Well, here we are. It’s spring time. Trees, flowers and your excitement about the “selling season” are starting to bloom.

Are you running your used car department the same old way expecting different results?
 
1. Re-evaluate-Take a minute and go walk your lot. Take the blinders off. First thing you have to ask yourself is “Does it look like Nordstrom?” Ok, maybe it’s not going to look like Nordstrom, but does it look like Walmart after a big sale? You know, everything is just thrown everywhere. Let’s do a little checklist:

• Are the vehicles in straight lines?
• When was the last time the entire lot was rotated?
• Are you using angles to display your inventory?
• If you are using license plates, do they all have one or do some have them on the front, some on the rear and some not at all? Some cars do not have a bracket on the front. Why would you even bother if you can’t put a license plate on all units?
• Do they all have your decal on the rear of the vehicles?
• Are all old decals removed?
• Do you have fresh FTC stickers on each vehicle?
• Do you have fresh window stickers on each vehicle?
• Do you have the year of each vehicle on the front and rear windshield? Yes, front and rear.
• If you have other decals or markings on the windshields, do they all have same or similar markings?
• Do you have hang tags? If so, do they all have hang tags? Are some lying on the floor?
• Do they all have at least a quarter of a tank of gas in them?
• Are they nasty, dirty on the outside?
• Are you making use of your entire front row for used vehicles?
• When the public rides by or pulls onto your lot can they easily identify where the used cars are?

2. Refocus-To be successful in the used car business you have to be well focused on it and be totally committed. Your entire management team has to understand your commitment to the used car business. This doesn’t happen through osmosis and a meeting every six months. When I say entire management team I mean just that. All Sales, F&I Management, Service Management, Parts Management, Body Shop Management and the Controller. Little Johnny, the lot attendant, needs to be a part of this as well. For the next 60 days, meet with these key staff members twice a week to discuss where you are and where you’re going. Tuesdays and Fridays are best. Make sure on Fridays that they are all included in a lot walk. Do not miss a used car on this lot walk. Every car in your inventory must be touched. If it’s in service, touch it. If it’s in prep, touch it. If it’s in the budget center, touch it. Everybody touches it. You will come across issues you never knew were there and better yet you will solve them immediately. (Don’t let anyone miss these walks.) Make sure a part of that conversation includes everyone knowing how much money you have tied up in used cars and how many of those dollars are over 60 days. Yes, they need to know the dollars, not just the number of units. Make sure they also know what percentage is dead money over 60 days. Example: You have $1,000,000 in used. $600,000 is over 60 days. Make sure they understand that 60% of your money is dead and eroding fast.

3. Re-Recon-Take every unit over 30 days old back through a recon process. (You’ve already missed your best window of opportunity to make gross; that would be the first 20 days.) Most of them should not need mechanical work done, but if they do, get it handled. Most importantly, put a full clean up back on them. Whatever you have to spend, it’s going to be worth it.

4. Re-Invest-in yourself and your management team. Do something to gain some knowledge. Hire me, visit CarMax, or visit a dealer friend in another state that does a good job in used. Attend a workshop. Join a Twenty Group. Join a Used Car Twenty Group. Do something besides sitting there and waiting for something to happen. You may think you already know all there is to know about the used car business and you will just be wasting your money. The fact is maybe you actually know a lot, but you need something to jar your brain and get it going again. You have become real good at talking the talk, but you may not be walking the walk.

5. Re-think- your management team. Do you really have the right person running your used car operation?  Yes, that person may have been with you for years. Loyalty sometimes equals mediocrity. Maybe they have some great skills, but the fact may be that you are not making the best use of their talents. Used car managers today have to be “Asset Managers.”  It is not a matter of just being a “Car Guy.”  They have to have a good blend of common sense and ability to make use of technology. In my travels, about 75% of the dealers have the wrong person managing their used car operation and they wonder why they are not maximizing their full potential? (Even if you have the right person, they have to have the right tools, processes and your full support to be successful.)

