Quotes I often hear when I’m in dealerships:

1. “We never miss a trade.”
2. “We don’t try to steal trades.”
3. “We put top dollar in every unit we appraise.”
4. “We’re not going to miss a deal at the front door.”

Fundamentally none of these are true. Everyone misses trades.

What’s funny is when you go to the auctions to buy cars you always pay more for them than you would if that car was sitting at your front door.

Stealing trades is one of those things that falls into the “We’ve always done it that way” category.

I believe there are four fundamental causes for trying to steal trades:

1. The fear of the bump. Used Car Managers fear the bump from upper management so they low-ball the trade thinking the bump request is just around the corner. The used car manager is protecting their “territory” by low-balling the trade.

2. Pay plans also tie into stealing the trade. The manager is protecting their own personal pocketbook especially in those cases where the used car manager is only paid on used car gross. Even if they are paid on total gross it still creates “trade stealing.” Gotta make some gross someplace.

3. Aged inventory. We need to steal the trades to make up for the sins we have on the lot right now. As long as you allowed aged inventory to exist you’re going to have people trying to steal trades.

4. The old adage that you “make the money,” when you buy or trade the unit. That’s only partially true. You “make the money” when you sell the unit and you make the most when money when you sell it fast.

Here’s the fix:

1. Put solid disciplines in to eliminate aged inventory. (My Life Cycle Management Process.)

2. Put top dollar on every trade. I said top dollar on every trade. No bumps. Pretend you are at the auction. Step up from jump-street.

3. Change the pay plans. Paying on gross profit becomes more archaic every day.

4. Stay focused on improving your look to book. Review every vehicle that was appraised from the previous day that you didn’t get.

When you stop stealing trades you improve the quality of your used car inventory.

When you improve the quality of your used car inventory you sell more used cars.

When you sell more used cars you become more confident that you can put top dollar on trades.

When you put top dollar on trades you sell more new and used cars.

Stop stealing trades. That’s all I’m gonna say. Tommy Gibbs

There’s a lot of conversation these days about a surge of off-lease cars flooding the market and hurting wholesale values.

Oh stop it! Don’t listen to all that silliness. Of course values are going down. It’s not very often that used car values go up.

Of course you have to pay attention to the market. It’s not any different today, tomorrow, this year or next year. It’s always like that.

What you should be thinking is stick to your core principles. Do those fundamental things each and every day that you know you need to do.

Do What You Know!

1. Make good decisions
2. Price them right
3. Price the problematic cars to sell faster
4. Speed your processes up
5. Be smart with high dollar used cars
6. When you miss a car, deal with it quickly
7. Don’t operate in fear
8. Do a Trade Walk every day
9. Turn units faster
10. Press your cost down

You won’t get hurt if you pay attention and do the things you know you need to do. And, do them every day. Do what you know.

That’s all I’m gonna say, Tommy Gibbs

I frequently write articles trying to get you to take certain actions in order for you to avoid having aged inventory.

The more I study the subject and the more dealers I work with, the more I become convinced that there’s very little money being made on anything over 30 days old.

The biggest problem with aged units is the impact on your ability to sell cars today. Nope, I’m not even talking about your ability to price and sell the aged units. I’m talking about your ability to trade for more vehicles as you work new and used car deals.

When you have aged units, there’s a little voice deep inside the dark corner of your brain saying, “Hey, be very careful, don’t step up too much on that trade. Bossman, you’ve got a bunch of other issues out there on the lot and if you step up on this one, you’re just creating more problems.”

It’s not just that you can’t make any money on the aged units; you can’t sell fresh units or new units because your existing inventory keeps your brain all twisted up.

Keep an eye on that dark corner inside your brain. That’s all I’m gonna say.Tommy Gibbs

I often have conversations with dealers and managers about units they have had in their inventory too long and/or those vehicles that might be in the $25,000 to $35,000 range.

I question whether they are profitable or not. For those managers who want to keep units until they can retail them I sorta agree in that I’d like to see you retail them, but faster. I hate dumping retail pieces in the wholesale market.

I’m convinced that keeping them past 45 to 60 days doesn’t make you money unless of course you make a killer gross. I’m also convinced that the longer you keep the more expensive vehicles, the further you erode your profits unless of course you make some awesome grosses which isn’t too likely.

So, here’s the deal…if you disagree with me “prove it.” Yep prove it. Start tracking the ROI on any unit you retail over 60 days old and any unit that you have over $25,000 in.

Come on, bring it on. Prove it to me. Prove it to yourself. Remember when calculating ROI, the standard is to use only front gross and the sweet spot is 110 to 120%. You can use my ROI calculator. Go to FixRoi.Com.

I’m looking forward to you proving me wrong. Bring it on. That’s all I’m gonna say. Tommy Gibbs

The final in a 3 Part Series.

1. Think in terms of improving gross in small increments. Try paying the managers a bonus for achieving nominal increases each month. Start by improving gross by $50 a unit. Do that over the next year and you will see a slow and effective way to increase your gross. You can only eat the elephant one bite at a time.

2. How could I talk about your grosses without mentioning “Life Cycle Management?” Life Cycle Management is designed to help you create a sense of urgency on those cars that are most likely to kill your grosses. The faster they go away the better your gross will become.

3. Track GAP and ROI. When you do, grosses go up. How much are you giving up once the customer shows up at your store with a price from the Internet? If you don’t know then you can’t fix it.

4. Are you stocking the wrong stuff? If the data tells you there are a lot of Impalas being sold in the market then it stands to reason that there must be are a lot of them for sale? And wouldn’t it be logical to assume that it will be hard to make money on those units since there is a high day’s supply? When it comes to making gross, the law of supply and demand is certainly in place. You don’t have to be an economics major to understand this fundamental principle.

5. Shoot the moon on the right stuff. Since the beginning of the car business, higher grosses are driven by some home run cars. You have to understand which ones are home runs, singles, doubles and triples.

Fix what you can fix. That’s all I’m gonna say, Tommy Gibbs