(Written week of April 20, 2020, in the middle of coronavirus pandemic.)

I get several calls and/or emails a day asking, “What should I do about my aging inventory now that sales have slowed so badly.”

My first piece of advice is this may not be the time to be thinking about writing your inventory down.

It is certainly a time to think about retailing everything you can at some number.

That said, there may come a point at which you need to write down a selected few units or possibly your entire inventory.

If you’ve been allowing units to exceed 60 days then you may be in big poop and have to bite the big bullet.

The first thing to understand is don’t bother writing your inventory down unless of course, you’re going to commit to some serious changes.

Often when dealers write their used car inventory down, they take a big hit, 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 and thinking here we go again.

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.

Of course, your attitude is different right now as a lot of you are being forced to retail units at less than desirable numbers. You would have been better served to have had that sort of mindset before we got to this hot mess of today.

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 more. 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.”

If you’re interested I have an easy to use spreadsheet that I’d be happy to send you. It helps you make the adjustments and encourages you to set a new life-cycle on each unit you write-down. Hit the reply button and it will be on its way.

One more thing to keep in mind; 30 days is now the new 60. Be mindful of your 30-day rolling sales numbers vs your current inventory numbers.

This may or may not be the time for write-downs.

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

That’s all I’m gonna say, Tommy Gibbs

(Written in April 2020 in the middle of the coronavirus pandemic.)

There’s never a perfect time to make changes.

That said, we should certainly do our research, do some strategic planning and pick a time and place that gives us the best chance to succeed.

Many dealers are likely going to be making tough decisions about staff and business strategies in the near term.

One of those most likely to go to the top of the list are pay plans.

Part of that evaluation is to determine if you’re incentivizing the right behaviors that are going motivate the mindset of current and potential team members moving forward.

Dealers have known for years that paying on gross has its issues but evaluating options and making changes often gets put off because of the concern of upsetting the staff and the “timing” is always wrong.

There may never be a better time than right now to make that change.

In the end, a smart Dealer/GM would be wise to seek input from the sales staff and sales management.

Buy-in of the “new plan” has a much better chance of succeeding when the team believes it’s their plan.

Maybe this is also a good time to review:

1. The selling process.

2. Used car aging policy.

3. Recon time to the front line.

4. Website (I dare you. Go look at it. Click around a little.)

5. Ability to sell a vehicle remotely. Do you have a real process in place? (Electronic Signature and delivery procedure.)

6. Staffing. The right people? The wrong people? People doing the wrong things for their skill level? “The right people on the bus, sitting in the right seats, doing the right stuff.”

7. Advertising & Marketing. Are you spending the money in the right places? Better yet, are you holding those places accountable for the numbers they are generating or not?

8. F&I process from the turn-over to F&I to contracts in transit. Is F&I a part of your online selling process?

9. Factory receivables. Are your factory receivables in shape and being followed up on? Are you getting every dime they owe you?

10. Never has there been a better time to evaluate your leadership and communication skills than right now.

Right now, more than ever before in your store’s history, your team needs to see and hear you. It can be a one-on-one session or an all-hands-on-deck meeting. It just needs to be.

There’s no perfect way for you to deliver the message. Just make sure you keep delivering.

People often feel they are left in the dark about what’s going on.

You are the light. Shine your light. You are their light and hope that we will get through this hot mess.

Go shine your light. That’s all I’m gonna say, Tommy Gibbs

When I was a kid growing up in Richmond VA my father had a “dirt lot” used car lot.

My father and some of his fellow used car dealer friends loved to gamble. Back in those days they would rent a hotel room in downtown Richmond and play cards all night long.

Some nights he came home with money. Some nights he came home broke.

My father’s nickname with his peers was “Nervous.” Yep, they called him nervous. He was always worried that the cops were going to raid the joint and take ’em all to jail.

We all inherit traits from our parents. I inherited the “nervous” trait from my father.

Used cars make me nervous. Some used cars make me more nervous than others. This is a time to be more nervous about some than others.

You should be identifying the ones that make you the most nervous and come up with a plan to make them go away.

A few of the ones that make me the most nervous are:

1. High dollar
2. High miles
3. Bad colors
4. Bad equipment
5. Cars we have too much money in from jump street
6. Anything 45 days old and older
7. Auction purchases
8. High cost to market
9. High day’s supply

Gambling made my dad nervous.

Used cars make me nervous.

Gambling on the wrong used cars makes me even more nervous.

What makes you nervous? That’s all I’m gonna ask, Tommy Gibbs

Going back to 2013 (Article) and even further I’ve been trying to tell you that now was the time to take action.

I’ve continuously said you cannot afford to do things when you “have to.”

I’ve said time and again that you need to be leading from the front and not chasing from the rear.

I’ve talked for years of the fact that you don’t need those big fancy showrooms. I realize that can be a tough fight with the factory, but some of you let your ego get in the way with size, cost, and sizzle.

