Business has been pretty good hasn’t it? If you have access to the financial statement take a peek at your net profit to sales percentage. Are you in the 4 to 6% range? If you’re only in the 2% range, you could be in trouble when business starts to go south.

Historically in this business dealers make the most money when they are coming off of tough times. That’s easy to understand. When things get tough dealers tighten up on expenses and get back to basics.

Thus when the worm starts to turn, dealers rock the bottom line for a short period of time. But as we all know, the better business gets the sloppier we get.

It’s been very good for a number of years now. So, where are you? Are you letting things get out of hand? Are you making money in spite of yourself?
Is it the market or is it you that’s making it happen?

Ask these questions of yourself:

1. Have you dissected every expense on the expense page?
2. Do you have too many people in the wrong places and not enough in the right places?
3. Is your selling system the selling system you think
you have?
4. Are you evaluating every trade that you don’t make?
5. Are you holding a daily “save-a-deal meeting?”
6. Are you doing a trade walk?
7. Are you utilizing my “life cycle management process?”
8. Are you evaluating all the wholesale pieces to see if they have life in them?
9. Do you have a photo booth and is your website the best it can be?
10. Have you shopped your own dealership? Have you shopped CarMax?
11. Do you hold your staff accountable?
12. Can you shorten your selling process?
13. Are you using vAuto to buy and price your units correctly?
14. Do you have the right staff that’s getting daily coaching & training?
15. Are you still doing business the same way you did 10 years ago?
16. What’s the turnaround time for a used car from the time you own it until the time it’s ready for the line?
17. Are you leading the way or are you talking the way?
18. Are you mining your customer base for nice used cars?
19. Are you relying on packs to save your gross profit?
20. Are your pay plans old, outdated and not in tune with today’s market?
21. Is your volume and gross going up or down?
22. How many turns a year are you getting with your used inventory?
23. Are you tracking ROI/GAP?
24. Are you forecasting or “hopecasting?”
25. When was the last time you let Tommy Gibbs help coach you?

These are great questions you should be asking yourself. That’s all I’m gonna say, Tommy Gibbs

Did you know that for the year 2015 you need to focus on year models 2012, 2011 and 2013s in that order?

I’ve studied this and researched it for years. Unless there is something strange and unusual about your market here’s the way it has been going back to 2002.

If you get a chance to appraise a car that happens to be any of these year models you need to think long and hard before you try to steal it. These units are going to turn more or less regardless of the make or model.

Of course you’re still going to use your vAuto appraisal tool, but these units generally fit a price point that more buyers can afford.

I would suggest you further research this by using the Experian tool called Auto Count USA. It will give you the top selling models for your market.

Use this SHEET to list them and keep a focus on the year models listed at the top of the page.

I’m often telling you things you already know, because I know how easy it is to lose focus.

Stay focused on these units and you will make more deals and sell more units. That’s all I’m gonna focus on for today, Tommy Gibbs

One of the things I’m constantly encouraging my readers and clients to understand is that keeping units past 60 days is a really, really bad business plan. It borders on insanity.

If you still have 60-day-old-plus units, and/or you’re not a believer yet, I want to give you another way to frame it.

If you had $1,000,000 in the bank and each month the bank took $100,000 of your money and said “Thank you, goodbye, and have a nice day,” how long would you keep your money in the bank?

Well, well, well—hello 60-day-old units.

If you have $1,000,000 tied up in used cars, and $400,000 of it is over 60 days old, (I see numbers like this all the time) you’re losing a minimum of $40,000 month, give or take. If you want to debate the 10% idea then say goodbye to 5% and ring up a loss of $20,000.

One thing is for sure, you no longer have the $400,000 you thought you had. You do on paper, but you don’t in reality.

I have a lot of dealers who send me their GAP/ROI spreadsheet to review each month. (If you don’t know what it is, then you should find out.)

What is so shocking is when you sort the columns by days in stock or gross profit, more often than not, there isn’t any money being made after 30 days. Yep, 30 days. You don’t have to take my word for it. Just start tracking your mess and you will see.

We are all good sales people. Good sales people like to be sold. Often, someone is selling you on the idea it’s ok to keep ’em past 60 days. And even sadder, you might be selling yourself that it’s ok to do so.

A very smart man once told me that there are three places you should never put your money; in the bank, in the bank, in the bank.

Don’t be stupid. That’s all I’m gonna say. Tommy Gibbs

As I write this I’m headed to the NADA convention. Are you going? If not, maybe you should be.

If you’re not going, I’m wondering why? Why would you not go? Don’t have time? Don’t want to spend the money? Don’t want to leave the store? None of those are very good excuses.

Now is the time to open your mind and shoot some WD 40 into your brain to loosen things up a bit. It’s winter, it’s cold and if you’re not careful your brain will freeze up and not thaw until sometime in August.

If your mindset is “the Convention is always the same” then the only reason that would be true is because you’re always the same. You get out of something what you put into it.

It’s hard for your vision to change when you sit there and stare at those same walls and same people day after day.

That’s why you need to go. You need inspiration. You need to see the possibilities. You need to go and learn something.

If you show up and find me I’ll give you a copy of my book, “The Little Used Car Book, Volume 6.” My little book is not a cure-all for your used car business but it’s guaranteed to give you some ideas and wisdom to help your bottom line.

By helping your bottom line, it will more than pay for your little trip. I’ll be hanging out at the vAuto booth (1718S), so look me up.

I’d hate to miss you this year. That’s all I’m gonna say. Tommy Gibbs

I’m thinking about half my readers know what a “wash out sheet” is and the other half probably don’t. For those that don’t, in the early years of the retail auto business, dealers used a “wash out sheet” to determine how much money they really made on the sale of a vehicle.

Here’s the way it worked. A new car comes into your inventory. You don’t know how much money you made until any and all trades are sold and thus “washed out.”

Follow the sequence. A new car creates a trade; you sell the trade. You trade in another and finally sell the last one with no trade. You then you calculate the total gross generated by the sale of that one new car plus all the trades.

It this case it took 3 transactions to determine how much total money was made. You would do the same thing if you purchased a used vehicle. If there were no trades or maybe one, the wash out occurs much sooner.

Some dealerships didn’t pay the sales person his/her full commission until the deal “washed out.” Do you think the sales person had a vested interest in seeing that the trades got sold? You betcha!

As I see the industry struggling with gross profit I have to wonder if maybe we’d be better off to go back to the old way of thinking. With technology being as sophisticated as it is today, why not calculate the total gross generated by one new car sale or one purchased used car sale?

We can all agree that to improve front gross profit, we need to work harder to sell the value of the vehicle and our organization. Most would also agree the key to long term success is going to be to improve volume.

If you’re going to improve volume it might be wise to look at the big picture by thinking about how much total “wash out gross” we are generating rather than just the sale of one unit.

It’s kind of like suits and ties. Keep them around long enough and they will come back in style. That’s all I’m gonna say, Tommy Gibbs