return.  They expect to be paid for their efforts and eventually to receive a promotion, a bonus, or even just a pat on the back.

An employee is not disloyal to a dealership if they failed to do their best; they would be disloyal to themselves.  And if a company retained an employee in spite of mediocre performance just because he or she has 20 years service, supposedly out of loyalty, it would actually be disloyal to other employees and the stockholders.

Many of you are going to survive this current crisis, but if you don’t make some hard, tough decisions involving personnel and processes you will have a very hard time surviving the next five to ten years. That’s all the lip service I’m gonna give you and that’s all I’m gonna say.

Gas prices went to over $4.00 a gallon last July…and we all know the rest of the story. Many dealers went into a panic mode of dumping SUVs and pickup trucks. (Even after I told them not to.) Then they went out and purchased lots of smaller cars.  Sometime thereafter gas prices dropped below $1.68 a gallon and many dealers have now stocked up and are doing quite well with used SUVs and pickups. The worm is about to turn again, and the worm is going to suck some more blood out of you if you aren’t paying attention.

The key is to control the worm and at the same time improve grosses (actually total gross.) You have to work in a very short window with your inventory. You cannot keep vehicles 30 days and beyond and actually be selling in “today’s market.” It does not mean you have to give your cars and trucks away, nor does it mean you have to dump them in the wholesale market. You can still shoot the moon if you want to on a given unit, but you have to make price adjustments much, much quicker than you ever have. The days of carrying units 60 plus days are over. I said it’s over.  You need to get over it and stop all the silly excuses you keep coming up with.

Many of you are crying that you can’t find inventory so why should you reduce the price on what you currently have? Lord, help me, but if I have to explain all of that then you need to sell the farm grandpa.

There is inventory out there somewhere and there is inventory you can buy and make money on. But, you have to be creative and look for it almost 24/7. It won’t happen going to a couple of auctions a week and/or looking online a few hours a day. Your current used car manager does not have the time or the patience to get the inventory you need in order to maximize your potential. It goes much deeper than just looking. It’s about doing the research about what is selling, then finding the right stuff and turning it quickly. Yes, you may pay what you consider to be “too much,” and yes, your grosses might suffer a tick, but you will sell a lot more units and your ROI goes way up. There is nothing better than putting units in the street for your dealership.

So let’s review the warning.

Gas prices are going up.

Don’t get caught with your pants down.

Work with a short window.

Work harder at finding the right inventory. (Someone other than the used car manager.)

Work harder at turning it faster.

 

You’ve been warned, that’s all I’m gonna say, Tommy Gibbs

It’s funny the things I see. You can see much more clearly when you are not in the moment of battle. Successful Dealers, even those with struggling franchises, (who doesn’t have a struggling franchise?) have a different view; a different attitude; a different swagger about them and a different way of managing accountability.

Right now some of you are feeling a little better about things. The worm is starting to turn and that’s a good thing, but the real question is…are you ready? Oh sure, you’ve made a bunch of cuts, fine tuned a few things, but are you really ready?

Here’s some timely suggestions:

1. Observe-Spend a Saturday just sitting in the tower observing. Say nothing. Take notes.
2. Ask Questions-On Monday meet with your GSM/Sales Manager and ask him/her to review with you what the selling process is. Better yet, prior to meeting with them, ask them to write out the selling process to bring with them to your meeting.
3. Beat them to death-Tell them what you observed and how far off track they are compared to the list and the discussion you just had.
4. Re-Commit-Get them re-committed to what they say they are supposed to be doing.
5. Re-Deploy-get them on a mission to get back on track through renewed focus, training, disciplines and processes.
6. Create Accountability-create a daily check list to review what they are doing as compared to what they said they were going to do. Continue to observe and whenever it’s not right go back to step one and start over again.  Your number one job is to “Guard the Processes.”

You have to raise your level of intensity and accountability. Human nature being what it is, people will do what little they have to do to get by. Most want to cut corners. If you take a square piece of paper and keep cutting the corners off it you end up with a circle. When you cut corners with your processes you end up going in a circle. (And your bottom line sucks.)

I wrote an article recently about lip service and loyalty. Your loyalty to certain staff members causes you to accept lip service, which then causes you to accept mediocre people and performance. If you keep it up you won’t be around three years from now. Only those dealers who are willing to make adjustments and take tough stands are going survive in the long run. Let the spankings begin. That’s all I’m gonna say, Tommy Gibbs

If you are on some kind of turn like 60 days (should be 45 days) have you ever wondered how much money you have lost when you dumped it at the auction when you hit the end of your cycle? The typical used car manager is willing to take a loss at the auction at 60 days to a bunch of vultures, but would not dare sell the car at a loss to a retail customer. Now let me ask you, who do you have the greatest opportunity to recoup your loss with in the long run?

The real bottom line to all of this is you have to push prices down enough to retail them prior to 45 days be it at a profit or not. It doesn’t mean you have to give your car away on day 10 or day 20, but by day 20 you need to start getting in the game.

