I hate it when I ride by a dealership and see a tent up with cars parked under the tent and the dealership is promoting a “tent sale.” Many of you have read my document on how to put on a real “Tent Sale,” which is not the same as what I’m sharing with you today.

Today’s subject is a “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.

As close to the road as possible, put up a tent that can hold 3 or 4 units. 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 telephone operator 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 with 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 gonnna say, Tommy Gibbs

I often have conversations with dealers and managers about units they have had in their inventory too long 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 probably 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. That’s all I’m gonna say. Tommy Gibbs

I was talking to a dealer last week about the challenge of playing the “race to the bottom” and how much he wants to stop pricing his inventory so aggressively. He wants to move to a model of selling the value of his product and organization. He believes that if he stops chasing price that he will achieve a higher average gross profit. He thinks the velocity mindset is hurting his average gross profit. He’s tired of playing his competitors pricing war games.

If you’ve followed my thoughts on this subject you know that I’m pretty convinced that if you pull back on your pricing that your grosses will go up….and, and, and…you know what’s coming don’t you? Your traffic will go down.

Screaming from the rooftops that you are a great place to buy a car won’t work for you unless you can scream it loud and clear and for a very long period of time. Your ultimate knee jerk of back to price wars would occur probably before you ran out of money.

If you follow CarMax you know they are the number one seller of used cars and don’t play much of the pricing game. Their cars are usually more expensive than yours. They have done a consistently good job of telling people, this is a great place to do business, we have lots of inventory and we will buy your car even if you don’t buy ours. That’s pretty much what they do. And, they don’t negotiate the price or the value of the trade.

We can all agree they have a totally different model than most new car dealers. Unless you are willing to convert to one-price, change your culture and are willing to spend a lot of bucks it’s not going to work for you taking the approach of “Buy here, ’cause we are great.”

I really do think one of the biggest problems in the industry (though it is getting better) is that when the customer shows up at the front door we still discount the car. This applies to new as well as used. The number one thing you can do to improve your operation and your gross profit is to learn to say “no.” Say it by presenting all those reasons why a customer should buy your car and do business with your dealership. You can only do this by preaching the message to your team every month, every week, every day. The entire team has to believe.

I recently visited with a very successful used car dealer who specializes in high line cars. He retails about 250 units a month and he gets about 1500 hits a day on his website. He said that he has noticed a trend over the last few years that people are driving shorter and shorter distances to purchase. His analysis of that is that more dealers are doing a better job of marketing their inventory online and therefore the customer can find what they want much closer to home.

As you may know Texas Direct has always used eBay as its website. In the early days they sold a large number of their vehicles online through eBay. A few years ago they relocated to an old Auto Nation Used Car Superstore facility and now sell a lot of cars to more of the local public. Yes, people still go online to find the price and car they want, but they are doing it in a shorter distant. Here’s a recent article on eBay losing traction that more or less backs up this thought process. Article

Strategy to consider:

1. Price your vehicles smarter. Everything doesn’t have to be at market price on the first day. Some should be over. Some should be below.

2. Re-price your inventory faster. Don’t let “buckets” rule your world.

3. Train and re-train your staff on selling the value of your vehicles and your organization.

4. You have to learn to say “no,” when the customer wants to negotiate when you know you are holding the winning cards. (Cars.)

Never give up on creating value, but if you give up on aggressive pricing you will be giving up a lot of traffic. That’s all I’m gonna say, Tommy Gibbs

Get ready to dig into your October financial statement.From a timing standpoint this is a perfect time of the year. I always looked forward to analyzing the October financial statement.

I can’t say that math was one of my best subjects, but I can divide by 10 real easy. At a glance I know what the averages are for any line item expenses, sales volume and gross profit.

What also makes October a perfect time is it sets the stage for the next year. Now is the time to start planning for 2014. Waiting until the last week in December to get your plan together is a really bad strategy.

This is the perfect time to dig in and firm up your fundamentals in all departments. This is the time to get back to basics. This is not the time to cut back on your training. This is when you need to amp up your thinking and stretch your organization.

If you don’t have a solid foundation of basic processes you will never maximize your success. This is the time to take control of the “evaporation factor” that’s been occurring all year long. This is the time to stop the “process bleeding.”

Your long term plan should include joining a Twenty Group and attending the NADA convention. Look, we all get lazy, and get caught up in our daily routines. Attending these meetings gets you revitalized. It gets you outside of your daily box and opens your eyes up to what the possibilities might be. Seems like a no brainer. This is the time to make those plans.

Teamwork is critical if you’re going to maximize your bottom line. To keep your team on the same page you have to constantly communicate to them what the expectations are and what processes they are expected to follow. There is no “shake ‘n bake” solution. You don’t fix it and walk away. You fix it and re-fix it.

What to do?

1. Ask yourself if you can improve your processes? If you focus on revamping your processes, what effect do you think it will have on your business? It is an absolute fact, that regardless of how well disciplined you are, over time your processes are going to evaporate. The best piece of advice I can give you is to lock yourself and your management team in a room and review every detail of your selling processes. Be bluntly honest with yourself. Then take the necessary action to get you back on track.

2. Can you improve your team? Got the wrong players? Now is the time to make the changes. If you already have the right team in place then it’s time to let them know what your expectations are and show them the plan and the path to achieve those expectations.

3. Don’t think of your planning as “you now having a plan.” Think of it as a “mission.” Plans can fall apart. When you’re on a mission you stay after it until you succeed.

I’m on a mission to get you to re-think what you’re doing…That’s all I’m gonna say, Tommy Gibbs