A special note to those of you in management that feel somewhat frustrated by the lack of support from your Dealer or General Manager. You may have some things you want to do, but the Dealer or General Manager keeps rejecting your ideas. Next time you have a brilliant idea, don’t just discuss it with your Dealer or General Manager, put your idea in the form of a proposal totally written out with every detail. Present it to the Dealer or General Manager and ask for 90 days to make your plan work. When you give it to them, tell them not to make a decision right away. Ask them to review it and make a decision within the next 48 hours. Most of the time, a dealer with half a brain will let you go with it, unless it’s just totally out there in left field. If your request is reasonable and the Dealer or GM rejects it, you might want to start looking for someplace else to hang out because you are fighting a losing battle. That’s all I’m gonna say, Tommy Gibbs

I know what you’re thinking and that’s not what I mean. I’m talking about "Execution Dysfunction?" Sure you’ve got a plan, maybe even an awesome strategy, but it’s not worth much if you can’t or won’t execute it. How many times have you seen your organization lay out a great roadmap of what they want to do and then 6 months later ask yourself "What happened to that?"

In a meeting a few years ago with two executives from AutoNation they stated that they had the best processes of anyone in the automobile business. In that same conversation a competitor’s name, CarMax, came up. They said "The biggest difference between CarMax and AutoNation is that CarMax actually executes their processes." Shocker. What a shocker. 

That wasn’t a slip of tongue, they were simply being truthful. They are no different than many of you, you know what to do, you know how to do it, but you just don’t get it done. You can increase your odds of defeating ED by paying attention to some of the following.

1. Get "buy in"-from staff members-Nine times out of ten ED happens when staff members don’t get a real sense of commitment from the top. They hear you say it, but they don’t see you live it.
2. Create Accountability-You need to have systems in place to measure what’s supposed to be taking place. Even more important, impose penalties if the measured targets are not achieved.
3. Kill the Cancer-There are always those that are naysayers, determined to undermine any changes you bring to the table. Negativity is like a cancer that will destroy the health of your business, and there comes a point where you have to cut out the cancer if the rest of the body is to live. There are some people you need to replace and you must have the courage to do so.
4. Properly Train and Re-train-If you think you can put a process in place, train the staff and walk away, you are dead wrong. Training or coaching has to take place every day. There are some aspects of training that have to take place monthly, quarterly or annually. Far too often business leaders want the "shake and bake" method. Shake it up, put it in the oven and that’s the end of it. You have to be willing to train and allocate a certain amount of resources for continued training.
5. Develop Your Own-In the example of AutoNation vs. CarMax, the biggest difference between the two is that AutoNation has purchased many dealerships and attempted either to re-train the previous staff or hire people from other dealerships. In the case of CarMax, each time they build a new store they hire new people and train them their way. If you are ever going to grow and remain successful, you have to develop your own staff.
6. Celebrate Success-Look for opportunities to applaud people and their "wins." I don’t mean just a pat on the back. Maybe it’s the employee of the month. Maybe it’s a lunch party for the office staff for closing the month out after a hectic last minute rush. Maybe it’s a record month in widget sales. Doesn’t really matter. Find a reason to celebrate.
7. Employees are more Important than the Customers-It’s a fact, if you want happy customers then you have to have happy employees. Yes, you want happy customers, but you will never have them unless you can get to the heart and soul of your employees.
8. Have a Sense of Humor-It’s ok to laugh at yourself. If your organization has gotten to the point where they can’t laugh and smile then they will have some very miserable days. A lot of miserable days is a formula for failure.

 

ED isn’t a laughing matter. The best processes in the world are just file drawer filler if you don’t have committed, trained, positive people executing them.
Recap:

1. Create Buy-In, Then Live It
2. Develop your Own. Train those that you can, unload those that you can’t
3. Celebrating and Laughter is good for the soul.

I wish there was a magical pill I could give you for ED,
but there isn’t. It takes hard work and paying attention. That’s all I’m gonna say, Tommy Gibbs

As I’m sure you may be aware the final four for the NCAA basketball championship is this weekend in Atlanta, GA.

More often than not these games are won on defense and a full court press is often a major part of a defensive strategy. A full-court press is a basketball term that refers to a defensive style in which the defense applies man-to-man or zone defense to pressure the offensive team the entire length of the court before and after the inbound pass. Some presses attempt to deny the initial inbound pass and trap ball handlers either in the backcourt or at midcourt. Defenses not employing a full-court press generally allow the offensive team to get halfway down the court (a half-court press) or near the basket before applying strong defensive pressure.

A full-court press takes a great deal of effort, but can be an effective tactic. Often when teams are behind late in a game, they will apply full-court pressure as a means of attempting to produce turnovers as well as tire opponents. Certain teams, such as those coached by Rick Pitino, are known for applying full-court pressure during most of the game. Presses are especially effective against teams with poor ball handlers, shallow benches (since players become more fatigued attacking a press), or teams with deliberate offenses (since taking the ball up the court can waste a substantial portion of the shot clock).

