One of the things I encourage dealers and managers to do in my workshops is to sort their used vehicle inventory by cost or investment, with the most expensive units at the top. Then I teach them 4 specific ways to attack their 10 most expensive units.

One of the more interesting but not surprising things we’ve observed over the years, is that if you lay your aged inventory side by side with your 10 most expensive, the two lists have a lot of the same units.

Another fact is that the longer a unit stays in your inventory, the less gross and the less ROI you make.

You would think the more money you have tied up in a unit, the more money you would make. If you actually think that, you would be wrong.

Adding to that problem is another well-known fact that the longer the more expensive units sit, the worse the ROI is going to be.

So go ahead and lay your two lists side by side and validate what you already know.

Here’s one final fact. We often know things, but look the other way. When you look the other way, you’re just being stupid. Don’t be stupid. That’s all I’m gonna say. Tommy Gibbs

I recently sent out a one-question survey asking if “price sells used cars.” The response was amazing and the results have been tabulated. Over 90% of the surveys said yes. Those that said no or checked “other” said things like:

Price generates interest, but you still have to sell the car.

You still have to show value.     

Only if the unit is standing tall.

A main component, but not the only factor.

Perceived value matters.

Price doesn’t necessarily sell the car but causes it to get viewed.

The talent of the salesperson matters once they get to the store.

A better question would have been, “Does price drive traffic to your store?”

However you want to slice and dice it, price either sells vehicles or it drives traffic to the store.

Since this is an undeniable truth, why would you have any units over 60 days old? Isn’t it also a fact that the longer you keep a unit, the less gross you make on it?

My conclusion is there’s a price that someone would have paid for the unit much earlier in the life-cycle if you had just priced it right. By going away faster, you make more money.

This isn’t rocket science. It’s part of the fundamental laws of nature. Study nature. That’s all I’m gonna say, Tommy Gibbs

How long does it take to know if they can do it? Do what?

Do whatever it is you’ve hired someone to do.

Does it take a week?
Does it take a month?
Does it take 90 days?
Does it take 6 months?
Does it take 6 years?

How long does it take you to figure out if you’ve got the right person or the wrong person in the job?

Part of that decision-making process might depend on:

1. How much have you invested in the selection process of putting the right person in the right job?

2. Did you put someone in the job because they were the “next up?”

3. How much have you invested in their training and development?

4. How much have you invested of your own time coaching and teaching the person?

5. Does your organization give people the tools they need in order to be successful?

6. Do you make the effort to get legitimate feedback from those around you that “know” about how this person is performing?

How long does it take for you to figure out if they can or they can’t? That’s all I’m gonna ask. Tommy Gibbs

For the last couple of months, we’ve been testing my soon-to-be-released software, UpYourGross. I cannot tell you how exciting this product is. It’s simple; it improves turn, gross, and ROI; it reduces wholesales losses; it creates accountability, and it will be priced very inexpensively.

One of the things I’ve noticed with some of the testing dealers is that once in a while they will actually make a little bit of gross on a unit that’s over 60 days old. Maybe you’ve experienced that same thing.

Even though a little gross was made, the ROI went deep into the tank. But it’s important for naysayers like myself to remember that bills get paid by accumulating gross profit regardless of when it’s generated. It’s not a good business plan or a great bet to think it’s going to happen very often, but I get it.

Since I’m in the question-asking mood, what if that same unit had been priced the same way on day 30 rather than after 60?

Would you have sold it faster?

Would you have had a better ROI?

Better yet, could you have sold it and reinvested the money and doubled the gross on two units vs. one?

Used cars don’t age on day 61. They age on day one because someone isn’t paying attention. All of a sudden, day 61 rolls around and panic sets in.

One of the drills I like to do in my workshop is to ask managers to describe their oldest unit in stock.

After they tell me all about it, I ask them, “In your professional opinion, why do you think you haven’t sold that unit?” With very few exceptions, whatever they say was there on day one. The one undeniable fact about the automobile business is that price sells cars.

If you priced your most problematic cars more aggressively in the first 30 days, then you would increase your odds of making a lot more money.

Stop betting on lucky. Start betting on smart. That’s all I’m gonna say, Tommy Gibbs

As Starbucks CEO Howard Schultz reminds us, “Seek to renew yourself, even when you’re hitting home runs.” How appropriate is that in today’s market?

A lot of dealers had a record-breaking month in March. Some of them have already spent too much time gawking at their financial statements, poking their chest out and patting themselves on the back. And guess what? For some of them April is off to a slow start.

Let me caution you; you cannot be satisfied. You can never be satisfied. Those sounds you hear behind you are the competition coming to gobble you up. If you take just one little break, one little hiccup, it could be the very thing that puts you into a downward spiral.

People are successful for a variety of reasons, one of them being “fear.”

The fear of failure.
The fear of falling back.
The fear of giving up all they have worked so hard for.

It’s that fear that causes the successful ones to keep pushing and to keep looking for new and better ways of doing things.

Scott McNealy, CEO of Sun Microsystems, once said “You either eat someone for lunch, or you can be lunch.” No truer statement has ever been made.

Being a hard-charging competitor can be craziness at its best. Competing is fun. Trying to get better is the lifeblood of competing, leading and winning.

