Are You Looking? Can You See?

I often wonder what dealers, managers, and leaders are looking at. At times it seems they are looking, but they don’t see.

Yogi Berra once said: “You can observe a lot by just watching.”

And sometimes even when they see, they don’t hold people accountable and take corrective actions.

Believe it or not, people want to be held accountable. It’s hard to hold people accountable when we haven’t set or determined what the expectations are.

Once expectations are set then we must have a way of measuring the progress. Measuring progress is probably one of the easiest things to do in the automobile business.

When the measurements are not satisfactory, we have to communicate the results and seek corrective action.

Once the corrective action plan is in place it all starts over again and at some point, there has to be, there just has to be, a consequence for failing to measure up.

And that’s where the biggest problem occurs. Not wanting to hand out the consequences is when leaders look, but don’t see.

I see it all the time. That’s all I’m gonna say. Tommy Gibbs.

A TIME BOMB IS TICKING!

Most dealers and managers have come to understand that speed is critical when it comes to making money on used cars.

If you are committed to 60 days or less (which you should be), then any days in the assigned life-cycle of a unit when it’s not available for sale is a killer.

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?

The 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. There are certainly times when a needed part is delayed and/or a vehicle spends weeks in the body shop.

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.

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. But, what you can’t do is change the math.

It is what it is. It’s a depreciating asset. The clock starts ticking the minute you own it. Do the math. The ROI is going south.

It’s a ticking time bomb. That’s all I’m gonna say, Tommy Gibbs

Do You Have a Heartbeat?

Great leaders have their thumb on the pulse of the organization. Without a pulse, the organization dies. If you are to improve your leadership skills, you must know the pulse of your organization.

You can only know the pulse of the organization by absorbing yourself within the daily activities and action of the business. To feel the pulse, you must feel the passion.

If you’re not feeling the passion, then your pulse may very well be dead. Maybe your pulse is dead because you’re burned out. How can you be burned out when you’ve never been on fire?

You are responsible for your own fire. I’m just trying to give you a match to get you going. Firing up your own passion will ignite your organization.

Real leaders have a pulse. Real leaders feel the pulse. Real leaders inspire a pulse.

I hope you’re on fire. That’s all I’m gonna say. Tommy Gibbs.

Over the last few months, I’ve spent time with hundreds of dealers through zoom sessions, in-dealership workshops, 20 groups and one on one conversations.

The common theme in those conversations is that grosses are going south and the honeymoon is over.

So, the question everyone is asking is what can we do to stop the decline or better yet what can we do to improve grosses?

I’d first like to address that question with a question.

Are you giving away some units that you should not be giving away?

Historically whenever dealers have a respectable average gross profit, they have a few home runs tucked into the equation. Are you hitting any home runs?

As inventory levels improve, it’s easy to jump into the burn and turn mindset with ALL your inventory.

I’m betting you are selling some units short that you shouldn’t. You have great software tools. You have a brain. You should be able to figure out that there are certain units that you don’t need to give away.

I understand the challenge. You have a 10-day-old used car and you’re staring at a $3,000 gross, so it’s tough to say “no.” But, that might be the very car you should be making $5,000 on. A handful of these units each month can make a big difference in your average gross profit.

Another component of low grosses is the mismanagement of the life cycle of each unit.

Far too often you hold onto problematic units too long. They get deep into their life cycle and then you decide to either retail or wholesale it at a breakeven or loss because you’re feeling the “aging heat.”

If you had unloaded these problematic units earlier in the life cycle, even at a low profit, your overall average grosses would have been better. A small loss early is far better than a bigger loss later.

If you start tracking GAP (Give-away-Profit) you might discover that certain managers and/or salespeople are too quick to give up on your internet price. GAP is the difference between your internet price and your final sales price. If you’re struggling with front gross, tracking GAP might help you zero in on the culprits.

Another drag on gross profits is a lack of training.

Does your sales staff have awareness of the vehicles you have on the ground? Do they really know your inventory. How often do you do a lot walk with the entire team? 

Are they selling your awesome recon processes to your customers? Do they even know how you recon a car?

Knowledge is power. The more information your salespeople have about your product and your processes, the more your gross profit will improve.

Never forget that you make the most money on units you sell in 10 days or less. If you have a sloppy recon operation and you have units spending 7 to 14 days in recon, you’ve lost your best opportunity to make gross profit.

We all know you make your best grosses on trades and customer acquisitions. What are you doing to improve that segment of your business? Are you allowing one manager to dictate the value of your used cars? Two heads are always better than one.

Are you tracking look to book by salesperson and sales manager?