A team with less talent can beat a talented team by utilizing a full court press for the entire game. It doesn’t take talent, but it takes a lot of heart and desire to play an “in your face” defense for the entire length of the court for a full forty minutes.  Teams that apply this strategy are constantly running fresh players into the game that eventually wear the opposing team down and cause them to make mistakes resulting in easy baskets for the pressing team. 

If you’re in the car business today you need to be in a full court press. You may very well be behind in the game. Be it good or bad, in the car business every day is a full court press day. Every minute of every day it needs to be an “in your face” approach.

I know you think you’re doing all you can, but you aren’t, there is always more. If you’ve played sports you know that is true. How can you do more? Start by writing it down. Make a list of all the basic things you know about this business. Things you now do, things you used to do and things you’ve heard that others do. Once you make the list, make a commitment to go into a full court press for a minimum of the next 21 days.

Why 21 days? Research has proven it takes 21 days to create a new habit. The reality is if you will focus on this list for the next 21 days good things will happen. I’m trying to press you to take action. I’m pressing you to get after it. I’m pressing you to take stock of what you do and how you do it.

I think of every minute of my life as a full court press. Press on. That’s all I’m gonna say, Tommy Gibbs

 

The more I’m involved with the automobile business and the more I observe other businesses, the more I realize we in the business world have got it all wrong when it comes to management. Specifically the word manager.

In business, people are often given the title of "Manager." Sometimes it’s truly a gift because they were next "up," and sometimes they worked very hard to get it. Most people who are managers think of themselves as, well, uhh, managers. They’ve been told they are a manager so they go about their business of managing people, systems, and processes.

I looked the word manager up and here’s what I found: "Somebody who is responsible for directing and controlling the work and staff of a business, or of a department within it."

I can’t argue that is more or less the definition that most people work from. When working with and leading people I believe we would be much better served by replacing the word "manager" with the word "coach."

Like many of you reading this, my life has been impacted in one way or another by sports. Whether you played sports or if you are simply a sports fan, the odds are you can relate to the field of sports and the influence it has had on you one way or another.

When I first got out of college I was a head football coach at a private military academy, Frederick Military Academy in Portsmouth, VA. The reality is that all throughout my career I’ve always seen myself as a coach not a manager.

If you think about what we do, at least those who do it well, we are always coaching. It’s just like being a head football coach. As a head coach your focus is to coach the players and the assistant coaches.  It never ends. If you have a coaches meeting then you are reviewing the practice, schedule, game plan, etc.  When you’re on the field with the players you are coaching technique, disciplines, conditioning, teamwork, attitudes, and the importance of "getting it right." 

Coaching takes place on and off the field just as it does with you in the dealership. Coaching is nothing but "selling." If you’re a coach of an athletic team you are selling players and assistant coaches on why they need to buy into whatever it is you’re trying to get across. This is no different than the business you’re in. You’re constantly selling someone on your team as to how and why to do things a certain way.

So, how much better off would we be if we all really took it to heart that we are no longer managers but "coaches" and that every minute that we are in front of our team our number one focus is to coach, coach and coach some more?

Top coaches are always looking for that competitive edge. 
Getting a competitive edge means seeking information, testing the waters, trying a new play, attending a coaching workshop, and pushing yourself harder than you’re pushing the team.
Top coaches communicate with other top coaches. (20 Groups.) Top coaches hire other coaches who are smarter than they are with specific skills to help the team win. Top coaches know what they don’t know. Top coaches hire me.

Here’s a little sidebar that you may find interesting. I’ve been in the used car and leadership training business now going on 11 years. During those 11 years, of the thousands of dealers and managers who I’ve trained I can only think of a couple that were really struggling and in the end just didn’t make it.

It’s really strange that dealers who are unsuccessful don’t hire me and those who hire me are already successful. They are already making money. Like any good coach they know they can do better. They know there is more to be had. They know the team needs to hear it from an outside coach once in a while.

Great coaches are givers of information and they seek information to make them and their team better.

Coach, thanks for reading my material. That’s all I’m gonna say. Coach Gibbs

In my workshop I give dealers a lot of information fully realizing they can’t or won’t do it all. And no doubt, I give away a lot of free information in my newsletters, which I’m ok with, as I’m a believer it all comes back around.

