Managing a used car inventory is a complex process, and while data analytics is a powerful tool, relying solely on it may lead to missed opportunities and pitfalls.

I must state, I’m a big fan of data. vAuto and some of the other great tools out there.. In my opinion vAuot is the gold standard of automobile data.

And, I own my own software product called UpYourGross. One of my favorite workshops to teach over the years is “When Common Sense Meets Technology.”

Dealerships should also draw upon their experience, wisdom, knowledge, and common sense to make better decisions. Here are 8 reasons why:

1. Data Can’t Predict Local Market Nuances

While data can show trends in broader markets, it often fails to capture the unique nuances of local markets. Management knows their customer base better than any algorithm. They understand which cars sell quickly in their region, the types of vehicles their clientele prefer, and which models are in high demand at different times of the year.

2. Historical Data Can’t Always Predict Shifting Trends

Used car markets are dynamic and can shift suddenly due to external factors like fuel prices, economic changes, or government regulations. Relying on past data alone might cause dealerships to miss emerging trends.

3. Human Intuition Can Fill Gaps in Data

While data can be comprehensive, it doesn’t always tell the whole story. For example, it might indicate that a specific model is a slow seller nationwide, but a dealership’s intuition and historical knowledge might suggest the opposite due to local preferences or promotions.

4. Experience with Vehicle Condition and Maintenance Costs

Not all used cars are the same, even within the same make and model. A car’s condition, maintenance history, and current mechanical state can significantly affect its resale value. Let me say this a different way; the used car you are looking at is an absolute “one of a kind.” There’s not another one like it in the entire world. Your eyes are on it and you know what you’re dealing with.

 5. Pricing Sensitivity May Vary Across Markets

Data-driven tools may set price recommendations based on averages, but those averages may not apply everywhere. Local economic conditions, competitor pricing, and even customer buying habits can influence what price a dealership can set for a used car. That said, price sells cars.

There’s an old saying about a car bought “right” is half sold. That’s sorta true, but never forget every used car has a price that it will sell for. When you have a car that you can’t sell, often it’s because you haven’t price it “right enough,” to make it go away.

6. Personal Networks and Relationships Matter

Dealership managers often have extensive personal networks and relationships with wholesalers, auction houses, and even other dealerships. These connections can lead to valuable insights and opportunities that are invisible to a purely data-driven approach. There’s lots of knowledge out there. Be smart enough to know what’s good knowledge and what’s not.

7. Gut Instincts Can Lead to Bold, Profitable Moves

There are moments when gut instincts, honed by years of experience, lead to bold decisions that data would never suggest. These instincts are based on accumulated wisdom, market feel, and an understanding of human nature. I once worked with a GM who seemed to have a horseshoe up his butt when it came to guessing the market. He would put on a big used car sale in the middle of a snowstorm and knock it out of the park.

8. Common Sense Helps Avoid Over-reliance on Trends

Data may highlight trends that appear promising but might be short-lived or irrelevant to a specific dealership. Common sense, grounded in real-world experience, can help avoid chasing trends that won’t deliver long-term benefits.

I’ve already mentioned the importance of common sense. Never sell yourself short, but don’t think that you’re so smart that the data doesn’t matter. That’s all I’m gonna say, Tommy Gibbs

Recently I got my normal early morning start…up early, some computer work, wrote a couple of articles, and headed to the gym. After the gym, I had a couple of errands to run but felt a little hungry after lifting all those heavy weights.

Because I’m conscious of eating healthy, I decide to zip through Taco Bell and grab something with some nourishing protein in it.

I pull up to the menu board and can’t find any of their breakfast food on the menu. About that time a little voice says, “Welcome to Taco Bell, order when ready.”

I’m still trying to find breakfast on the menu. Finally, I speak back into the little box and say, “Hey, I can’t find the breakfast menu.” Crickets.

I’m thinking, ok they must be busy, so I’ll just pull around to the window and order. I pull up to the window and the worker opened the window. I say, “Hey, what’s for breakfast?” She says, “We’re not open.”

I say, “What time do you open?” She says, “8:00.” Oh, ok…I pull up to the exit driveway and look at the clock on my phone. It’s 7:59.

I wonder, would she have been fired if she had said, we don’t open until 8, but it’s only one minute early so I’ll take your order. Or, I guess she could have said, drive around the building and you will be on time.

This reminds me of when I was a new car dealer. Back in those days, we opened the service department at 7:30 am. There would be customers lined up outside the service doors waiting for the doors to open. The service writers would be inside standing at their podium getting ready for the day and staring back at the customers.

“It’s 7:25, hey we’ve got customers, let’s open the door and get them on their way,” said no one ever.

Of course, you can imagine when Tommy hit the building, he’s screaming, “Open the door and take care of our customers.”

Now, what do you think the pushback was when I chatted with the service director later in the day about this hot topic?

“Boss, if we do that, we are training the customers to show up earlier and earlier.”

OMG, what a horrible thing that we train the customers that they can count on us to exceed their expectations and get them on their way lickety-split.

Does one-minute matter?