What about your trade ratio? How many units did you retail this month? How many had trades attached? Improve those numbers and you will improve your average gross profit. 

Everything I’ve shared with you here is important toward improving your used car grosses.

I’m betting my first bullet point is your number one issue.

Stop giving your good stuff away. That’s all I’m gonna say, Tommy Gibbs

Low Grosses?

Over the last few months, I’ve spent time with hundreds of dealers through zoom sessions, in-dealership workshops, 20 groups and one on one conversations.

The common theme in those conversations is that grosses are going south and the honeymoon is over.

So, the question everyone is asking is what can we do to stop the decline or better yet what can we do to improve grosses?

I’d first like to address that question with a question.

Are you giving away some units that you should not be giving away?

Historically whenever dealers have a respectable average gross profit, they have a few home runs tucked into the equation. Are you hitting any home runs?

As inventory levels improve, it’s easy to jump into the burn and turn mindset with ALL your inventory.

I’m betting you are selling some units short that you shouldn’t. You have great software tools. You have a brain. You should be able to figure out that there are certain units that you don’t need to give away.

I understand the challenge. You have a 10-day-old used car and you’re staring at a $3,000 gross, so it’s tough to say “no.” But, that might be the very car you should be making $5,000 on. A handful of these units each month can make a big difference in your average gross profit.

Another component of low grosses is the mismanagement of the life cycle of each unit.

Far too often you hold onto problematic units too long. They get deep into their life cycle and then you decide to either retail or wholesale it at a breakeven or loss because you’re feeling the “aging heat.”

If you had unloaded these problematic units earlier in the life cycle, even at a low profit, your overall average grosses would have been better. A small loss early is far better than a bigger loss later.

If you start tracking GAP (Give-away-Profit) you might discover that certain managers and/or salespeople are too quick to give up on your internet price. GAP is the difference between your internet price and your final sales price. If you’re struggling with front gross, tracking GAP might help you zero in on the culprits.

Another drag on gross profits is a lack of training.

Does your sales staff have awareness of the vehicles you have on the ground? Do they really know your inventory. How often do you do a lot walk with the entire team?  

Are they selling your awesome recon processes to your customers? Do they even know how you recon a car?

Knowledge is power. The more information your salespeople have about your product and your processes, the more your gross profit will improve.

Never forget that you make the most money on units you sell in 10 days or less. If you have a sloppy recon operation and you have units spending 7 to 14 days in recon, you’ve lost your best opportunity to make gross profit.

We all know you make your best grosses on trades and customer acquisitions. What are you doing to improve that segment of your business? Are you allowing one manager to dictate the value of your used cars? Two heads are always better than one.

Are you tracking look to book by salesperson and sales manager?

What about your trade ratio? How many units did you retail this month? How many had trades attached? Improve those numbers and you will improve your average gross profit. 

Everything I’ve shared with you here is important toward improving your used car grosses.

I’m betting my first bullet point is your number one issue.

Stop giving your good stuff away. That’s all I’m gonna say, Tommy Gibbs

The Old Accountability Subject

Frequently in my training sessions I’ll ask the question, “How many of you agree that we do a lousy job of holding people accountable in the automobile business?” Without exception, they will all raise their hands.

Leaders that have figured out how to hold people accountable are the most successful when it comes to developing a culture of leaders and achieving high results.

Holding people accountable doesn’t have to be a negative experience. When people understand the expectations, they will seek to achieve those expectations, goals, objectives, culture or however you might want to frame it.

People tend to do the right thing when they know it’s in their best interest, not when you must hit them over the head with a baseball bat.

Your job as a leader is to sell the team the idea that the things the organization deems to be in the best interest of the organization is actually in their best interest too. Achieving expectations means they win, we win and we all have more success.

Never forget, your #1 job as a leader is to remove the obstacles. When you remove obstacles it’s so much easier to hold people accountable.

Easy tips:

1. Make sure everyone is reminded of the expectations. Yes, that seems elementary, but the evaporation factor is always in play. Either as a direct message or subliminally, leaders must constantly remind the troops of what’s expected and what’s important.

2. Get on it right now. Far too often when there’s a lapse in achievement, leaders let things drag on and on. The more things are allowed to slip, the more those things become habit, and the more the expectations are lowered.

3. You don’t have to be mean to enforce expectations. People like to work in a well-run, well-disciplined organization. This isn’t about screaming and hollering at someone about their failures. It is about letting them know quickly we’re not on track; you and your team are not getting it done, whatever “getting it done” might mean to you.

At some point there must be consequences for those who cannot live up to reasonable expectations. The ultimate consequence is they get to go to work someplace else.

