If you have cars aging on you and you are dumping them in the wholesale market and losing money, then you are totally on the wrong path.

If you are paying attention to the right things and if you understand that you are in the retail automobile business there should be very few units you blow out and lose money on. It’s about retailing cars before they get to the end of the cycle.

1. It starts by selecting the right inventory. Unless you are an exception to the rule, most of those aged units are auction purchase cars. There’s nothing wrong with buying auction units, but you have to think “hole fillers” and “short life cycle.”

2. Tackle my “Life Cycle Management” concept-like your life depends on it, because it does. You are either getting tired of hearing me talk about it or you have started utilizing it. Software is coming to help you. You will never get your inventory under control as long as you allow all units to have the same number of days on the shelf. You have to identify and acknowledge what each car is on day 1 not day 61.

3. Making smart and quick decisions on trade-ins you bury yourself in-Happens all the time. You step up for whatever reason, but since you don’t use “Life Cycle Management” you treat these units just like every other unit. Look Einstein, if you buried yourself in it on day one it’s only going to get worse. The best thing you can do is price that unit below market and make it disappear.

4. Don’t get too excited-about a successful short term run. It will kick your butt every time. Stop it. All of a sudden you have a strong 30 day period when you sell 10 XYZs. For whatever reason they were hot. So, what do you do? You run out and buy 20 more of those bad boys. And guess what happens? They sit and they sit. And now you have some more huge wholesale losses staring you in the face.

If you go back and analyze those first 10 you popped out like hotcakes you will probably find something unique and special about those units. Might have been miles, might have been color or it might have been the price of gas during that stretch that influenced those sales. I’m not saying you shouldn’t get excited and try some more of those hot babies, but you need to be smart enough to keep your enthusiasm under control. You have much more control when you take them in small doses rather than choking yourself to death.

5. Understand that you are in the retail business-You need to make sure you are pricing your cars to market early enough and attractive enough to find a retail buyer early in the life cycle. In most cases, if you analyze your aged units you will discover that for whatever reason you overpriced them too long. Key words here are “too long.”

When you are retailing your retail pieces you don’t have to worry about aged units and wholesale losses. That’s all I’m gonna say, Tommy Gibbs

The longer I’m in this business the more I scratch my head when I come across dealers that allow their managers to keep units past 60 days. I’m not talking about one or two here and there. I’m talking about a consistent pattern of multiple aged units.

There’s no way that they don’t know that it doesn’t work.

So, why do they do it? The only thing I can figure is they just don’t have a commitment to having a disciplined organization and/or they don’t understand the math.

I’m not going to bore you with the whole ROI calculation story, but want I do want to point out to you is by and large you don’t make much money on anything you have that’s over 30 days old.

So, how do you think you’re making money on all that stuff you keep past 60 days? Have you ever thought about tracking it?

Maybe they just don’t know how to say no, when a manager asked if they can keep it a little longer.

Here’s the best tip I’m ever going to give you. The next time a manager asks if they can keep it a while longer, hold up your hand, palm facing away and say “Just talk to the hand.” That’s all I’m gonna say, Tommy Gibbs

1. Study The Data- Be a student of the game. Use Auto Count’s Reports each month to confirm what’s selling and what’s not. Use vAuto’s stocking tool to determine the fastest moving units to stock. Combine those reports with Auto Trader’s reports and you will have a competitive edge. The more units you step up on the more cars you sell at retail.

2. Press Your Cost Down-This is probably the simplest and most effective thing you can do to improve your business. Know what your average cost per unit is every day and do what you can to reduce it. There is no magical number. It’s about keeping the less expensive units and making sure the more expensive ones turn fast.

3. Know Your ROI-Every deal should be tracked for ROI. As you are working a deal you not only need to know how much gross you have, but what the ROI is. Go to FixROI.com and plug in three numbers. Shoot for 110 to 120% ROI. By knowing your ROI you will know what’s working and what’s not.

4. Attack the 10 Most Expensive Units in Stock-Make a list each day of your 10 most expensive units in stock. With one exception make sure they are priced really, really right. The one exception is if you know you always make money on a unit that’s on the list then use some common sense, don’t give it away. Consider putting bonus money on those 10 units regardless of the number of days they have been in stock.

5. Life Cycle Management- There is nothing, absolutely nothing you can do that will improve all aspects of your used car business more than understanding my process of “Life Cycle Management.” Think Fast, Be Fast-You are working with a depreciating asset. Pull the trigger quickly on units that you are suspicious about. Don’t hang on to them hoping and wishing something good is going to happen. Early losses are far better than late losses. If you are paying attention and recognizing problem units early in the life cycle then you will have a lot less need to lose money on them at 45 or 60 days. Knowing how to use EWR (Early Warning Radar) pays big dividends.

That’s enough for now. That’s all I’m gonna say, Tommy Gibbs

Several times a week someone will ask me, “What should the percentage of wholesale units be relative to the number of used cars retailed?”

While there may be some statistical data with 20 groups telling what dealers are averaging as a percentage, that doesn’t mean that there’s an acceptable number to be shooting for.

My answer to the question is, “There is no number.” Having said that, if you’re the Dealer or General Manager it’s a number you should always keep your eye on.

I’m a bit old school, but as a dealer I looked at every retail deal and every wholesale deal once it had billed and booked. My initials went on every deal.

I would often pick the phone up and say to the used car manager, “Tell me about this unit you lost $500 on” or “Tell me about this unit you wholesaled and made $300 on.”

I wanted to plant the seed in the used car manager’s mind that I was always looking at these units that were being wholesaled. What I was trying to do was create a little element of doubt as to whether we could have retailed this unit.

I know that there may be some dealers who may not agree with this statement, but I truly believe you should retail everything that has a breath of life left in it. Why should you let someone else gain a customer and make the money?

Sure, you will have some issues. But the pluses far outweigh the minuses to wholesaling a lot of units. We are in the retail automobile business and we should retail everything we can.

Don’t worry about the percentage. Worry about retailing more units. That’s all I’m gonna say, Tommy Gibbs

One of my favorite things to do when working with dealers is to discuss their oldest used vehicles in stock. If the oldest unit is 55 days old or 155 days old, 99.9% of the time they all have a storyline tied to them.

The conversation will often evolve to where the used car manager will say “We have it priced #1 in the market, it’s a nice car and I don’t know why it hasn’t sold.”

Some of you won’t like my response. But, my response is based on reality. And the reality is, if it’s priced #1 in the market and it still hasn’t sold…it’s not cheap enough.

We’re not talking about a fresh piece. We’re talking about your oldest unit in stock. And, it may have a flaw you failed to identify soon enough.

You’ve had it way too long. It’s time to make it “cheap enough” and make it go away.

That’s all I’m gonna say, Tommy Gibbs