There are a number of factors that go into achieving a better gross profit than what your store is currently producing.

None are more important than how you price your units and how you pay your staff. We often price units that we have the greatest profit potential too low and price units with a lesser profit potential too high.

There’s no disagreement that pricing plays a role in the equation. There’s another hidden element that’s often ignored and it’s what kind of a deal that you’re willing to take.

And that’s where pay plans have the greatest influence.

I will give you a couple of examples:

You have a nice trade.
It has a wide cost to market in your favor.
It has a low market days’ supply.
It’s 12 days old.
You have it listed with a gross of $2700.
After some negotiating the salesman and you are staring at a $1500 deal.
You take the deal.

How can you not? You’re both being paid on gross. You just gave away $1200 that maybe you shouldn’t have.

Here’s the flip side:

You have an auction purchase unit.
You have a cost to market not in your favor.
High market days’ supply.
It’s 56 days old.
At 56 days of age you still have it listed with a $1500 gross profit.
After some negotiating the salesperson brings you a deal that’s a $500 loser.

You don’t want to take the deal because there’s nothing in it for you or the salesperson. (Actually, there may be for the salesperson because you have a $500 bonus on the unit to make it go away.)

You take the deal and moan all day about how Internet pricing is killing your grosses.

The reality is your pricing was off from jump street.

If you find yourself holding on to some of these low-profit potential cars longer than you’d like, you might find that you’re letting what you paid for vehicles influence what you are listing them for.

You priced it wrong because you wanted a certain margin going in. You may have priced the unit with the same margins as you would with a nice trade.

Both of these examples add to your gross profit woes.

If you want to improve your gross profit you need to change your thinking when it comes to pricing, paying on gross and the deals you’re willing to take. That’s all I’m gonna say, Tommy Gibbs

I’m done playing nice. I’m done being soft spoken. I’m done not telling you like it is. I’m done with you telling me you drank the Kool-aid and all is good.

Unless you drank my super Kool-aid, it’s not all good. Some of you have. Some of you haven’t. If you haven’t, you should.

I’m screaming. Yes, screaming from the rooftop that you need to be using my life-cycle management process. The reason you need to be using it is that it makes good sense. You cannot deny that it makes good sense.

I guess you could, but you’d be wrong.

You could say, “My team and I don’t have the discipline to utilize it,” which would be a shame, but you can’t say, “It doesn’t make good sense.”

For your entire career, you’ve either stated or heard others state, “All units must stand on their own.” Yet, you treat them all the same. What are you thinking? How’s that working out for you?

Life-cycle management requires you to have a unique strategy for every unit on day one. If you have a unique strategy on every unit on day one, none will see day sixty-one.

My software helps you manage it, but I don’t care if you buy my software or not.

What I care about is that you acknowledge the fact that all units don’t deserve the same shelf life.

What I care about is that on day one that you be honest with yourself about what you’ve done to yourself.

What I care about is that you understand you cannot treat a purchase unit the same as you do a trade.

What I care about is your gross going up. Using life-cycle management makes your gross go up.

Maybe you should come up on the roof with me and look down and see the view I see. If you did, you’d be screaming too. You’d be screaming at the person in the mirror. That’s all I’m gonna say, Tommy Gibbs

First I want to make it perfectly clear the amount of respect I have for those who have been in this business for many years. Those that have grinded it out, those that have street savvy, and those that at times made chicken salad out of chicken poop. There is no adjective to describe the admiration I have for you.

That being said I want to speak to those of you that are in charge of the hiring and struggle to find that superstar used car manager. The used car manager you need may very well be right under your own roof, and you’re walking right by him or her a dozen times a day.

For whatever misconceived reason, when you need a used car manager, the first thing you want to do is find a used car guru that works someplace else and lure them away.

I don’t have to tell you the challenges of hiring from the outside. I don’t have to, but I will.

1. The person you hire isn’t going to have the same culture that you’ve been working so hard to develop.

2. Their thinking about the used car business isn’t going to necessarily align with yours. That doesn’t mean either of you has it right or wrong. It just means it’s going to be frustrating and more than likely expensive.

3. If you’re running an ad in Automotive News, most of the respondents are going to be from outside your area. I’m not even going to attempt to list all the issues tied to bringing someone in from afar. If you don’t understand those issues then you’ve got a lot more problems than I can help you with.

4. When you hire from the outside you are looking for a miracle worker to fix the mess left from the last miracle worker. Most likely the mess will get bigger. All you’re doing is rinse and repeat.

5. You’re doing nothing to encourage people to want to grow and develop within your organization when you keep going to the outside. You need to promote from within.

The real answer is that you don’t need someone from the outside with a bunch of experience. What you need is to commit to giving someone from within a chance and a whole bunch of your personal time and energy.

What you need is:

1. Someone that’s a young “thinker.”
2. Someone that has high energy.
3. Someone that believes in your culture and store.
4. Someone that’s coachable.
5. Someone that has common sense.
6. Someone that understands technology.
7. Someone that has integrity.
8. Someone that has a strong work ethic.
9. Someone that has good communication skills.
10. Someone that’s hungry.