4. Be consistent in your actions and statements. The easiest way for expectations to fall apart is that you are all over the place. You let some things slide for some people and not for others. You cannot be Dr. Jekyll and Mr. Hyde. Selective enforcement with just a few people will destroy the morale and productivity of the team.

5. There are times when you need to figure out the real root of why expectations aren’t being met. What’s the real problem? Leadership sometimes will set the wrong expectations. Setting the wrong expectations is just as bad as not having any

6. In order to hold others accountable we too have to hold ourselves accountable. We should make it a daily practice of looking in the mirror and being honest with ourselves. .

A part of holding yourself accountable is never to forget, “Familiarity breeds contempt.” The closer you become with people the more difficult you make your responsibility of holding them accountable.

I’m holding you accountable. That’s all I’m gonna say, Tommy Gibbs

Where Do You Fit?

I’ve written about this before, but if we’re going to make progress we need to know what stage we’re in.

I’m going to be discussing and commenting on what’s commonly known as the “Four Stages Of Learning” plus two others that I know you have never heard of because I made them up. I don’t know where the first four originated, I just know I stole them

All 6 stages of learning apply regardless of the application. They can be applied in sports, business, social activities, and life in general.

1. Unconscious incompetence-The individual does not understand or know how to do something and does not necessarily recognize the deficit. The individual must recognize their own incompetence, and the value of the new skill, before moving on to the next stage.

The length of time an individual spends in this stage depends on the strength of the stimulus to learn. The more time they are willing to spend learning the skill or activity the faster they move to the next stage. Example: You decide to take up golf so you go out to the driving range, whack at a few balls. 1 out of 10 you make great contact, but you have no clue what you’re doing. You know you love the feeling and you know you want some more of it so you keep returning to the driving range and/or play a few rounds of awful golf.

2. Conscious incompetence-Though the individual does not understand or know how to do something, he or she does recognize the deficit, as well as the value of a new skill in addressing the deficit. The making of mistakes can be integral to the learning process at this stage. Example: After going to the driving range for a while and playing a few rounds you begin taking lessons with a golf pro and quickly realize how little you know. You observe others either at the golf course or on video, etc. and the realization of how much there is to this game starts to sink in.

3. Conscious competence-The individual understands or knows how to do something. However, demonstrating the skill or knowledge requires concentration. It may be broken down into steps, and there is heavy conscious involvement in executing the new skill. Example: More golf lessons, more golf rounds played and you are starting to understand the integral parts of the swing. You haven’t mastered the swing yet, but you are starting to strike the ball more consistently especially when you think it through.

It’s not automatic, but your skills are improving as your knowledge starts to grow. This can be the most frustrating stage of the first four. You still have to think about it. When you do, your results are much better, and when you don’t you want to throw your clubs in the lake.

4. Unconscious competence-The individual has had so much practice with a skill that it has become “second nature” and can be performed easily. The individual may be able to teach it to others, depending upon how and when it was learned. Example: You’ve now repeated your golf swing enough times, played enough rounds, attempted enough different types of shots that you can break par or better, and have reached a very competitive level. You no longer have to think about the elements of your swing, you just do it. The physical and mental muscle memory is locked in.

5. Competent Incompetence-is the most dangerous of the six. It’s when you have years of experience, know your stuff and have become convinced you have nothing else to learn. Your success has convinced you that you are “the man” (or woman) and you are done learning. Seeking more knowledge is the last thing on your mind. What got you to where you are today is what you think is going to keep you where you are and beyond.

6. Learning to be competent-this stage never stops. It’s a life long journey that keeps life interesting and challenging. You know that learning is a journey, not a destination. (That would be you and I.)

The most successful people at any skill, business, or activity are the ones who continue to do two things:

1. They keep going back to the basics

2. They continue searching for answers even when they think they already have many of them.



What stage are you in? I’m in the “Learning To Be Competent” stage and I hope it never ends. That’s all I’m gonna say, Tommy Gibbs

Why Not Try It?

There are times when I struggle as to how much I want to “share” with you in my free newsletter. I often ask myself, “Should I save this for my paying clients?”

This is one of those times, but what the heck, here you go.

If you’ve heard me speak or read any of my material, you know I believe it’s way past the time we had two-tiered pricing from the service & parts department to the used car department.

A different price structure for your cheaper used cars will pile up more gross and put more profit on your bottom line.

It’s a tough sell for those dealers locked into stinky old legacy thinking who have “always done it that way.” I, of all people, realize how difficult change can be.

Since that’s such a tough sell how about giving your used car department some coupons. “No way,” you say…well, you give coupons to your customers all day long so why not the used car department?

