A good friend of mine who passed away this past year had a saying and it goes like this: “You can justify anything you want to justify.”

Dealers and managers will often try to justify keeping units past 60 days. If you’re a believer in the value of keeping up with ROI, I doubt there are many cases in which you can prove the justification.

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 that 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 that 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 that 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 what I call “false justification.”

Sometimes when we justify things in our own mind, we are simply lying to ourselves and those around us. That’s all I’m gonna say, Tommy Gibbs

1. Average gross per unit will come down. (Doesn’t mean it has to be that way at your store.)
2. Use of personal devices by consumers to shop vehicles and prices will increase.
3. Nice used cars will be scarce.
4. You will struggle to make ANY gross on aged units. (Well, duh, you’re not using my Life Cycle Management process)
5. Finding sales people who want to work the hours and be paid on gross will become even more difficult.
6. Maximizing the use of software and technology in your dealership will challenge you.
7. The franchises you represent will put more expenses on your side of the table.
8. The manufacturers will increase the pressure on you to hit market share.
9. You will accept aged units as a necessary evil of the automobile business.
10. Your average cost per unit in stock will go up.
11. You will become more dependent on your used car department to save your new car department.
12. The amount of water in your used car inventory will increase.
13. Your dealership will be sued because someone didn’t “just handle it.”
14. Your CPA and legal fees will go up.
15. You will waste 50% of your advertising dollars and you won’t be able to figure out which 50%.
16. F&I income will feel stress from the regulators.
17. Improving recon time for used going through your shop will be a high priority. (You will talk about but not fix it.)
18. You’ll hire managers from the outside because you haven’t developed your own people.
19. You will wholesale some used cars that you should have retailed.
20. You’ll think about hiring me, but you’ll talk yourself out of it…again.

Well duh. Most of these are always true. Some things change. Many don’t.

Happy New Year to you too. That’s all I’m gonna say, Tommy Gibbs

You’ve tried everything else to move that aged inventory. Might as well try this:

“Mark Down Tent.”

A “Mark Down Tent” is not a permanent fixture. It’s to be used from time to time when you are trying to unload problem cars. You know those units that you all of a sudden discovered you are killed in and have had hanging around way too long.

Put up a tent that can hold 3 or 4 units, as close to the road as possible. If permissible, hang banners around it that say “Mark Down Tent” and use the little signs that you can stick into the ground with arrows to the “Mark Down Tent.”

Promote the “Mark Down Tent” in all your ads including your website. You might want the receptionist to answer the phone, “ABC Motors, have you heard about our Mark Down Tent?”

Using a marker, start off by putting a very, very high retail price and the date on the front windshield. You will be marking the price down each day by $500, with the date beside the new price until sold.

Draw a line through the old prices and dates. The sales person’s commission on day one will be $2000. Each day that you mark the car down by $500 the sales person’s commission will be reduced by $100.

Now don’t panic. I said to start off with a really high retail price. If you get to a point where you are uncomfortable with the pricing going too far south you can always pull it from the tent.

The idea is to create a sense of urgency with both the customer and the sales person to take action.

The reason you now need to put cars in the tent is you didn’t have a sense of urgency soon enough in the first place. That’s all I’m gonna say, Tommy Gibbs