1. I wish we could do away with packs.

2. I wish every sales person worked his or her entire deal on a tablet.

3. I wish we could eliminate cashiers.

4. I wish we had salaried sales people with annual bonuses.

5. I wish we had salaried management with annual bonuses.

6. I wish we didn’t have to rely on processing fees to make a nice bottom line.

7. I wish we had two-tiered pricing from the service department to the used car department.

8. I wish every service writer presented the menu on a tablet.

9. I wish we didn’t have to negotiate prices.

10. I wish we didn’t have “towers of power.”

11. I wish sales people didn’t sit behind a desk to work with a customer.

12. I wish sales management & sales people had a 40-hour workweek.

13. I wish we could get units through service in 3 days.

14. I wish we never would have any units over 60 days old.

15. I wish we didn’t have new car rebates.

16. I wish auction fees could be reduced.

17. I wish we focused more on “leading” rather than “managing.”

18. I wish every dealer was in a 20 group.

19. I wish your showroom didn’t look like a showroom.

20. I wish I’d see you at the NADA convention.

21. I wish 75% of a sales transaction could take place online.

22. I wish you’d get 12 turns per year.

23. I wish we could rid ourselves of “Legacy Thinking.”

24. I wish you would finally hire me.

25. I wish you a great holiday season.

That’s all I’m gonna wish for, Tommy Gibbs

I’m a big proponent of forecasting. It lays out a map as to where we are going. Although there are detours along the way it gives us a chance to get to our final destination.

I’m an even bigger proponent of department head meetings. I believe your job as a leader should be to teach, educate, coach and encourage your team to seek ways to improve your operations. I tend to take a common sense approach to most things in life and I approach forecasting and monthly management meetings no differently.

Dealers, or any business for that matter, tend to forecast based on what they would like to do in the upcoming year. Often it’s based on statements such as “we need to increase our sales by 10%” and/or “we need to reduce expenses by 15%.”

Saying you want to increase your business by 10% sounds good, but if you don’t have a plan to get there what good is it? I’ve always been baffled by annual forecasting.

One of two things usually happens:

1. Someone is overly optimistic and/or they are blowing smoke up someone’s butt.
2. Someone serves up a low ball because they don’t want the pressure of hitting an unrealistic number.

Although dealers want to see an improvement in the next year’s numbers, what they really want is a number they can take to the bank.

In order to do a realistic forecast you have to take into account staffing, inventory, and market conditions. How can anyone do a forecast and predict what those three pieces of the equation are going to look like 3, 6 or 12 months down the road?

I’m not saying you shouldn’t do an annual forecast, but doesn’t it make more sense to adjust that forecast monthly or quarterly based on those three fundamental elements?

Because most leaders don’t make those adjustments it frustrates the management team and defeats whatever good intentions there might have been. Everyone eventually loses respect and confidence in any type of forecasting and concludes “Why bother?”

While it makes good sense to do a monthly or quarterly review of the actual numbers, managers become disillusioned with these reviews in that they become a “beat up” session rather than trying to figure out what went wrong and how “we” can fix it.

People know when they didn’t perform. What they want from upper management is leadership that gives well defined ideas and direction on how to “fix it” or make it better.

Using more common sense with your forecasting and monthly management meetings will help you grow a solid organization that generates consistent profits and sustained growth.

That’s all I’m gonna say, Tommy Gibbs

Once in a while I run into dealers and managers that struggle with how long they should keep units. It can create conflict so severe that someone (the manager) ends up losing their job.

Over the years I’ve run into a few people that are adamant that it’s ok to keep units past 60 days. I’m ok with someone having a different business model that really works. But, I question if it’s really working when you do the math.

Take a look at the chart and the bullet points below:

1. The first one is a car that you make $1200 on, hold 25 days and end up in the sweet spot of 117% (Sweet spot 110 to 120%)

2. The second one shows that if you keep that same car for 60 days, in order to achieve the same ROI you would need to make $2900 in order to get to the 118%. Is that doable?

3. The 3rd example shows that if you hold that same car 60 days, make $1200 on it, you end up with an ROI of 49%…not good, but if you held it 60 days you are probably happy to make the $1200.

4. The 4th example shows that if you make a $1200 gross on a car that you hold for 90 days you end up with a horrible 32% ROI…is that a good use of your money?

5. The last example shows that if you hold that same car for 90 days, in order to hit the sweet spot you would need to make $4300 gross. Can you really do that after 90 days?

Holding cars based on the theory that you can’t replace them is “false justification.”