Here’s the way it works:

1. The dealer or GM decides how many coupon sheets they will issue to the used car manager at the beginning of the month. If you want to get sophisticated about it, then base it on some formula of how many used (or even new) were sold the previous month.

You could do 40 used gets you one sheet. Or 40 new gets you one sheet. There are all kinds of ways to set this up. You could do for every 10 units over forecast you get an extra sheet for the next month. Whatever formula works for your size store.

2. The sheets are set up with 8 coupons. You could do more or even less.

3. At the top of the sheet, the Dealer/GM will determine the maximum ACV the coupons can be used for. I’m thinking less than $10,000, but you get to choose.

4. Each coupon requires:

A. The stock # of the unit
B. The ACV before coupon/repairs are done.
C. The manager’s signature.

5. I have a template that allows you to change the coupon percentages to suit your taste. (Send me an email and I’ll send you the template.)

6. How you expense the coupon discounts is up to you, but let me suggest that parts and service handle the discount just like you would with any customer.

7. Is there a slightly negative impact on your percentages in parts and service? Probably.

8. Is there a positive impact on your total gross profit? You betcha!

9. Is there a positive impact on attitude from the used car department? Another you betcha!

10. You will sell more used because you’re keeping some pieces you’ve been letting go down the street. You will sell more new because you will step up on some trades since you now have a way to turn them into retail pieces.

Trades are getting harder and harder to come by. You can’t afford to miss not one single one.

If you want to sell more used cars then do something different.

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

Person In Charge

One of the issues that constantly comes up is the PIC (Person in Charge); the dealer, general manager, owner-operator who doesn’t listen to those in the trenches when it comes to what’s working, what’s not, and what can be done to fix something.

Oftentimes it’s not just that they don’t listen, it’s that they don’t bother to ask.

Even when they do ask, they won’t act on the information they have been given because they (the PIC) have been there and done that.

Sometimes they have over-analyzed the information to a point where they are convinced that whatever the thought or suggestion that was served up will not work.

Experience is a powerful tool and so is the lack of it. Experience can convince you not to do something that might make you a lot of money. Inexperience can cause you to take a chance and make some money.

I think far too often in business we become convinced that something can’t be done. You know the old saying, “If you think you can, you’re right and if you don’t think you can, you’re also right.”

You need to listen to those under you, and you need to let them try some of the things they believe will help your business. Take the handcuffs off and turn them loose occasionally.

What you think doesn’t matter as much as you think.

Here’s a technique you might want to try.

Ask the members of the management team what they need to fix whatever problem they feel is getting in their way of performing to their maximum potential.

In other words, get them to tell you what they need to get the results we’ve been seeking.

More inventory, more people, more software, more whatever…then waive your magic wand and give it to them.

What you have now done is eliminated the obstacles they have been using as their excuses for not getting the job done.

There you have it. It’s a leader’s job to eliminate obstacles. When you eliminate excuses everybody wins.

That’s all I’m gonna say, Tommy Gibbs

Full Court Press Time

March Madness is upon us. Unless you’ve been living under a rock you know that March Madness is the NCAA basketball tournament.

Often 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.

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.

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.

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 there 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. 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.

Be Faster!

I’m not talking about turning your used cars faster. I’m talking about picking up how fast you walk. The tempo of your gait says a lot about you.

If you want to energize your team you first have to energize yourself.

If you know me, you know I’m not a very patient person. One of the things that drives me nuts is when people waddle along on a moving sidewalk.

If you’ve ever traveled through the Atlanta airport, I’m sure you’ve seen the moving sidewalks that come to an end, you get off, walk about 25 feet and get onto another one.

I was recently on one with a group walking like a buffalo herd that had just eaten a massive meal. After the exit, I decided to see if I could out-walk them on the side while they walked on the moving sidewalk. Of course, I won.

When you pick up your speed, you energize yourself. When you energize yourself, you energize your team. Speed and energy go together.

Slow walkers tend to think slow and move slow. Not only are they slow, but they are also slowing down everyone around them. By and large, they aren’t going anywhere. It’s obvious that wherever they are going isn’t important or they’d be in more of a hurry to get there.

People who walk fast want to get somewhere fast. But more than that, fast walkers are people that have high energy and are go-getters. Fast walkers are confident, courageous, and all about having a no-fuss in life.

They expect other people to keep up with them and they have a low tolerance for those not in a hurry to get things done.

They often don’t tolerate a lot of words, and if they do, they want you to spit it out fast and get on with it.

Think fast.

Talk fast.

Move fast.

Be fast.

That’s all I’m gonna say, Tommy Gibbs