1. Do a better job of training the sales people (and sales managers) to sell the value of your company and the value of the vehicle, and your grosses would be a lot better. The Team needs to learn to say “no” and to convince the customer that you have the best deal going.

2. Provide more information. The more information your sales people have about your inventory and how it’s priced to market, the more likely they are to do a better job of convincing the customers you’ve got the best car at the best price. You have to sell the sales staff before you sell the customer.

3. Do more and better research. The more research you do on what’s hot and what’s not in your market, the better off you will be. Grosses go up when you are selling a product that’s high in demand and low in supply. Key components for you to utilize are vAuto Stocking Tool and Auto Trader Data.

4. Rethink “Buckets.” Buckets are a solid discipline process, but you can’t take a position that all cars in the first 20 days are priced a certain way and at day 21 another way and so on. There are some that need to be over market and some under market, regardless of age. All cars have to be evaluated on their own merits and this must be done daily, not in 15 or 20 day windows. One of the biggest problems I observe is that cars don’t get re-priced soon enough. You might want to start to pay close attention to how often cars are re-priced. Some of your older inventory may have been ignored along the way.

5. Track GAP and ROI. Dealers who are tracking GAP and ROI are seeing a big difference in their average grosses. If you’ve not bought into this process then maybe it’s something you should take a hard look at. If you need the GAP/ROI spreadsheet, send me an email and I’ll get it right to you. (It’s Free!)

6. Fix your reconditioning timeline. If your most profitable car is a 20-day car (and it really is) how can you allow the service department to bog you down with it spending 7 to 10 days in the shop? This is one of those things that’s fixable, but it has to be done by the dealer. If the dealer wants to fix it then it gets fixed. Speed wins; the lack of speed kills. It’s as simple as that.

7. Re-do your website. How does your website look? Your website is the “New Showroom.” Do your pictures tell a good story? Do you have 12 to 20 photos? If that’s all you have then you are not in the game. You need at least 40 and they need to be done in a photo booth. If you don’t have a photo booth you need to make a commitment to get one. Saying you don’t have the space is a poor excuse. You can make it happen if you want to. Kind of like the issue in service. You can fix it. You just need to do it.

8. Install EWR into your “Trade Walk.” If you’re not familiar with Early Warning Radar, read this article. EWR will help you eliminate your problem cars. Even if you’ve read it before, read it again.

The used car department takes a lot of energy and effort to achieve the volume and gross you need to make big money. You can say that “gross is a state of mind” all you want, but what really creates gross is your mind getting in gear and fixing the things that impact gross, not sitting around thinking about it.

There’s no one big thing that’s going to improve your gross. It’s a lot of little things. That’s all I’m gonna say,Tommy Gibbs

I’m mainly talking to GMs, Dealers and Owner-Operators. I’m not saying you’re out of touch. I’m just asking if by chance you’re out of touch?

The view from a computer screen is very different than the view from the sales tower, the service write-up lane, the parts department back window, the technician’s work area and even the general office workspace.

Are you spending any real quality time in these areas? Do you really know what the team is up against?

I fully realize that when you visit these areas things are not always as they appear. Everyone is on good behavior when you are there. But, if you really pay attention you will soon see what they are up against minute by minute.

One of the things that will probably jump out at you is how much time your team members spend being unproductive. If nothing else, you will observe that you’ve turned your sales managers into clerks.

If they spent half as much time each day developing sales people and selling cars as they do chasing paper issues you’d sell a lot more cars and have a much better bottom line.

For gosh sakes, hire them a clerk. That’s all I’m gonna say, Tommy Gibbs

The more involved you can get your entire sales staff in your used car department, the more likely they are to sell a few more used cars for you.

Back in the ’80s, I stole the idea of Adopt-a-Car from my good friend Tim Deese, who’s been a used car guru for about the last 35 years.

It works very well when you have the discipline to work it. It has the potential to evaporate quickly so I suggest you consider trying it for 60 days. When I say try it, I mean announce that you’re only going to do it for 60 days so you don’t look stupid when the evaporation factor bites you in the butt. You can always renew it.

The fundamental adopt-a-car program is that each sales person has their own used car inventory and they get paid extra money if they sell their own units. If another sales person sells one of their cars they still get paid on it.