Maybe not to you and the Taco Bell bunch, but it matters to me and your customers. That’s all I’m gonna say. Tommy Gibbs.

I want to speak to those of you that are in charge of the hiring and struggle to find that superstar used car manager. The used car manager you need may very well be right under your own roof, and you’re walking right by him or her a dozen times a day. For whatever misconceived reason, when you need a used car manager, the first thing you want to do is find a used car guru that works someplace else and lure them away. I don’t have to tell you the challenges of hiring from the outside. I don’t have to, but I will. 1. The person you hire isn’t going to have the same culture that you’ve been working so hard to develop. 2. Their thinking about the used car business isn’t going to necessarily align with yours. That doesn’t mean either of you has it right or wrong. It just means it’s going to be frustrating and more than likely expensive. 3. If you’re running an ad in Automotive News, most of the respondents are going to be from outside your area. I’m not even going to attempt to list all the issues tied to bringing someone in from afar. If you don’t understand those issues then you’ve got a lot more problems than I can help you with. 4. When you hire from the outside you are looking for a miracle worker to fix the mess left from the last miracle worker. Most likely the mess will get bigger. All you’re doing is rinse and repeat. 5. You’re doing nothing to encourage people to want to grow and develop within your organization when you keep going to the outside. You need to promote from within. The real answer is that you don’t need someone from the outside with a bunch of experience. What you need is to commit to giving someone from within a chance and a whole bunch of your personal time and energy. What you need is: 1. Someone that’s a young “thinker.” 2. Someone that has high energy. 3. Someone that believes in your culture and store. 4. Someone that’s coachable. 5. Someone that has common sense. 6. Someone that understands technology. 7. Someone that has integrity. 8. Someone that has a strong work ethic. 9. Someone that has good communication skills. 10. Someone that’s hungry. If you don’t have someone or multiple someones like this in your organization then you need to rethink your organization. That’s all I’m gonna say, Tommy Gibbs

Do The Care?

THIS IS DIFFICULT What’s difficult? What I’m about to say is difficult. I don’t like saying it, but it’s the truth. People lie. When they lie the impact is expensive and painful. What lie am I talking about? It’s the lie of: “Yes boss, I’m all in.”“I’m with you.”“Let’s rock this thing.”“I think you’re brilliant.”“This will take us to the promised land.” They are looking right at you shaking their head north and south on the outside, but on the inside their head is going east and west and they are thinking, “No way!” Behind the scenes they are circumventing whatever it is you’re trying to do. They don’t want the change you’re trying to implement, and they have convinced themselves that the old way is the best way. They have a hidden posse of followers that they have gathered up to help spread the negative propaganda. They will act like they are in the boat rowing with you, but at the same time they are drilling holes and letting the water seep in. They will play along with you for a period of time as if they support the idea, but plant seeds of doubt to convince you that you’ve got it wrong and that we need to go back the other way. In the end, one of two things will happen. You will listen to them and bail out of the idea. Legacy thinking wins again. Or you figure out what’s going on and send them packing. Either way it’s going to be expensive and painful for you.It would be a lot less expensive and painful if you had figured it out sooner.You’d figure it out a lot sooner if you would just pay attention. That’s all I’m gonna say, TommyOne of my favorite authors and bloggers is Seth Godin. Seth once wrote “that when staff members aren’t doing what you would like them to do it’s not due to ignorance. It’s due to the fact that they don’t care about what you care about.” Getting people to care about what you care about isn’t necessarily about having more meetings and training sessions. Of course, that activity is a part of giving people what they need to know. Knowing something and doing something is what separates the good companies from the great companies. One of the best things a leader can give to his/her organization is to set the atmosphere for a defining culture and to make sure there’s a clear understanding of the following facts: Everybody has the same product.Everybody has great prices.Everybody has technology.Everybody has trained technicians.Everybody has good selling processes.Culture is what will separate your organization from your competition. Most of the time upper management “gets it.” The breakdown occurs at the next level. Far too often we don’t get enough influence from the core staff to make a real difference. A few are talking the talk, but most aren’t walking the walk. People must “see it” in order to start to “believe it.” Your challenge is to get more of the “next level” involved, engaged, and believing they can make a difference. Until you do so, you’ll hold some nice meetings. Do some nice talking. Print some nice posters. Create some nice name badges. Feel good about yourself. But not much will change. That’s all I’m gonna say, Tommy Gibbs

One of my favorite authors and bloggers is Seth Godin. Seth once wrote “that when staff members aren’t doing what you would like them to do it’s not due to ignorance. It’s due to the fact that they don’t care about what you care about.”

Getting people to care about what you care about isn’t necessarily about having more meetings and training sessions. Of course, that activity is a part of giving people what they need to know.

Knowing something and doing something is what separates the good companies from the great companies.

One of the best things a leader can give to his/her organization is to set the atmosphere for a defining culture and to make sure there’s a clear understanding of the following facts:

Everybody has the same product.

Everybody has great prices.

Everybody has technology.

Everybody has trained technicians.

Everybody has good selling processes.

Culture is what will separate your organization from your competition.