Study it. Embrace it. Love it. Use it as success fuel. Use it to take you to the top of your mental game.

Develop an unstoppable competitive mindset, and it will push you so far ahead of the competition that you won’t have to worry about looking over your shoulder.

What you have to realize is that most people are just lazy and because they are lazy they can become complacent very easily. Ultimately their lazy streak will show its head; that’s when you can “own” them.

There are times when you can have a good month in spite of yourself because the market lets you win.

No easy wins this month. Time to go to work. That’s all I’m gonna say, Tommy Gibbs

Salespeople are trying to make a living. You’re paying them on gross. What else would you expect?

My first management position was as a used car manager a very long time ago. I had a sales person working for me that was about as one-way of a person as you can ever imagine. He also wasn’t very good at telling the truth.

Let me tell you what he was really good at; he was really good at selling the freshest pieces that came into our inventory. Talk about doing a trade walk. Every morning he scouted the units that came in the night before. He knew what he could sell that would make him the most money.

During his tenure, I don’t recall him ever selling an older unit. He wasn’t there to help us. He was there to earn a living and feed his family.

It stands to reason why you have salespeople walking around your inventory. They can’t make any gross on those older units. They aren’t stupid, and though they may be team players, the team they are really playing for is the “home team.”

I’ve asked this question before and I’m going to continue to ask it. Does it make any sense in today’s market to keep paying salespeople on gross profit? They certainly don’t have as much control over it as they once did. You’re already setting the bar with the price you’ve put on the Internet.

The only way moving to a volume-based pay plan works is to be a one-price dealer or have a “well-disciplined management team” that’s not going to let them give the unit away.

And now you know why the management team walks around the pay plan issue. That’s all I’m gonna say, Tommy Gibbs

March Madness is almost over and so is your month. Unless you’ve been living under a rock you know that March Madness is the NCAA basketball tournament.

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.

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, 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. Try this. Raise your hand. Now raise it higher. See, I told you so.

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. How hard can it be to hold yourself and others accountable for just 21 days? Come on, get with it.

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.

If you’ve just returned from the NADA Convention, what better time than right now to start a full court press? Anytime is a good time to start a full court press.

I think of every minute of every day as a time for a full-court-press. Start pressing and run up the score. That’s all I’m gonna say, Tommy Gibbs

The problem with used cars is there are no absolutes. I frequently get questions starting with “What if…”

As in, “What if you have a one-year-old truck with 15,000 miles on it and you over-appraised it and have $42,000 in it?”

Accountability: “The quality or state of being accountable; an obligation or willingness to accept responsibility or to account for one’s actions.”

Accountability starts with you, vibrates to those around you and ends up back in your lap. If you believe a leader sets the culture of an organization then you must believe you cannot create an organization of accountability if you’re lacking in your daily disciplines.

If you’re not willing to hold yourself accountable then for sure you can’t hold others accountable.

Why should those around you do what has been deemed important, if you as their leader aren’t willing to do the same? There are a million ways to describe this, but since I’m a common sense guy, how about “monkey see, monkey do?”

A good leader makes sure those around them know what’s important. And a good leader makes things important by checking to make sure those around them are doing what’s important.

Building an organization of accountability isn’t a one-time thing. It’s an everyday thing led by you.

Accountability plays no favorites. If you let one person off the hook, eventually the entire organization falls off the hook.

Besides your personal accountability, there are three parts to holding people accountable.

1. Your personal street savvy. For many, this is based on time and experience and there are a few that are born with it.

2. Getting your head out of the sand. Get out of your office. Pay attention by using your peripheral vision and hearing.

3. Data. Look at the data and look at it some more. Data can be overwhelming. Figure out what’s important and what’s not by applying common sense to everything you’re looking at.

Sometimes data is misleading. Sometimes it smacks you upside your head.

Are you building an organization of accountability? That’s all I’m gonna ask, Tommy Gibbs

If you’re a consistent reader of my newsletters you may have noticed more than half of them involve the disciplines necessary to run your used car operation. There’s no denying that the stronger you are in used cars the better you are in New, Service, and Parts. It’s a given. It’s a fact. It is. It just is. You can deny it all you want. You will be wrong

There’s an old saying, “Do the things you don’t want to do, so you can do the things you want to do.” That’s a great life lesson to understand, live and grow by. Never has there been a more powerful truism than for the automobile business.

There’s no department that requires more specific strategic disciplines to be successful than your used car department.

The most common discipline that dealers struggle with is turning their inventory in 60 days. Let me state it a different way; no unit can become 60 days old. Some of the more disciplined operations are starting to put that number at 45 days old.

Most dealers would say they want to make more money. In order to make more money, you have to do some things you don’t want to do. One of those things is the pain of discipline. Doing a lot of little things each day to ensure you can do what you want to do.

If you’re not already on a 60-day turn it’s going to be painful and costly to get there. Either you or your staff will have all kinds of excuses as to why you can’t do it. It’s going to cost you some money to get it done. (Do the things you don’t want to do.)

When you finally get it done, your dealership runs smoothly, you make more money, life is simpler and you smile a lot. Now you’re doing the things you want to do, as in making more money.

“The pain of discipline or the pain of regret.” If you would use my lifecycle management process you’d have a lot less pain. That’s all I’m gonna say, Tommy Gibbs