I want to emphasize this whole idea of retailing, not wholesaling and not going to 60 days. If the prices are managed correctly there is someone’s butt that will fit into the seat. There is a price a car can be retailed at which is a far better choice than taking the car to the auction at the end of the cycle. The stereotypical used car manager does not “get it.” Someone in upper management has to decide to change the course of direction and someone has to be in charge of “Market Pricing.” The reality is you almost need a geek who understands the car business and can sit in front of a computer most of the day and monitor the market.

It is "stupid thinking" to rationalize that if you didn’t sell the car at a loss to a customer that you would sell that same customer a car at a profit.  Not so!  There are customers who will come to you because of the attractive price point you have a particular car listed at. Thus, you now have a customer in your system for future sales/prospect that you would never have had. To do this you have to take an aggressive approach as the car passes through whatever buckets you set up. Why would you rather lose money at the auction than lose it with a retail buyer?

That’s all I’m gonna say. Tommy Gibbs

Feels good doesn’t it? I bet it does. It was the best month for most of you in probably more than a year. Ah, and now the temptation shall return. You know the temptation to hire more staff and to spend more money on advertising. It’s understandable that some of that has to happen, but I want to remind you what you’ve been saying.

You said, never again will I let my expenses get out of control, never again will I go back to my old ways, never again will I carry inventory I don’t need, never again will I let used cars get out of control, never again will I keep people I should not keep, never again will I let ups leave without a TO, never again will I not require sales people to log all customers, never again will I not require my sales staff to follow the road to the sale, never again will I keep used cars over 45 days. So, once “again” I want to remind you of things that are “never again.”

You are sitting on an opportunity of a lifetime to make the most money you have ever made. You have made the necessary cuts. But Temptation is chasing you like a coon dog chasing a raccoon on a cold winter’s night. Temptation is the evil that will take you from a superstar to a superdud.

Some of you have gotten too lean especially in the sales department. You are still that one key person away from making it really happen. It’s not just about adding that one key person, but how you organize the rest of the team. Some of you don’t have the best players in the best positions. In some cases you are paying the wrong people way too much to do a job they can’t do in the first place. Those people need to go and/or be reassigned. I know, I know, they are good people, loyal and all that, but now is the time.

I want to create a little temptation here myself. I want to tempt you to re-think your team; to step it up a notch. There are lots of good people in the market right now that you can hire who will make a difference. You need to continue the shake up. With some restructuring of your team, you’re only one key player away from knocking ‘em dead. Temptation is a bad thing. Temptation is a good thing. Tempt yourself to go to the next level. That’s all I’m gonna say. Tommy Gibbs

Have you ever had a colonoscopy? If you have you know the preparation is the worst part. The actual procedure just isn’t much to it. They knock you out, you wake up and hopefully you have a nice hinny to show for it. But let’s go back to the prep part. It’s a living hell ain’t it? If you’re not over the age of 50, you probably don’t know what I’m talking about. Well, it’s about drinking some nasty stuff and sitting on the toilet about every 15 minutes.

If you had a great month in July, good for you. But, better yet, good job on being prepared. The sad part of this is that some of you were not prepared at all and still had a good month in spite of yourself.  I keep telling you, “You are never as smart as you think you are and you are never as dumb as you appear.” It’s the good set or bad set of circumstances we sometimes find ourselves in. So now you’re feeling kind of smug, like you’re all that and box of rocks.

Without some real painful preparation this surge you are now getting just isn’t going to last. You are running out of new cars, so now whatta you gonna do? Over the years you’ve gotten used to giving away new cars so your grosses still are not what they need to be for the new car department to make money.  The problem is we’re still selling from fear. Fear the customer will run away; fear we will lose a deal to the competitor. Fear of fear. Did you ever notice how hard it is to sell when you operate in fear?

As hard as it is to do, there are some customers that you just need to let walk. Yep, let ‘em go. Have you ever said to a customer “you know, we just don’t think this is going to work out and we don’t want to sell you the car even if you paid full sticker.” Man, that’s a hoot and oh what a feeling! More often than not it really gets their attention. They become darn right humble when you tell them you don’t want their business.

Ok, so it’s a drastic step, and not one you can use very often. The bottom line is your staff really has to do a better job of not dropping their pants and running away so fast. Work a little harder, sell a little smarter and most important prepare a lot better. Just because it’s summer and business has picked up does not mean the preparation is over. Baseball players take batting practice before every game. That’s done to improve what they already know how to do. Just because your guys know how to sell cars doesn’t mean they don’t need to practice how to do it better. More and better preparation means a much more productive hiney. That’s all I’m gonna say. Tommy Gibbs

What’s next? Of course you don’t know. But the one thing that you know is that you have to get up and get after it tomorrow. Clunkers are driving you nuts, but the real deal is to not let it. Control the things you can control and take on “What’s Next.” What’s next is you have about 4 and ½ months left to go in the year to make up a lot of lost time.