I’d recommend it be $100/$50. It’s easy extra money. If it would make you feel better, then add another $100 to the cost of each unit as it comes into your inventory so that when you finally pay it you’ve already expensed it.

If a sales person trades a car in, that car is part of his/her inventory. All other inventory is distributed on a rotating basis to the entire staff. When you first start the program you will have some orphan cars that you would do the same with.

In order to make this work you have to have the discipline to take cars away when a sales person doesn’t adhere to the program. The main reason we are going to pay them to sell their own inventory is to get them to help us make sure the car is standing tall at all times.

Here are some reasons to take a car away:

1. Cosmetic problems
2. Trash in the interior
3. Gas on empty
4. FTC and/or window stickers edgy
5. Hang tags not properly displayed

And now for the lot walk kicker. During the course of the lot walk, the sales people must be able to recite the following on their inventory:

1. Year, make and model of the car
2. Mileage of the car
3. How long we have owned it
4. The Internet Price and Last price change
5. Something they know about this car. It may be one owner or something they looked up about this model on the Internet.

You can come up with your own list, but if you are going to pay them to sell their own inventory then you need to require them to know something about it.

Make sure that when you do the lot walk you take a copy of the inventory with you and check them off as you go. “Voila,” there will be some missing cars and the used car manager and sales staff need to have an answer.

Adopt-a-Car is old school. Creating accountability is old school. Try some old school, that’s all I’m gonna say, Tommy Gibbs

1. Your oldest unit?
2. Where is it parked?
3. Your look-to-book?
4. Your most expensive unit?
5. What’s your wholesale to retail ratio?
6. Who owns your used car department?
7. How many turns are you getting a year?
8. What’s your average cost per unit in stock?
9. How many clicks does it take to get from A to B on your website?
10. How many days does it take to get a unit through recon and on the line?

There are lots of things you need to know. I’m just pointing out 10 of them. That’s all I’m gonna ask, Tommy Gibbs

Did you ever wonder why you can’t achieve and maintain maximum success in your used car department?

When you analyze it you have a pretty good inventory. You’re not short on operating capital. The amount of space you have is ok and most of the management staff seems to have a pretty good understanding of the importance of having a good used car department. You have great software that you use to stock and price your inventory and you do a nice job of reconditioning your inventory.

So what could it possibly be?
I’m gonna tell you.
Are you ready?
Are you really ready?
Here it comes…hang on.
I’m gonna tell you.
I won’t lie to you.
I have the answer——“nobody owns the department.” It’s that simple.

Until you or somebody takes ownership, it ain’t gonna happen. I realize every dealership has some restrictions on the amount of management staff that can be allocated to any one department, but far too often used cars are an add-on for someone on the team.

Maybe it’s sorta the GM’s responsibility.
Maybe it’s sorta the GSM’s responsibility.
Maybe it’s sorta the Desk Manager’s responsibility.
Maybe it’s sorta the Sales Manager’s responsibility.
Maybe it’s sorta the combination used car manager/sales manager’s responsibility.

See what I mean? Nobody owns it. Yes, the duties of a used car manager today are far different than they were 20 years ago. There are some situations where we are asking some “used car managers” to do things they don’t have the skills to do. Just because someone understands the wholesale market doesn’t mean they understand the retail market.

When somebody owns the used car department they come to work every day on a mission:

On a mission to make it happen.
On a mission to get people excited.
On a mission to ensure units aren’t aging.
On a mission to get units through the system.
On a mission to make sure the inventory is turning.
On a mission to get cars online and on the line ASAP.
On a mission to build a team that gets after the used car market.
On a mission to study the best of the best and make the department the best it can be.
On a mission to identify and have a strategic plan in place to make the problematic units go away.
On a mission to sell everyone on the role the used car department plays in the overall success of the dealership.

Who owns your used car department? That’s all I’m gonna ask, 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 I see 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

There’s a book out by Jason Jennings and Laurence Haughton that has the perfect title for the automobile business, “It’s Not the Big that Eat the Small…It’s the Fast that Eat The Slow.”