Most of the time upper management “gets it.” The breakdown occurs at the next level. Far too often we don’t get enough influence from the core staff to make a real difference.

A few are talking the talk, but most aren’t walking the walk. People must “see it” in order to start to “believe it.”

Your challenge is to get more of the “next level” involved, engaged, and believing they can make a difference.

Until you do so, you’ll hold some nice meetings. Do some nice talking. Print some nice posters. Create some nice name badges. Feel good about yourself. But not much will change. That’s all I’m gonna say, Tommy Gibbs

I’ve always encouraged dealers and managers to track ROI. I’m convinced it’s a critical piece of information that everyone needs to be aware of. By doing so the bottom line will increase.

If nothing else, it makes you aware of how important speed is when it comes to making money on used cars. (Or new for that matter.)

But let’s be clear. We pay our bills, and we get paid by generating gross profit.

Lots of gross profit.

It’s not about giving all your inventory away. It is about understanding which cars you can make money on and which ones need to be turned faster.

The question often comes up, “When does the clock start ticking?” Does it start with the actual day you own it, or does it start when the car goes on the lot/online?

Let me make this as clear as I possibly can. It starts the moment you own it.

Period. No exceptions, no ifs, ands, or buts.

The gross profit and ROI clock are ticking from the moment you own it.

If you want to trick yourself by assigning a different date once the car’s online, then go ahead; it’s your store you can do what you want. What you can’t do is change the math.

It is what it is. It’s a depreciating asset. Your ROI and Gross Profit are going south minute-by-minute, day-by-day.

Understanding the connection between ROI and Gross Profit makes you smarter. Be smart. That’s all I’m gonna say, Tommy Gibbs

I trust your good judgement.

Those are five very powerful words.

One of my favorite statements, when people come to me seeking guidance on making specific decisions, is “I trust your good judgment.”

Granted they will sometimes make decisions I might not agree with, and that’s the best part.

Why?

Because it gives me a chance to coach them in a positive way.

I don’t have to tell them they were wrong. I simply ask them if they considered coming to a different conclusion by doing whatever?

I might say next time it might be better to blah, blah, blah.

Only in a rare set of circumstances would I bust them over a decision they have made.

If you want to build a powerful team of leaders look for opportunities to say, “I trust your good judgment.”

That’s all I’m gonna say, Tommy Gibbs

Your inability to move fast is a killer for your used car business. Moving fast puts you in the winner’s circle. Not moving fast puts you in the loser’s circle.

The speed of your service department has a direct impact on your ability to produce gross in the used car department. You cannot afford to wait 7 to 10 days to get unit online and on the line.

Unfortunately, many service managers haven’t been trained to understand that your used car inventory is a depreciating asset and it’s costing you money every day it’s not available for sale.

I’m not selling my workshop with this newsletter, but I always encourage dealers to include the service manager in my used car workshops.

I think in some cases service management gets caught up in the day-to-day issues with your retail customers and they don’t pay attention to what’s going on with your used cars.

They need to continuously be educated about how fast the market can change on a used car and what it does to the bottom line of the dealership.

If you want to improve your speed, then you need to take a hard look at my “Life Cycle Management” process.

“Life Cycle Management” will change your used car world forever, make you lightning-fast, eliminate wholesale losses, improve turn and gross profit.

Sometimes your people are lazy or someone they just don’t know.

Regardless of the reason, it gets back to speed being the killer and speed making you a winner. That’s all I’m gonna say, Tommy Gibbs

If I get asked this question once a week, I get asked this question 100 times a week. It’s generally phrased as, “We can’t find inventory, do you have any suggestions?”

These are smart, intelligent dealers and managers asking the question. These are people who are true “car guys and gals.” They are not new to the game and they know what end is up, yet they still ask the question.

They know the answer. But they hold out for a miracle that I have a secret tunnel that I can connect them to that has some gold at the end.

To quote my good friend and mentor Dale Pollak:

“The reality is that there are plenty of cars available in the wholesale market, but the margin opportunity for most is very, very small.”

So there you have it.

Dale has spoken and I shall interpret. There’s inventory out there, but you can’t or won’t pay the price.

You won’t pay the price because:

You haven’t accepted the fact that units you purchase aren’t going to have much of a profit margin.

You haven’t accepted the fact that you will need to turn and burn those units.

You haven’t accepted the fact that total gross is more important than average gross.

You haven’t accept the fact that packs and high recon costs are adding to your woes of paying the price.

You haven’t accepted the fact that paying on gross profit further complicates the retail selling process.

You haven’t accepted the fact that you need to create a greater awareness on look-to-book.

You haven’t accepted the fact that mining your customer base for potential sellers is worth more than a 60-day trial run.

You haven’t accepted the fact that the number one issue of low grosses is you sell too many units late in the life-cycle.

You haven’t accepted the fact that many good things come to the table when you find a retail buyer at some number.

These are just a few of the things you haven’t accepted, that are causing you not to be able to find the inventory you need.

It’s important to know where to buy cars. It’s even more important to know why you aren’t buying them. That’s all I’m gonna say, Tommy Gibbs