Either my ego or my wisdom tells me that for each item I can convince a dealer to do, their business will improve by at least 10%. So, if a dealer does 10 things I put on the table then their business could actually double from their current production.

I’m going to share 10 relatively simple things I’ve picked from the many I present in my workshops for you to dwell on and for you to consider doing.

Let’s pretend you are now selling 100 used cars a month. Doing all 10 suggested processes will get you to 200. If you’re not selling 100 just make the adjustment based on 10% for each process you are willing to commit to on a consistent basis. Here you go:

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. Make sure you keep these lists at the tower/desk so when one comes to the door to be appraised you step up and make a deal on a car that you are going to be able to retail in short order. The more units you step up on the more cars you sell at retail. Take a hard look at Auction Genius to help you find the cars you need in the most efficient manner possible.

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. If you are at $15,000 today, do what you can to get it to $14,500 and so on.  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. Your cost, your gross, and the number of days the unit has been in stock. Bingo, you have your ROI. 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. Sooner rather than later. Most dealers bonus their sales staff when the units have aged. Do it early, you will be much better off. Lastly, make sure the service manager gets that list each day and if one of those units happens to be in the service department the service manager has to understand they must get it out of the shop in a hurry because it’s one of your 10 most expensive units. You have lots and lots at risk with these units.  

5. Life Cycle Management-Read this statement then read it again. 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. Everything, including decisions on what to keep and not keep has to be done fast. 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 take units to the auction and lose money on them at 45
or 60 days. There are certain "Trigger Points" you need to focus on during your daily "Trade Walk." Knowing how to use EWR (Early Warning Radar) pays big dividends.

6. Lot Walk-Nothing new here. If you do a lot walk once a week with all the members of your sales and management team then without a doubt you will sell more units. And, you’re going to see a lot of things you’re not going to like. Do you remember doing "Phone POPS?" You know, it’s the deal where they place mystery phone calls to your sales department then play the results back to you. They are never, never, never very good. Makes you just want to scream. So, initially you will have the same feeling when you do the lot walk. But, the bottom line on the lot walk is it gets your entire team to know and understand your used car inventory. The more knowledge they have the more they sell. 

7. Daily Inventory Pricing-The market changes every day and so should your pricing. Sometimes you can ask more, sometimes you can ask less. You cannot and will not achieve maximum results by changing prices every 10 to 20 days. Pricing takes intense management. It’s not something you do when you get around to it. You would be far better off if someone priced the car who is not in charge of appraising and buying them. 

8. Analyze Your Wholesale Pieces-Look at the numbers. How many units are you wholesaling each month? Go over each unit. How many of them could you have retailed if you opened your mind a bit either relative to pricing and/or the type of product you’re willing to keep? Are they early wholesale units or late wholesale units? You need to know the difference between the two. If you have lots of units being wholesaled late (at the end of the cycle) the odds are you are either stocking the wrong stuff or pricing them wrong. If you are wholesaling a lot of units early in the cycle it’s probably because someone on your staff doesn’t want to "mess" with certain types of cars. The probability is there may be a problem getting them through service in a timely manner or the used car department feels ripped off by your service department. The good news in in either case it’s a fixable problem. You just have to want to fix it. 

9. Photo Booth-and 40 pictures per car. If there is one thing I would do if I opened a dealership today it would be to do whatever it takes to have a photo booth. If you haven’t accepted the fact that the Internet is your new showroom then you are doomed. You cannot and will not be able to remain competitive until you get with it. It’s the biggest no brainer since the invention of the wheel.

10. SETS & SUBSETS-simply put, SETS is an easy way to set up a price leader with several other vehicles for the customer to pick from when they show up. SETS & SUBSETS are designed to drive traffic and increase volume. You can do as few as two cars in a SET, but never more than five. It’s not as complicated as it first appears. Don’t over think this. 

Here’s a bonus one for you. It’s called Save-a Deal-It’s the basic of all basics. From the first day I got in the business we did a save-a-deal meeting every morning. Back it those days we didn’t call it that. I learned that term back in the 80s from my good friend Mike Casey with JM&A. Call it whatever you want, but it’s an easy way to increase your business another 10%. Simply put, you go through all your pending deals and ups from previous days. You will always find that two heads, three heads, etc. are better than one.