Some new car dealers believe the definition of Velocity is:

“Velocity-a method of giving your cars away so as to impact your gross to a point of a substandard amount that will make you want to throw up your hands, beat yourself over the head, and barf.”

I have a new definition for the word velocity; the whipping boy of the auto industry that can be blamed when we use software pricing tools as the Bible, don’t use our brains and don’t use the tool as it was intended in the first place.

You can make one of two choices:

1. Hold high gross profit per unit.
2. Do lots of volume at a little lower gross.

Which way do you think is going to pile up the most gross to pay the bills at the end of the month?

Dealers have been known to complain that when they went on the velocity method of pricing their used cars to market, their grosses went south. Well duh, of course they did.

What actually happened is those dealers had let their inventories age on them and when they finally priced them to market they got crushed.

Software won’t save you. Having discipline and using your brain will save you. There will be pain unless you use your brain. I like that, “Pain, if you don’t use your brain.”

That’s all I’m gonna say, Tommy Gibbs

So, how was your June? How have your first six months been? It’s July. Half the year is gone. Kinda scary isn’t it?

Some of you have had a great first half. Some of you, not so much.

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

Something has been holding you back. 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. That’s all I’m gonna say, Tommy Gibbs

Every human holds certain prejudices. We’d like to think we don’t, but we’re only human.

The type of prejudice I’m talking about is how you treat certain customers. Yes, I know this is pretty deep, but it’s something you should be very concerned about.

On the one hand, you have some customers that you roll out the red carpet for. You treat them like gold (which you should do for all) and you even give them special discounts or coupons from time to time when it’s not even necessary.

Sometimes the ones that you treat the best are the ones that only come to see you once every 6 months or so. With this un-loyal customer you do everything in your power to get them in and out of your shop as soon as possible and often give them a free car wash. In the end, these customers are not all that loyal to you and will drop you in a heartbeat for a cheaper deal down the street.

Then there’s another customer, a very loyal one that you don’t treat quite as well. It pains you to give them a discount and you will often send them to the back of the service line.

No free car wash for these customers. If anything, you look for a way to charge them more, let alone serve them up discount coupons. The hours per RO with these customers is more than twice what it is with the others. What’s funny about this customer is they wouldn’t think of doing business with anyone but you. They are loyal to you beyond belief, but you treat them like crap.

Let me introduce you to these two customers that you show prejudices to every day.

Meet your retail customer and your used car department. That’s all I’m gonna say, Tommy Gibbs

There are a lot of challenges in today’s automobile world.

Most of us are always looking for answers.

Could It Be?

1. Could it be that the consumer is using the Internet for the majority of their purchases and therefore is pushing you into a pricing war you would rather not be in?

2. Could it be that you are not managing your pricing correctly? Are you coming out of the gate based on a bucket concept and pricing everything at X amount under market? Are you failing to shoot the moon on a few select units for x number of days before you drop your pants?

3. Could it be the stuff you are buying is like an impossible dream? Are you buying 2015’s with 25,000 to 35,000 miles on them? Really? The only way you’re gonna sell them is to give them away, eroding more average gross profit.

4. Could it be that you and/or your team really don’t understand “Life Cycle Management” and the powerful impact it has on gross and volume?

5. Could it be that you are stocking cars that are way too expensive, so you end up competing with your new car business and selling them at little or no gross just to make them go away?

6. Could it be you are not tracking “GAP?” If you aren’t tracking GAP then how are you to know how much you’re giving away once the customer shows up?

7. Could it be your used cars spend the best days of their shelf life tied up in service and recon?

8. Could it be your presence on Auto Trader and your website is just so, so? When was the last time you looked at the photos on your website?

9. Could it be your management team isn’t really a team?

10. Could it be you have gotten too smart to do a “save-a deal” meeting every morning?

11. Could it be you let a lot of nice trades get away from you because either (A) your managers won’t step up or (B) they wholesale them because they feel the service department is ripping them off?

12. Could it be you have aged units and when you dump them they kill your overall gross?

13. Could it be the deal is screwed up before it ever gets a chance to be turned over to a manager and/or the managers just aren’t taking TOs?

14. Could it be you’re not willing to invest in your team what it will take to maximize results?

Maybe you just need to think about what it could be. That’s all I’m gonna say, Tommy Gibbs