I’ve been saying since the 1980s that there are too many dealerships. If you’ve been around that long, you probably have too. The law of supply and demand has always worked to our disfavor when it has come to making the kind of money we should make based on the amount of money and risk we have in play.

I believe the over-dealerization (A word I made up, go with it) started in the 1970s as the Japanese imports started to come onto the scene. Those franchises followed the footprint of the domestics with a strategy of, well there are three Chevy or Ford stores in the market, so we need three Toyota, Honda, Datsun, etc.

As more and more importers discovered our thirst for inexpensive, gas efficient, and higher quality vehicles, the number of new car dealerships mushroomed. Even to this day, dealers are willing to stand in line and spend big bucks for a chance at an open point that might just turn out to be the next great Honda franchise.

Those domestic franchises had been set in place many years before when the road systems made traveling from one store to the next, a bit time consuming and often not worth the ride.

Today in some markets you can go to 5 Chevrolet dealerships within 5-minute intervals. Or, can now you can make that same journey in 2 seconds with the click of a mouse.

Saturn had the right idea. Give a dealer multiple points in a specific market and let the dealer decide the if, where and when. Setting up a non-negotiating selling process and selling everything for full window sticker was the rule of the day. In the end, they just didn’t have the product to be competitive.

The last few months have been the equivalent of having fewer dealerships because of less product availability.

Individual dealers and dealer groups are reporting record profits nationwide. Do you think it’s because dealers have all of sudden gotten that much smarter?

That’s not to say that the smartest of the smart haven’t done a lot to maximize their profit potential, but there is a tendency to ignore the reality of the situation and to think, “hot dang, we got this thing figured out.”

The only thing that’s been figured out is the law of supply and demand which works every time. When you have a low supply of vehicles and an ample number of buyers, your gross and net profit goes up. The reverse is also true.

This honeymoon won’t last forever. Fewer dealers will. That’s all I’m gonna say,

One of the most interesting things about the automobile business is the dealer has “the power” to fix anything that needs to be fixed.

That being the case, the only real question becomes if the dealer has the will and the money to fix what needs to be fixed then why don’t the fix the things that need fixing?

Think about that for just a moment. They have the power. They often have the money.

But, more often than not they don’t have the will.

So, there you have it. It’s not money or power. It’s a matter of having the will to fix what needs fixing.

Having the will means dealing with all the messy details to get it done.

Where there’s a will, there’s a way. That’s all I’m gonna say, Tommy Gibbs, Tommy Gibbs

I’m thinking your salespeople’s paychecks have been pretty good of late.

Especially if you’re paying on gross. Good for them. I’m an advocate for salespeople making more money.

But, wait…what did they actually do to earn those bigger grosses and paychecks?

I’m thinking they are a victims of a good set of circumstances which in part has been the law of supply and demand and the way you have priced and held the line on little or no negotiating of prices.

You have to ask yourself does it really make sense to be paying them on all that gross when they haven’t had much of an impact on it?

The same holds true for paying on gross in the overall scheme of things.

When you’re giving cars away, it’s not the salespeople giving them away. It’s the way you’re pricing them because you have too much inventory or need to make something go away.

This may not be a good time to change your pay plan. But, it’s a good time to ask yourself why are you still paying on gross? That’s all I’m gonna ask, Tommy Gibbs

One of the things I remember about advertising is it’s hard to gain momentum, but really easy to lose it.

In the good ole days, if you were pounding the airwaves and decided to take a break, it was really difficult to get it going again.

When things are rocking is not the time to pull the plug; it’s the time to crank it up.

It’s that way with training too. My business is always good, but it’s even better when times tighten up. When times are tough dealers are looking for answers.

Right now, most dealers are busy selling cars, having record months in gross and their bottom lines.

I don’t train salespeople, but why would you spend money on sales training when Johnny 7 car is now selling 15 and his grosses are $500 more than they have ever been?

I wouldn’t worry about it. This is going to last forever. That’s all I’m gonna say, Tommy Gibbs

A number of years ago I came up with a saying, “You’re never as smart as you think you are and you are never as dumb as you appear.” Some of you are feeling pretty smart right now.

It could be that you are really smart, or it could be that you got lucky because of a once in a lifetime market shift in your favor. (Dale Pollak’s Article)

And of course there are times when you feel pretty dumb. Even that may or may not be true. You might be a victim of a bad set of circumstances. Some of you have had bad franchises in bad locations or it could be that you’re a newer used car manager that inherited a hot mess for a used car inventory.

Or it could be you’re just dumb.

In any given set of circumstances, it’s important to maximize whatever you have. Right now, you may be maximizing things in spite of yourself or maybe you’ve been smart enough to make some good moves.

It could have been you didn’t know what to do and by doing nothing you got lucky.