I preached for years that all salespeople need to become Internet salespeople. People want to deal as little as possible with your staff in the showroom.

Even without the coronavirus you’ve seen showroom traffic dwindle year after year.

How many times have I said you have to be set up with electronic signature so you can do as much as possible online?

So here we are; social distancing is the theme of the day and many dealers are scrambling to change up their business models.

Some of you have heeded that advice and are in better shape than others. Even so, you still have work to do.

I hate to be the bearer of bad news, but there’s no going back to “normal.” This may well be the “new normal.”

If you’re not already dialed into the new way of doing business you need to quickly go into a “balls to the walls, take no prisoners” mindset and sense of urgency.

Put as much time and money in as you have to. We’re at that point in time where you don’t have a choice.

Now you have to, which is never the position any of us want to be in. You just have to do it. That’s all I’m gonna say, Tommy Gibbs

We’ve all heard the saying, “When the going gets tough, the tough get going.” Those words were never truer than they are today.

I actually started writing this a few weeks ago, but my spin on the subject is spot on depending on your definition of the word “competition.”

Right now you’re not just competing against other dealers, you’re competing against the media’s spin and unknown factors that are upsetting you, your team, and the market.

We’ve had some good years so it’s easy to feel somewhat satisfied.

You can never be satisfied. Those sounds you hear behind you are the competition coming to gobble you up. If you take just one little break, take your eye off the ball for one second, or have one little hiccup, it could be the very thing that starts a downward spiral.

As Starbucks CEO Howard Schultz reminds us, “Seek to renew yourself, even when you’re hitting home runs.” How appropriate is that in today’s market?

Tough times and competition always make you better. Those competitors running behind you are a good thing. Learn to appreciate your competitors and make it a point to learn from them. Use them to scare you into more heightened motivation and a stronger competitive mind-set.

Successful people often succeed out of fear. The fear of failure. The fear of falling back. The fear of giving up all they have worked so hard for. It’s that fear that causes the successful ones to keep pushing and to keep looking for new and better ways of doing things.

Scott McNealy, CEO of Sun Microsystems, once said, “You either eat someone for lunch, or you can be lunch.”

Competition is the very lifeblood of a driven business leader. Study it. Embrace it. Love it. Use it as success fuel. Use it to take you to the top of your mental game.

Develop an unstoppable competitive mindset, and it will push you so far ahead of the competition that you won’t have to worry about looking over your shoulder.

Competition is an extra spice that keeps life interesting, keeps us on our toes, and stimulates us to greater creativity and productivity.

The best leaders realize that when they are having success it’s easy for the team to become satisfied and complacent and it’s the leader’s job never to let that happen.

A leader’s job is to push the team through the good times to the next level, and the next level, and the next level.

Pushing through the good times was my original thought on this newsletter. Real leadership shows up when times are tough.

Make sure you show up. That’s all I’m gonna say.Tommy Gibbs

I received a call the other day from a dealer raving about how great his used car business is.

Over the years his increase in used car sales has been astonishing. In part, because he became a believer in a lot of my concepts and philosophies; none more important than retailing anything that has a breath of life in it.

I’ve always been a big believer in trying to retail everything that has a breath of life left in it. Certainly, you have state safety laws to abide by and of course, you may have your own standards for safety and reconditioning.

Often dealers conclude that they don’t want to mess with the older used vehicles because they don’t want to damage their reputation. I’ve never understood that part. The customers buying the older, cheaper units are thrilled to have that vehicle. It’s not going to hurt your reputation.

In case you’re sitting on the fence on a “Budget Center,” ask yourself these simple questions.

1. What about all the parts and service gross that would have been generated on the less expensive cars going through service and reconditioning?

2. What about the fact that you could have put more money in some trades because you intend to retail them vs. wholesale them? How many more car deals do you end up making because you have a better plan?

3. Does the increase in volume from the less expensive units impact the attitude of the sales staff and their ability to earn additional income? Isn’t it true the best time to sell a car is when you just sold a car?

4. What’s the benefit of having someone driving a car, any car, high dollar, low dollar, that they purchased from you?

5. Is there a chance you just sold a car to someone who might never have set foot in your store simply because you had a vehicle at a price point they could afford to pay?

6. Is it possible that this new customer has a friend or relative who might one day come buy something because of the way this new customer was treated during the buying experience?

7. Are the odds in your favor that they may come back for an oil change or another service?

8. Does doing business generate business?

9. What’s the “Return on Investment” on selling these less expensive cars? Relative to the amount of money tied up, aren’t they a far better investment than what you would make with a $25,000 car?

How many times in a year can you turn over a $7,000 to $10,000 investment vs. a $25,000 investment?

10. Doesn’t it make sense that if you can sell more cars with less money tied up that it’s a good thing? There isn’t much of a downside to increasing volume and decreasing investment.

It’s found money, that’s all I’m gonna say, Tommy Gibbs