You might be a rock star, but unless you do the math you might be living under a rock. That’s all I’m gonna say, Tommy Gibbs

It’s Thanksgiving and time to give thanks. If you’re like me for sure you have a lot to be thankful for. Among many things I’m thankful for are your friendship and support.

Thanksgiving also starts the close out of the year. It centers around Black Friday and rolls through the last week of the year. Like it or not, 2017 is already here. I’ve listed some very basic ideas you need to take into consideration that will help you finish strong and get ready for your best year ever.

A. Re-commit yourself- and your thinking towards being the very best you can be. Take stock of all those great ideas running around in your head. Write them down and make a commitment to get them done by certain dates. Post it on the wall in several places that you will see frequently. If you have a private restroom, put it on the mirror.

B. Re-evaluate-the appearance of your inventory. Let’s do a little checklist:
1. Look at your inventory online. Are they all there? 40 + pictures & prices posted?
2. Take a lot walk. Are the vehicles in straight lines?
3. When was the last time the entire lot was rotated?
4. Are you using angles to display your inventory?
5. Do you have hang tags? If so, do they all have hang tags?
6. Are they nasty, dirty on the outside?

C. Refocus-To be successful in the used car business (or any business) you have to be focused and be totally committed. Your entire management team has to understand your commitment to the business. Make sure a weekly lot walk is part of your routine. Every car in your inventory must be touched. If it’s in service, touch it. If it’s in prep, touch it. If it’s in the budget center, touch it. Everybody touches it.

D. Re-Recon-Take every unit over 30 days old back through a recon process. (You’ve already missed your best window of opportunity to make gross; that would be the first 20 days.)

E. Re-Invest-in yourself and your management team. Do something to gain some knowledge. Hire me, visit CarMax, or visit a dealer friend in another state that does a good job in used. Attend a workshop. Join a Twenty Group. Join a Used Car Twenty Group. (Hire me!) Do something besides sitting there and waiting for something to happen.

F. Re-think- your management team. Do you have the right person running your used car operation? Yes, that person may have been with you for years. Loyalty sometimes equals mediocrity. Maybe they have some great skills, but the fact is that you may not be making the best use of their talents. Used car managers today have to be “Asset Managers.”

The dealers with the most successful used car operations are those who have taken ownership of the used car department. The more involved you get, the more success your dealership will have.

I’m thankful for lots of things this holiday season and I’m especially thankful that you’ve taken the time to read my little Zingers. That’s all I’m gonna say, Tommy Gibbs

Ok, I don’t hate them, but I’m becoming less and less of a fan of them for sure. As a new car dealer for over 20 years I found packs to be a useful and profitable tool to increase profits and flexibility.

As for being against packs, if they are still working, stay with them. I just question if they are working as well as some dealers think they are.

I believe that in the big picture they have outlived their usefulness. If you review the history of packs, they came about in part because managers worked from cost up. Dealers figured out that if the manager’s target for front gross was $1000, that they would hit that number if they had packs or not.

It’s very much in the family of why we charge full retail in the service department to the used car department. Over the course of time charging full retail and packs didn’t hurt front gross and it actually made the dealership more money. Over time packs have become their own profit center.

These theories and concepts have worked well for a long period of time. The Internet has dramatically changed the game. More and more dealers are pricing to market vs pricing based on what they have in the car.

They are not working from cost up like they did in the good old days. And, the sales person has very little control over grosses, as the price has been set before the customer even shows up. The reality is it makes very little sense to pay sales people on gross profit in today’s market.

As my good friend Dale Pollak likes to point out, packs are nothing but a tax on your vehicle. You are taxing yourself and making it that much more difficult to be competitive.

As more and more CarMaxs, Varooms, Echo Parks, Texas Directs, Carvanas, Auto Nation USA get into the game, the less relevant packs (taxes) will become. When you’re being charged full retail in service and you also have packs, you are adding additional cost to your inventory that others don’t have.

Every time you go to appraise a unit or go to the auction, those additional charges are running around in your head and are making it that much harder to acquire inventory. I do believe that with better strategies dealers can improve their average gross profit…but, not by much…thus the only way to win the game today is to sell more used cars. To sell more used cars you have to be able to get more used cars. To get more used cars you have to have an acquisition advantage.

If you’re still using packs keep using them if they are working. But, you should keep asking yourself if they are really working as well as you think and if they are putting you at a disadvantage in the marketplace.

I don’t hate packs, but I do hate it when we lie to ourselves. That’s all I’m gonna say. Tommy Gibbs