I realize human nature is that people like to complain and want to blame someone for their inefficiencies. What do you think the number one complaint is I hear from sales management when I’m in dealerships?

Yep, you’re right, the service department. Sometimes it’s subtle, sometimes it’s blunt, often tempered with an excuse or apology to dare complain about it.

Early in my career my attitude was, “Shut up, go to work and control the things you can control, because it’s not going to change.” Well, I’m here to tell you it does need to change and sooner rather than later.

If you review history, you know that the reason dealers charged full retail from the service department to the used car department is very much the same reason they implemented packs. Sales managers have historically worked from cost up and so charging full retail and having packs has worked very well over the years.

You can think what you want, but as time has progressed, the used car department has become an easy mark for the service department. Though there are other factors involved, never forget the fact that the hours per RO on a used car ticket vs. a customer pay ticket is more than double.

It’s not only the amount they are charged, but also the time it takes to get the car in and out of service. Almost everyone in the business today understands how crucial speed is to being successful. The lack of speed and efficiency in your service department is killing your ability to do volume and make the money you have the potential to make.

Creating speed and becoming more efficient should be your number one priority as you move into the selling season.

I like relating our business to sports. Name a sport, any sport and today’s athletes are bigger and faster than they have ever been. With profit margins decreasing, your business needs to emulate sports. You have to get bigger (sell more cars) and become faster and more efficient than ever before.

Today the big buzz is how can we make the customer experience easier, better and faster? Even if you can improve the selling process you will never maximize your potential until you tackle the amount of time and cost tied to getting the used car to market.

I’ve said it before and I’ll say it again. The greatest thing about being the dealer/owner operator is you have the power. You have power to fix whatever it is you want to fix. That’s all I’m gonna say, Tommy Gibbs

Baseball season is here. Without a doubt all the teams are excited, optimistic and hope to make the playoffs. Only the best of the best will do so.

I’m thinking you and your team would also like to make the playoffs. The playoffs for you would be to sell more units and have a record profit year.

Here are 6 fundamentals that you need to focus on if you want to make the playoffs:

1. Hustle, Hustle Hustle-When I think of baseball and hustle I can’t help but think of Pete Rose. His nickname was “Charlie Hustle.” As a player Pete was the epitome of the word hustle. That is the mindset you need to be successful and move your business to the next level.

You have to be determined to out-hustle the other guy, gal or business. The great thing about hustle is that it requires no God-given talent. It just requires that you want to do it. So maybe you’ve not been hustling as hard as you should. Let’s hustle a little harder. Let’s dive for some line drives. Get with it.

2. Have a Game Plan-Nothing happens without a strategic game plan. The plan has to be well thought out. A solid plan requires research, time and talking to others. Those around you see and know things you cannot possibly know. It will surprise you what you can learn from people you would normally discount as not being important or having much to offer.

Your plan should be constantly developing, growing, expanding. Adjustments are a part of the game. Those who can adjust to the changing conditions increase their chances of winning. Put the plan in place and be ready to make adjustments. Every one of those players in the All-Star Game took batting practice before the game. Part of your batting practice needs to be to look for ways to tweak your game plan.

3. Think Fast-Think fast and move fast should be your motto. Decisions and changes need to be well thought out. If you’re “up early and stay up late” you can make fast decisions that will bury your competition. In baseball, even if your team has weak areas, speed can overcome a lot. Think fast, be fast.

4. Increase Your Communication-Communication starts by listening and responding. It takes a combination of meetings, memos, emails, and phone calls to distribute information. The keys are updates and progress reports. The more information you share with your team the more progress you will see and the more your team will develop.

The more the team develops the more wins you get. There’s a lot of communication going on in a baseball game; signs, signals and meetings on the mound. You can never communicate the game plan too much or too often.

5. Get Back to Empowerment- Years ago, automobile dealers took a page out of the airline book of customer satisfaction by allowing staff members to make on the spot decisions to satisfy customers. Our policy for years was if the customer asks then the answer is “Yes.”

That’s not to say that you don’t need to have limits, but you must empower your people to “just handle it.” Nine times out of ten you’re going to do it anyway, so let them handle it in the trenches. If you have talented players sometimes you have to turn them loose.

Talented base runners are often allowed to steal on their own. The coach lets them use their God-given talent. Yes, they get thrown out once in a while, but people have to make some mistakes in order to learn and get better.

6. Pick Up The Intensity-When you combine Intensity with Hustle it’s almost impossible not to hit homeruns. There’s nothing magical here. Intensity separates the winners from the losers. It gets down to the teams who are moving ahead vs. the ones who are stagnant.

I’m pulling for you to make the playoffs . That’s all I’m gonna say, Tommy Gibbs

You probably fit into one of two categories. Either you are not happy with your average gross per unit or you are not happy with the volume of your used car department. In either case you also may not be happy with the total gross being generated.