Suppose I’m wrong? Maybe you won’t hit 110% increase in sales. Maybe you will only get half that? Not so bad! It takes 21 days to create a new habit. How many of these are you willing to focus on for the next 21 days? Today is day one. Go do it.

That’s all I’m going to say. Tommy Gibbs

The number one reason you can’t buy used cars is that you can’t and won’t pay the price. It’s that simple. You and your used car manager can spin it anyway you want, but the bottom line is when you or they see a car that you would like to have on your lot you will not step up and pay the price. There are logical reasons for this, most of which need to go away.

For many of you the reasons may go away in six months, a year, two years or three years but it’s going to happen and for the sake of your operation I hope it’s sooner rather than later.

Let me dissect this deal for you. The odds are pretty good that your internal labor rate is $75 to $125 depending on what part of the country you are in. Your average reconditioning costs are running $800 to $1400 depending on a couple of things.

One of those things would be that you are in the "Newscar" business as opposed to being in the "Used Car Business." Oh, I know you think you are in the used car business, but you aren’t. "Newscars" is when you carry a lot of late model stuff. 

Sure your recon cost is lower because you’re not spending a lot of money on these cars as they still have factory warranty. (Bad strategy that happens when your used car manager gets tired of getting killed every time he/she sends an older car into service.)

Or, if you are a big time "Certified Dealer" then your cost per unit would be higher because of the factory requirements.

So let’s round the reconditioning number off to a nice $1000 per copy. (Do your own math if you don’t like mine.)

The next part of this dissection is those wonderful little packs you add on to protect yourself from paying too much in salesman’s compensation and other little safeguards you feel you have a need for. I come from the "Pack Generation." Always loved them. The business has changed. I’ve changed and you should change too.

On average, hard and soft packs combined run $500 to $1000. So let’s round that number off to $800. When you add my little rounded off numbers from the reconditioning and packs you have a total of $1800. (The problem with the pack and recon "drug," is that it still sorta works and you can shake ‘da habit.)

So as I often say, "Here’s the deal." You are starting off from "jump street" with an $1800 cost disadvantage against those dealers who aren’t doing it the old fashioned way. (CarMax and Texas Direct to name just two of them.)

We can debate the way you charge the sales department in service all day long. But your theory of if we don’t charge them full retail (or close to full retail) that they will just give it away in the sales department is "old, tired and a worn out" theory. (I know, I know, it’s still sorta working.)

You cannot continue to rely on the sales department to prop up the service department. Sooner or later the folks in service are going to have to get better with how they sell and develop your customer base.

Propping up service is much like the unemployment checks people have been getting the last few years. As long as the government keeps handing them checks then there isn’t much sense in them getting out and looking for a job.

What compounds the problem is your pay plan. As long as you keep paying sales people and sales managers on gross you are going to fight a losing battle. Yes, this is a hard one for you to get your head around, but sooner or later you gotta "get real." 

Just think about it for a minute. You put killer used car prices on the Internet and now you’re starting to put killer new car prices on the Internet. Aside from doing the right things when the customer shows up, how much control do the sales people and sales managers really have on gross profit? Ok, they have some, but not as much as they used to have.

What if you changed the pay plan and took gross out of the equation? Under that scenario what you charged in service and the need for packs would be irrelevant.

What if you thought of reconditioning as simply another line item expense on your statement just like you think of advertising or supplies? Keep in mind this article is all about "Why you can’t buy more cars."

If reconditioning and packs were not screwing up your "cost basis" then you could absolutely buy more cars and no doubt you would sell more because you would be in them right and have a pricing advantage over the competition. When I say you can buy more cars, I’m also talking about buying more "trade ins," which obviously allows you to make both more new and used car retail deals.

There is no doubt this is a difficult cultural shift for your business just like what’s happening to you with the Internet moving you towards "One Price." You’ve been successful doing it the "Old Fashioned Way," but you are going to find it harder and harder to do so.

I’ve asked this question a lot lately: What if you had a clean sheet of paper and started over from scratch; how would you do it in today’s world?   That’s all I’m gonna say, Tommy Gibbs

Business is the most competitive sport hands down. And of all the competitive sports the automobile business is by far the most competitive. Nothing even comes close to equaling it. There is always someone wanting to take your championship ring from you.

The challenge for those in the automobile business has been and always will be figuring out the next step in order to stay ahead. There’s an old saying "Lead, follow or get the hell out of the way."