What’s next is you have to put the press on. You’re behind in the game. You’ve had some tough months, and now you have to catch up. There is no choice. Every minute of every day needs to be an “in your face” approach; you have to press your staff to do the things you know that will make you and them successful. There can be no slack.

I know you think you and your team are doing all you can, but you aren’t, there is always more. Start by writing it down. Make a list of all the basic things you know about this business. Things you now do, things you used to do and things you’ve heard that others do. Once you make the list, make a commitment to attack that list for a minimum of the next 21 days. Why 21 days? Research has proven it takes 21 days to create a new habit. (Odds are you won’t make a list. Did you know that only three percent of adults have written goals, and everyone else works for them?)

The reality is if you will focus on this list for the next 21 days good things will happen. You have no control over the past. You have total control over what you do today. Can you control the economy? Of course not, but you can control your efforts and “what’s next.” And, “what’s next” for you should be to re-focus on those things you can control and not the next Government or Factory program. That’s all I’m gonna say, Tommy Gibbs

I’m sure you have read that Jim Press is leaving Chrysler. I keep coming back to my famous saying, “You’re never as smart as you think you are and you’re never as dumb as you appear.” He appeared brilliant during his Toyota days and now he looks pretty dumb. Was he all that smart at Toyota and all that dumb at Chrysler? The answer in both cases is no. At Toyota he was at the right place at the right time. Great product, great organization and some darn good dealers to work with. He maximized the opportunity that presented itself. I don’t want to bust your bubble, but I highly doubt the dealers he inherited at Chrysler were any worse than the ones he had at Toyota. The mere fact that so many of those Chrysler dealers survived over the years is a testament that they were outstanding dealers and probably a lot better than some of the Toyota guys.

I don’t want to take anything away from you Toyota dealers, but some of you were also in the right place at the right time. Yes, some of you absolutely maximized your opportunity and good for you.

Which takes me to today’s subject. Being at the right place and maximizing your opportunity.  There is a tremendous opportunity right now for you in used cars. Everyone’s been all jacked up about this Cash for Clunkers deal, but now we have to come back to the reality of the marketplace. There has always been and will always be a market for used cars. Those dealers who have come to understand the role that used cars play in their overall profitability succeed in both good times and bad.

Let me give you some rough figures. Last year there were 36.5 million used cars sold in this country. Franchise new car dealers sold about 13 million of that number while used cars dealers sold about 12 million and the rest were sold by private individuals. The numbers this year and next year may not be quite that high, but they will be really big numbers as compared to new, which last year was 13.2 million.

It’s a fact that there will be fewer new car dealers competing for used car sales. It’s also a fact that there are fewer and fewer used car dealers. Thus, there is a huge opportunity for new car dealers who have their act together to capture used car market share and make a lot of money. There is a tremendous opportunity waiting for those dealers willing to make the commitment necessary to maximize their success. Many of you did it with Cash for Clunkers and you can do it with used car sales.

The opportunity is now, don’t miss it!  That’s all I’m gonna say. Tommy Gibbs

Back in my college days and somewhere up to about age 30 I enjoyed tying one on once in a while. Nowadays if I have just one drink, I feel like crap the next day so it’s not really worth it to me. But, back in the day it was so much fun to get a little drunk, a little buzzed. You know that loosey goosey, relaxed, uninhibited, just plain old giddy feeling. Ahh, but the next the day, what a price to pay! You know those moments when you say “God, just let me get over this and I will never do it again.”

I would imagine that you might be having such a hangover right now from the Cash for Clunkers program. It was fun while it lasted. What a nice high it’s been. All those customers coming in and partying with us; the excitement, the thrill, oh how sweet it’s been.

You are now faced with the morning after. It’s very quiet isn’t it? Just you and the pain.  The pain of dealing with the aftermath and wondering “what’s next?” Your new car inventory is down and you’re wondering what the next 4 months will bring before we get into 2010?

Part of the prescription you need to take to cure your hangover is used cars, but your head hurts even more because used car prices are driving you nuts. Prior to Cash for Clunkers you were starting to “get it,” but the party started and you couldn’t stop drinking the hard stuff. It was one of those free cocktail parties where you got to drink all you wanted of the best brands so you couldn’t stop at just one.

Months ago you gained some real used car momentum when you made the decision that you were not going to continue to rely on new car sales. But lately you’ve focused on drinking the new car cocktail and lost your focus on used and now you need to go into a recovery program.

You can recover, but you have to get back on track really fast or you will lose what you gained during the big new car cocktail party and your previous focus on used. The first thing you need to do is to quit listening to the propaganda that says you can’t find used cars. The used cars are out there but you need an all out assault on the marketplace in order to find them. More important is finding the ones that are going to turn the fastest. There are cars in your market that sell well which the other dealers are not aware of because they are not as smart as you. They are still shooting from the hip and you are a student of the game. You study the data and buy based on data.

A “solid diet” of used cars will make your new car cocktails taste a lot better and your hangovers a lot less severe.

That’s all I’m gonna say, Tommy Gibbs