Let me remind you that the only thing that is really important is how much total gross you are generating. I always say, “You cannot spend average gross profit. You can only spend total gross profit.”

It’s a contradiction to say to your staff that you expect both high volume and high gross per unit. They stay confused and frustrated when you keep pounding them over the head with this misdirection and sleight of hand marching orders.

I’m sure somewhere out there someone is making it happen on both ends, but it is certainly the exception and not the rule. So, you need to get over it. That’s not to say that in your store that you can’t do better with both than you are currently doing.

It’s a given that more than 80% of the people shopping a used car shop the Internet. If you think you are going to post high prices or no prices out on the Internet and traffic is going to show up, you are dead wrong. The Internet is a “game changer” for all of you, regardless of your new car franchise or set of circumstances.

You have to decide if you want to play the game. More importantly you have to decide if you want to win the game. It’s a game. There are winners and losers.

As Dr. Seuss said, “You have brains in your head. You have feet in your shoes. You can steer yourself in any direction you choose.”

If you are going to improve volume, you absolutely must develop a sound acquisition strategy other than just going out and buying more cars. Without allocating the right resources and strategy then going out and buying more inventory is the kiss of death. All that’s going to happen is you’re going to have a lot of aged inventory a few months down the road.

Taking this leap into the volume world means rewriting your overall strategy from acquisition to staffing, pay plans, reconditioning, marketing, and pricing.

Failing to address any of these will result in frustration and poor production and you may find yourself worse off than you are right now.

The fastest way to happiness is an improved bottom line. The fastest way to improving your bottom line is to improve your volume. Improving your volume improves the business in all departments.

That’s all I’m gonna say. Tommy Gibbs

March Madness is upon us. 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.

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

Every now and then we all poke our heads above the fence, and sure enough, someone will throw a rotten tomato at us. I’m poking my head above the fence. Don’t throw too hard.

My subject today is those units that come back into your used car department that have previously been in loaner or rental car service.

Most of the time they are just a few months old, nice cars, with low miles. They quickly become aged units in the dealer’s used car inventory that don’t make the used car department any money and worse than that, they are a source of great frustration for all.

There are solid and legitimate business reasons for having loaner/rental units as part of your business model. I get that.

The problem is they aren’t curtailed/written down enough while they are being utilized in your fleet and when they come out of service the dealer expects the used car department to save the day by retailing out of them.

Dealers sell them to the used car department based on what they have in them not based on what they are worth.

You sometimes try to justify to yourself that they are worth what you have in them because they are brand new units. They are not brand new units. By and large they don’t have new car incentives attached to them and in most states they have to be sold as a used car.

Ask yourself, if you went to the auction what would you pay for them. Hey, there’s a thought…why haven’t you taken them to the auction? Because you know they aren’t worth what you have in them. This ain’t rocket science.

Another piece of this equation is that these units have to compete with your new car business. It’s an impossible task that you are bestowing upon your used car department to retail you out of units you are super high in.

These units are probably worth $2,000 to $4,000 less than what you are selling them to your used car department for. Do you think your sales staff wants to sell units that you are so buried in? And you wonder why they are aging on you.

These units are costing you business left and right. Why would a used car manager want to step up on a similar trade at the front door when they know they have 15 units sitting out there right now, and probably another 10 on the way? (Read THIS from a week ago.)

These are dead units taking up space and dollars in your inventory.

If you want to get real, you should sell them to the used car department for the right money and share the write down expense with all departments. All departments, especially the parts and service departments, benefit from having loaner cars at their disposal.

This situation isn’t going to improve in the long term unless you take the advice I’ve just given you.

In the short term, you need to re-appraise all those units. Eat the loss, give them a new birthdate and put my life cycle management process in play.

I said you weren’t going to like this. We often don’t like the truth. I’m telling you the truth. Let the tomato throwing begin. That’s all I’m gonna say, Tommy Gibbs

Quotes I often hear when I’m in dealerships:

1. “We never miss a trade.”
2. “We don’t try to steal trades.”
3. “We put top dollar in every unit we appraise.”
4. “We’re not going to miss a deal at the front door.”

Fundamentally none of these are true. Everyone misses trades.

What’s funny is when you go to the auctions to buy cars you always pay more for them than you would if that car was sitting at your front door.

Stealing trades is one of those things that falls into the “We’ve always done it that way” category.

I believe there are four fundamental causes for trying to steal trades:

1. The fear of the bump. Used Car Managers fear the bump from upper management so they low-ball the trade thinking the bump request is just around the corner. The used car manager is protecting their “territory” by low-balling the trade.

2. Pay plans also tie into stealing the trade. The manager is protecting their own personal pocketbook especially in those cases where the used car manager is only paid on used car gross. Even if they are paid on total gross it still creates “trade stealing.” Gotta make some gross someplace.

3. Aged inventory. We need to steal the trades to make up for the sins we have on the lot right now. As long as you allowed aged inventory to exist you’re going to have people trying to steal trades.