That should be your motto. And to that point, in order to lead something you have to take risks. You cannot afford to sit back and wait for others to make the bold moves. The ones who have the courage to step out of the box first are the big winners.

Sure, stepping out of the box has risks. You may fail at first and you may have to hit the rewind button a few times, but in the end you win. It’s all about winning. You can’t win sitting on the sidelines waiting for someone else to figure it out. Winning means getting on the field and getting your face dirty and smashed once in a while.

Winning means doing those things others can’t or won’t do. Winning means removing things (and in some cases people) blocking your progress and getting on with it. Winning means trying things you don’t yet totally believe in, but knowing what you’re currently doing isn’t going to keep you in first place.

Sometimes blind luck (the right franchise at the right time and the right place) will get you in first place, but blind luck will only last for so long. At some point you have to make your own luck by doing things that make you uncomfortable. Being uncomfortable is never easy, but losing first place is even less so.

Continue to do what you’ve always done feels warm and fuzzy until you wake up one day and someone has taken your fuzzy ball and bat from you.

The car business isn’t a game. It’s a tough competitive sport and that’s what makes it such a great business to be in. 

Remember, "You never get it right and there’s always more to do and something to fix." Now go fix something even if it’s not broken.

That’s all I’m gonna say. Tommy Gibbs

By and large most dealers and managers have come to understand it’s not the big that will eat the small but the fast that will eat the slow. We all know the faster we can get a car on the lot and online the more we increase our odds of making a respectable profit.

Dealers are using various systems such as buckets, vAuto pricing and my life cycle management process to stay focused on changing pricing and turn. Never in the history of the automobile business has turn been more important.

If you are dealing with timelines and you are committed to 60 days or less (which you should be) then any days in the cycle in which the unit is not available for sale is a real killer.

The question often comes up "When does the meter actually start?" Does it start with the acquisition, the 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 what ifs, no buts…

The two issues that often come up are the delay in getting vehicles from auction sites and those units we can’t sell for legal reasons such as we don’t have the title as required by law in some states.

Sorry…it still starts when you own the car. You are working with a depreciating asset. If your asset is going down in value then you have to price your vehicle based upon that fact. To do anything else is a shell game.

10 Things To Help You Win The Meter Game:

1. If you are in a state where there are title issues there has to be a clear line of communication with the office on a minute by minute basis to alert you when the title arrives. Any break down in communication is costing you money.

2. It’s a fact that you are having to go further out of your area to buy cars at auctions, but you have to be selective and know what the timeline is that you are dealing with. Anything you can do to reduce transportation days the better. You might even want to consider paying the trucker a bonus for fast delivery.

3. How hard are you trying to buy cars in your own market? Do you have a procedure set up so that when someone comes in and wants to sell you a car that you give them the full routine with a written appraisal? Does your website have a self appraisal link so the customer can get real numbers from you quickly. Are you tied into Trade-In Marketplace?

4. Mine your customer base. For sure, you know which cars you always do well with. Often they are right under your nose hiding within your CRM. Vin Solutions has some great tools for finding those vehicles and giving you a chance to buy the car, trade the car or ultimately sell the owner a new car.

5. I mentioned Trade-In Marketplace in number 3. Are you using it? Maybe you looked at it when it was first introduced and passed on it. The kinks are out and dealers are learning how to take full advantage of this amazing tool. Let me suggest you re-visit the idea. When you combine vAuto’s Provision stocking tool with Trade-In Marketplace you will know what to stock, what you should pay for it and which auctions have it. That’s strong as "goat’s breath."
     
6. How about a unique and separate website that drives the customer to your website to sell you their car? I saw this one in the Tampa market a few months ago: "SellYourCarToUs.Com." It belongs to a very nice used car operation over in Orlando, FL. It’s imperative that when they land on your site that there be an easy, one click button to get them to a self-appraisal. Check it out. You will be impressed.

7. If you’re in a market with CarMax consider promoting that if the customer brings their CarMax appraisal to you within 7 days of the appraisal, that you will give them more for their car than CarMax or give them $100 cash if you can’t beat CarMax’s offer. What do you have to lose? Suppose you buy 10 extra cars this month and also pay out $1000 in loser fees. Do ‘da math, what did you make on the 10 extra cars?