If you don’t have someone or multiple someones like this in your organization then you need to rethink your organization. That’s all I’m gonna say, Tommy Gibbs

If I learned anything from being an athlete, a coach, an NCAA college basketball referee, and my time in the United States Marine Corps, it is that you have to be a well-disciplined team to win.

I, like many of you, can look back and review my career and unequivocally conclude that the success I’ve had is directly tied to discipline.

The common denominator that I observe in my dealership travels for the most successful operations is discipline. It’s there. It’s visible. It’s consistent.

You can have:

A lot of great ideas.
A lot of great concepts.
A lot of great tools and training at your disposal.
A lot of talented people.
A lot of great software.

None of it is worth the ink to write it down if you don’t have discipline.

As many of you know my team and I have developed some amazing software rightly named UpYourGross. What’s obvious is that the dealers who have the discipline to allocate 10 minutes a day to the software are getting results that far exceed their expectations and their investments.

Those that don’t are wasting their money.

This isn’t about my software. It’s about the value of discipline.

Leadership must have a clear understanding of discipline and what it means to the success of the organization.

If you’re going to develop a winning team you must be committed to the now, not later. If you’re not a person of action, not much else will matter.

When a leader is consistent in everything he/she does, then others will follow. When others follow the lead of discipline, momentum and growth are inevitable.

Never forget the enemy of discipline is procrastinating. Be disciplined. That’s all I’m gonna say, Tommy Gibbs

When it comes to the automobile business, we often have a very short memory. There are many who have forgotten what it was like back in 2008-2009. The better business gets, the shorter the memory we seem to have.

For some of us, it seems like it was just yesterday, and I can clearly remember how depressing the NADA Convention was in New Orleans in 2009.

There were some recent stories in Automotive News about how dealers were able to survive during those tough years.

One in particular that stood out for me was on Denny Amrhein, a managing partner at Grogan’s Towne Chrysler-Jeep-Dodge-Ram located in the Toledo, OH market.

The header in the article: “A new philosophy: Turning cars in 30 days.”

To quote Mr. Amrhein, “In 2008-09, right during the recession, my used-car manager came with a new philosophy of turning cars in 30 days – 60 days max,” Amrhein said. “We weren’t into making a lot of money on the cars -we were into turning them, so we could turn our cash fast

His store went from selling 60 used cars a month to 150-175 per month. Winning.

The way he was making money in 2009 is the same way you make money today. Turning your inventory is always a solid fundamental business principle of the used car business.

Back in 2008-2009 dealers were losing their franchises and were left with some nice empty showrooms. Many of them tried to turn those empty showrooms into used car operations. A few succeeded. Many failed.

They failed because for so many years they had ignored their used car business. They had made their money on new vehicles and paid little or no attention to used.

What better time to get your head into the used car game than right now when business is good?

You have very little control over your new car business. You can always control and make a living selling used.

We’re blessed to be new car dealers. When you focus on used, you increase your odds of remaining a new car dealer. That’s all I’m gonna say, Tommy Gibbs

There’s a lot of talk these days about the “Velocity Method” of selling used cars and trucks.

There are some that would define Velocity as: “A method of giving your cars away so as to impact your gross to a point of a substandard amount that will make you want to throw up your hands, beat yourself over the head, and barf.”

My definition for the word Velocity: the whipping boy of the auto industry that can be blamed when we use software pricing tools as the Bible, don’t use our brains and don’t use the tool as it was intended in the first place. Software is a tool. It’s not a genie in a bottle.

If you’re in a favorable market day’s supply position, why would you not shoot the moon on certain units for 10 to 20 days? If you use your vAuto pricing tool and apply some common sense your odds of improving gross profit and volume increase.

That being said, dealers today have never been smarter when it comes to understanding inventory turn. By and large, most dealers really do “get it.”

You don’t have to give all your units away, but you have to be smart enough to know how to turn your inventory. Being smart means knowing when to pull the trigger.

Dealers often miss the chance to take a shot at making some big grosses because their vehicles are hung up in recon for the first 10 to 20 days of their shelf-life. Those first 20 days are always when you make the most money.

As you move forward, think about the choices you have:

1. Hold a high gross profit per unit.
2. Improve your volume with lower grosses.
3. Improve your volume and be smarter about pricing and gross profit.

In today’s market, your best chance is #3. That’s all I’m gonna say, Tommy Gibbs

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 will have to become more efficient when it comes to managing your expenses. And, 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.

If you know your history, you know that a couple of the reasons dealers added packs and charged full retail from the service department was because sales managers worked from cost up.

This is no longer true. 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. (In the near future our UpYourGross software will track this for you.)

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.

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

1. I trust your good judgment.

2. How can I help?

3. What do you think?

4. I’m proud of you.

5. We can fix this.

6. You’re important to our team.

7. It’s not a problem. It’s an opportunity.

8. I need your help.

9. How can we get faster and better?

10. Tell me more.

11. What do you want to be when you grow up?

12. Whatcha got?

13. What’s working?

14. What’s not working?

15. What’s the number one complaint you’re hearing?

16. You have my full support.

17. What else?

18. You’re the best.

19. Love ‘ya.

20. Let’s go to work.

That’s all I’m gonna say, Tommy Gibbs