4. The old adage that you “make the money,” when you buy or trade the unit. That’s only partially true. You “make the money” when you sell the unit and you make the most when money when you sell it fast.

Here’s the fix:

1. Put solid disciplines in to eliminate aged inventory. (My Life Cycle Management Process.)

2. Put top dollar on every trade. I said top dollar on every trade. No bumps. Pretend you are at the auction. Step up from jump-street.

3. Change the pay plans. Paying on gross profit becomes more archaic every day.

4. Stay focused on improving your look to book. Review every vehicle that was appraised from the previous day that you didn’t get.

When you stop stealing trades you improve the quality of your used car inventory.

When you improve the quality of your used car inventory you sell more used cars.

When you sell more used cars you become more confident that you can put top dollar on trades.

When you put top dollar on trades you sell more new and used cars.

Stop stealing trades. That’s all I’m gonna say. Tommy Gibbs

There’s a lot of conversation these days about a surge of off-lease cars flooding the market and hurting wholesale values.

Oh stop it! Don’t listen to all that silliness. Of course values are going down. It’s not very often that used car values go up.

Of course you have to pay attention to the market. It’s not any different today, tomorrow, this year or next year. It’s always like that.

What you should be thinking is stick to your core principles. Do those fundamental things each and every day that you know you need to do.

Do What You Know!

1. Make good decisions
2. Price them right
3. Price the problematic cars to sell faster
4. Speed your processes up
5. Be smart with high dollar used cars
6. When you miss a car, deal with it quickly
7. Don’t operate in fear
8. Do a Trade Walk every day
9. Turn units faster
10. Press your cost down

You won’t get hurt if you pay attention and do the things you know you need to do. And, do them every day. Do what you know.

That’s all I’m gonna say, Tommy Gibbs

I frequently write articles trying to get you to take certain actions in order for you to avoid having aged inventory.

The more I study the subject and the more dealers I work with, the more I become convinced that there’s very little money being made on anything over 30 days old.

The biggest problem with aged units is the impact on your ability to sell cars today. Nope, I’m not even talking about your ability to price and sell the aged units. I’m talking about your ability to trade for more vehicles as you work new and used car deals.

When you have aged units, there’s a little voice deep inside the dark corner of your brain saying, “Hey, be very careful, don’t step up too much on that trade. Bossman, you’ve got a bunch of other issues out there on the lot and if you step up on this one, you’re just creating more problems.”

It’s not just that you can’t make any money on the aged units; you can’t sell fresh units or new units because your existing inventory keeps your brain all twisted up.

Keep an eye on that dark corner inside your brain. That’s all I’m gonna say.Tommy Gibbs

I often have conversations with dealers and managers about units they have had in their inventory too long and/or those vehicles that might be in the $25,000 to $35,000 range.

I question whether they are profitable or not. For those managers who want to keep units until they can retail them I sorta agree in that I’d like to see you retail them, but faster. I hate dumping retail pieces in the wholesale market.

I’m convinced that keeping them past 45 to 60 days doesn’t make you money unless of course you make a killer gross. I’m also convinced that the longer you keep the more expensive vehicles, the further you erode your profits unless of course you make some awesome grosses which isn’t too likely.

So, here’s the deal…if you disagree with me “prove it.” Yep prove it. Start tracking the ROI on any unit you retail over 60 days old and any unit that you have over $25,000 in.

Come on, bring it on. Prove it to me. Prove it to yourself. Remember when calculating ROI, the standard is to use only front gross and the sweet spot is 110 to 120%. You can use my ROI calculator. Go to FixRoi.Com.

I’m looking forward to you proving me wrong. Bring it on. That’s all I’m gonna say. Tommy Gibbs

The final in a 3 Part Series.

1. Think in terms of improving gross in small increments. Try paying the managers a bonus for achieving nominal increases each month. Start by improving gross by $50 a unit. Do that over the next year and you will see a slow and effective way to increase your gross. You can only eat the elephant one bite at a time.

2. How could I talk about your grosses without mentioning “Life Cycle Management?” Life Cycle Management is designed to help you create a sense of urgency on those cars that are most likely to kill your grosses. The faster they go away the better your gross will become.

3. Track GAP and ROI. When you do, grosses go up. How much are you giving up once the customer shows up at your store with a price from the Internet? If you don’t know then you can’t fix it.

4. Are you stocking the wrong stuff? If the data tells you there are a lot of Impalas being sold in the market then it stands to reason that there must be are a lot of them for sale? And wouldn’t it be logical to assume that it will be hard to make money on those units since there is a high day’s supply? When it comes to making gross, the law of supply and demand is certainly in place. You don’t have to be an economics major to understand this fundamental principle.

5. Shoot the moon on the right stuff. Since the beginning of the car business, higher grosses are driven by some home run cars. You have to understand which ones are home runs, singles, doubles and triples.

Fix what you can fix. That’s all I’m gonna say, Tommy Gibbs