8. Increase your odds of success and efficiency when buying online by using Auction Genius. This may well be one of the biggest game changes in the history of the car business. Take a look at this 2 minute video. CLICK HERE 

9. Fix your service and recon issues. I know it sounds like I’m picking on service a lot and that’s not my intent. I just know in most dealerships it’s the same old, same old. How many total days are being wasted from the time the car is acquired until the time it gets on the lot and online? In today’s age of speed you have to find every day that you can if you’re gonna win the "meter game."

10. Make sure you include in your "save-a-deal" meeting every morning a list of all vehicles that are either in transit or tied up due to title issues. The more you pick up the intensity on these units the faster things will happen.

Pop Quiz:
When does the meter start? When you own it.
What can you do to improve it? Re-read 1 thru 10.

Control what you can control. That’s all I’m gonna say,
Tommy Gibbs

It’s a fact that I travel a lot. And since most of the time I’m spending the client’s money I don’t stay in fancy hotels.

Typical hotels I stay in are Hampton Inn, Hilton Garden Inn, Courtyard by Marriott and Residence Inn. I don’t know this to be a fact, but of those I mention Courtyard has probably been around the longest.

My observation is that Courtyard is the one that is the most stuck in the old way of doing business. They have attempted to make some upgrades but compared to the rest, they seem a bit like a dinosaur. They still are doing business in part because of the law of supply and demand.

Before I go any further I want to admit to you that I realize how difficult it is to change. The problem with changing in the car business is the old model still works. Well, sorta, but the question is for how long?

We all know we need to speed things up in the dealership. The only way we will win is to do volume vs. making $3,000 average on front gross. I’m always afraid that my readers think I’m saying you can’t do a respectable gross. That’s not my message at all. You can, but you can’t do it the way you are managing your used car inventories.

I’ve come to understand that it’s very, very difficult to sell in volume and achieve a super high average gross profit, but I also know that the faster we sell cars the higher the average. The longer it takes you to sell a car the lower the average.

How much better off would you be if you sold more of your used cars in the first 30 days rather than the last 30 days of the life cycle? I keep screaming “Life Cycle Management” and more and more dealers are starting to heed my plea.

Speaking of a bad business model; dealers are fully aware that the biggest disconnect in the dealership is between used cars and the service department yet they continue to let service do its own thing, which in the end creates a logjam with the recon cost, speed and efficiency. It’s so very interesting that when the dealer becomes the “used car manager,” that the roadblocks toward productivity are knocked down overnight.

Ten more bad business models for you to chew on:

1. Because of demand from the factories dealers buy high dollar real estate and build high dollar facilities, built on factory specifications so they can sell their product at little or no profit. Dealer margins on new cars have been cut from a high of 22% in the early 70’s to almost nothing today, yet we still negotiate our selling prices even after your Internet price has driven the customer to your front door.

2. Within these high dollar facilities we have high dollar equipment, computers, floor tiles, colors, etc., dictated by the factory. If you are a dealer have you ever noticed they always have something else to sell you? Often what they sell you, you can buy cheaper elsewhere.

3. The factory works hard to convince the dealers that these fancy facilities create customer loyalty, profits and future sales. For a few customers they do, but for the majority it’s just not true. They buy their next car based on convenience and price.

4. Dealers egos get involved in the creature comforts for un-loyal customers who by and large couldn’t care less. Did I mention convenience and price?

5. Within about an 18-month window dealers lose the customer to the Jiffy Lubes of the world. This time price isn’t a factor because the average oil change at Jiffy Lube is about twice what yours is. It’s all about convenience. “Get me in, get me out, I’ve got things to do.”

6. Customers hate the length of time it takes for them to buy the car and take delivery. Electronic signature will start to creep more and more into the forward thinking dealer’s model. Not because the dealer wants it, but because today’s customers will demand it. It’s not going to be long before the customer will show up, pick up the car and leave. All the hoop jumping will be done online.

7. Dealers abuse the used car department by charging them retail because that’s the way they have been taught. Dealers believe that if they don’t charge them full retail that they will give it away anyway. All that really does is create an additional price gap between what a dealer can sell a car for and the competition. Since this model has worked so well for so long it’s going to be a tough change for most. Those who figure it out will get to reap the benefits big time.

8. By and large dealers are still paying on gross profit when in fact the control over gross at the sales and sales management level continues to erode. Paying on gross has worked very well for such a long time, but change is coming. The percentages you currently pay out to sales staff and sales management will not work in a market of “shrinking margins.”