The most important thing right now is recognizing where you are, how you got there and how to stay on this magical course you’ve discovered.

Even with all that said, this business continues to be:

All about the basics.
All about the fundamentals.
All about your disciplines.
All about the processes.
All about understanding the data.
All about common sense.
All about your focus.

There’s your roadmap to staying the course. Stay the course. That’s all I’m gonna say. Tommy Gibbs

Everyone has problem cars from time to time. You know the ones I’m talking about.

The ones that want to stick around forever. The ones you haven’t yet found a buyer for.

But where did they come from? How did they all of a sudden end up on your lot? Did they just fall out of the sky?

Can you imagine how much better off you would be if you could identify problem cars on day 1 vs. day 61? Suppose you had a strategy in place to deal with them sooner rather than later?

The number one problem in the industry is we just don’t pay attention. We don’t pay attention soon enough. By the time we realize we have a problem, it’s too late.

Take the time to do a “trade walk” which includes all purchase units, and be blatantly honest about what you’re staring at.

Then put a strategic plan in place to deal with the more problematic units.

If you did nothing more than that, you’d have a lot less units falling from the sky, hitting you in the head and giving you a headache.

And, you would have a lot better bottom line. That’s all I’m gonna say, Tommy Gibbs

If you’re the Dealer, GM or GSM and you’ve got inventory over 60 days old, it’s on you. It’s your fault. You own it, no excuses.

I cannot tell you the number of times the top dog wants to blame the used car manager for the aged inventory, grosses, etc. Really? No, no, no…it’s your fault for allowing it to happen.

Either you let them sell you on all the reasons why they should keep them, or you just weren’t paying attention. Either way, it’s on you.

There’s a retail buyer for every unit sitting on your lot. You just haven’t priced it right enough to make it go away. There are zero excuses for anything being over 60.

Here’s the real excuse; you’re not paying attention. You’re not in the game and you’re not leading anything.

You need to man-up, woman-up and stand up. Look in the mirror and be accountable. Stop blaming the used car manager. It’s on you. That’s all I’m gonna say, Tommy Gibbs

Can you believe it? Does time fly? The year is half over.

How was your June? How have your first six months been? I know it’s been a crazy year, but some of you have had a couple of good months.

You might even be beating your chest a little bit.

Some of you have been running full speed ahead. Some of you have been dragging through the sand.

Maybe in your state and your market, COVID 19 has hurt you or in some cases it may have even helped you.

If you haven’t performed well, there may be some legitimate excuses, but maybe you just had the wrong plan in place.

Just because you had the wrong plan does not mean it’s too late to fix it. You’ve still got 6 more months to go.

Those of you who have had a good first 6 months need to be cautious of becoming complacent. Even though things have been going well, you would be very smart to review how you can make things better as you tackle the second half.

Everything we do is about choices. You can choose to let things be as they are or you can choose to dial it up a notch or two.

To do so means to review your plan and the strategies you have in place. And, make the changes that are necessary to get you where you know you need to go.

Your other choice is to do nothing. Go sit in your office and stare at the wall. Enjoy your seat and pretty soon it will be over, Tommy Gibbs

Without question, some people are luckier than others. It’s not always true, but some of the time it’s just a fact.

More often than not, luck is a by-product of being prepared.

The more you prepared you are, the luckier you get.

Being prepared means studying your craft.

Being prepared means making some mistakes and moving on.

Being prepared means a willingness to change.

Being prepared means listening to other points of view.

Being prepared means getting outside of your comfort zone.

Being prepared is a constant thirst for knowledge.

Being prepared means having lots of residue on your hands.

Many have the will to win. Very few have the will to prepare to win. That’s all I’m gonna say, Tommy Gibbs

I’m anything but a fan of this pandemic mess, but maybe there’s been a silver lining in this big black cloud.

Many dealers have reached out and said that finally they have gotten their inventory under control and they have no 60-day old units. Hot dang! About time. Now don’t screw it up.

I’m going to share 5 simple things I’ve picked from the many I present in my workshops for you to keep you on track and out of the 60-day old nightmare.

1. 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 $18,000 today, do what you can to get it to $17,500 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. If you figure out how to reduce your recon cost on the cheaper units, then you’ll figure out a way to retail more.

2. 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. Make sure the service manager gets a copy of the list each day and create a sense of urgency to get any of those through the shop quickly.

3. Life Cycle Management-There is nothing, absolutely nothing, you can do that will improve all aspects of your used car business more than understanding my process of “Life Cycle Management.” Think Fast, Be Fast-You are working with a depreciating asset. 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.

4. Lot Walk-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. The lot walk gets your entire team to know and understand your used car inventory. The more knowledge they have the more they sell.

5. Daily Inventory Pricing-The 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.

That’s all I’m gonna say. Tommy Gibbs