9. Most dealers believe customers want to negotiate and we can agree that’s true to a point. I hear many dealers say they will never go to “one price.” Then I ask them if they are giving up much off their used cars posted on the Internet? Most say they are holding the line on the cars they sell off the Internet. Makes you go hmmmm.

10. The Internet has become the “Great Equalizer.” The current dealership model doesn’t work well with the Internet. The fact of the matter is dealerships need to make big grosses in order to pay for all the enormous operating costs they are dealing with. If 90% of the potential buyers who are shopping for a new or used car shop online, can we continue to be successful with a tired worn out business model like Courtyard by Marriott?

Ask yourself what would you do if you could start out with a clean sheet of paper. That’s all I’m gonna say. Tommy Gibbs

About 20 years ago I developed SETS & SUBSETS. Stole the idea and expanded it. Nothing new about the stealing thing. There’s not too much original going on out there.

Over the last 10 years I’ve introduced hundreds of dealers to the concept. Dealers are always looking for an edge so when they see SETS & SUBSETS they become intrigued and want to learn more.

Therefore I get lots of request for more information on how to set them up and maximize their potential. Whenever I’m talking one on one with a dealer I try to explain that SETS & SUBSETS are not the answer to his/her used car business.

I want to go on record that there many fundamental things that need to be achieved before expanding to SETS & SUBSETS. They are not a magic bullet. The magic bullet is the reality that you must manage your inventory better today than you have ever had to do in the past. 

SETS are all about setting up a price leader to drive traffic to the store.  The lead or number 1 car is the most important car in the SET. You can do SETS in 2, 3, 4, or 5 car SETS. Experience has taught me that going deeper than 5 just confuses the issue and makes it much more difficult to manage. 

The lead car needs to be a rough, high mileage, ugly car. Make it safe, but don’t make it pretty. The more dents and oil leaks the better. (oh, chill out.) This is not about bait and switch. It’s about the customers transferring themselves to another car in the SET or to one out on the perimeter. 

The key to SETS is picking the right lead car. Yes, I said it should be rough, but it needs to be desirable in the “public’s mind,” and most important it should be the latest model you can find for that SET. 

There are two sources to determine which SETS you are going to work with. First, it’s based on Internal Data. What used car have you historically done well with? Second, it’s based on External data. Using tools like vAuto, Auto Trader and AutoCount USA, you should be able to figure out what the hottest models are in your area. 

You don’t have to do SETS in a 5 car SET. You can do 2, 3, 4, or 5, but don’t do 6, 7, etc. Just trust me on this. 

Cars in your SETS must be parked together in a row with the prices clearly marked on them. You want to get a $1500 to $3000 gap between each of the units. You would not want to advertise your lead car at $6,995 and your number two car at $12,500. That’s too big of a jump from the lead to the second car. 

A SUBSET is a SET with a non-desirable member in it. As an example since a Honda Accord is a pretty good seller in most markets, you might have a Honda Accord SET with a SUBSET tucked in the middle. A good SUBSET car would be a Mitsubishi Gallant. The Accord will drive traffic down the line to the Gallant. The Gallant won’t drive traffic to “nuttin’.”

Two of the biggest mistakes that dealers make is they try to make a profit on the lead car and they pick too nice of a car to be the lead. The lead car is a “loss leader.” More often than not the car dealers pick to be a lead is really a number 2 car. A 2 car is a profit maker and one that you’ve fully reconditioned so you would want to make sure you haven’t made it the lead. 

I always tell dealers if you’re going to try SETS call me before you do so. 9 times out of 10 when they describe the lead car, it’s the wrong lead car. 

If you want SETS to work you have to advertise your lead car at what you have in it or less. Do not (there is only one definition of do not) try to make a profit on the lead car. The sole purpose of the lead car is to drive traffic to the dealership. 

When done correctly one of three things will happen:

1. The customer shows up and buys the lead car. (Ugg!)

2. The customers transfer themselves to the 2, 3, 4 or 5 car.  (Yipee)

3. The customer buys something out on the perimeter. (More Yipee)

The key is that the customer showed up on your lot today and you have a chance to sell them something. 

So, there it is. SETS described in its simplest form. There’s a bunch more to them than I can’t put in this newsletter. But, remember, I warned you at the beginning of this article, don’t even bother trying SETS until you fix a lot of your other issues first.

That’s all I’m gonna say, Tommy Gibbs