When I was a kid growing up in Richmond VA my father had a “dirt lot” used car lot.

My father and some of his fellow used car dealer friends loved to gamble. Back in those days they would rent a hotel room in downtown Richmond and play cards all night long. Some nights he came home with money. Some nights he came home broke.

My father’s nickname with his peers was “Nervous.” Yep they called him nervous. He was always worried that the cops were going to raid the joint and take ’em all to jail.

We all inherit traits from our parents. I inherited the “nervous” trait from my father.

Used cars make me nervous. Some used cars make me more nervous than others.

I actually believe I have a special radar for some units that make me shake in my pants.

A few of the ones that make me the most nervous are:

1. High dollar
2. High miles
3. Bad colors
4. Bad equipment
5. Cars we have too much money in from jump street
6. Anything 45 days old and older

Yep, those are just a few of the ones that make me nervous.

Gambling made my dad nervous.
Used cars make me nervous.
Gambling on the wrong used cars makes me even more nervous.

What makes you nervous? That’s all I’m gonna ask, Tommy Gibbs

Sometimes it’s simplest processes that are the most effective. Pressing your cost down may be the easiest and fastest way to improve your used car business.

Most new car dealers are not in the used car business. Most are in the NEWSCAR business.

That’s when the average cost per unit in your inventory keeps creeping up and up and before you know it you are too close in price points to your new car inventory. I have an easy experiment for you to do.

Take out your financial statement and go to the used car page. To do this correctly you will need to chart each month for the entire year. On that page you will see a column that has used car sales dollars in it. Simply put, that’s as if you sold one car for $10,000 and one for $20,000, thus you had $30,000 in Sales Dollars.

That in and of itself doesn’t mean much to you. Now, subtract your total gross profit from that sales dollar number for each month. That will give you your cost of sales.

Divide the cost of sales by the number of units sold each month. That will give you the average cost per unit sold for each of the twelve months. I know, I know, pretty simple stuff.

Hang on… When we do this little experiment here is what we generally find: the month in which you had your best retail sales is the month in which your average cost per unit sold was the lowest for the entire year. And, the month in which you had your worst retail sales, your cost per unit sold was the highest for the entire year.

The bottom line is that the more you press your average cost down, the more used you will sell and the better off you will be. You end up getting in the used car business and out of the NEWSCAR business.

You end up selling more units with fewer dollars tied up. Oddly enough, most of your problem cars go away. Your ability to get on a 45 to 60 day aged inventory goes way up.

So, what’s the magic number to get to? There is no magic number. Every dealer’s number will be different. If you are at $14,500 today, your mindset should be “How do I get to $14,000,” then $13,500, then $13,000 and so on.

The more you press your average cost down, the better off

you will be. I find it interesting that when I’m speaking to a group, they think they are hearing me say go out and buy cheaper cars.

No, that’s not what I’m saying. I fully realize how hard it is to buy cheap cars. What I am saying is that it’s not so much about what you buy, but what you don’t buy. If you are buying a high dollar car you have to buy it with great caution. You need to either have it sold, or have data to back up that it’s going to move fast.

I’m often asked two questions:

1. What should my target goal be? There is no target, just try to get it lower than the day before.

2. Can I press my average cost too low. The answer is no.
Pressing your average cost down is a no brainer. That’s all I’m gonna say, Tommy Gibbs

I’m in multiple dealerships almost every week. I get to see it all. The big ones, the little ones and bunches of in-between. I’ve seen 15-car showrooms and I’ve seen some that have zero cars in their showrooms.

In the big picture I realize dealers have to build what the manufacturers require them to build in order to acquire, keep and maintain the franchise. But, do you really need the size facility that some require you to have? Expensive real estate and expensive buildings may one day be the kiss of death.

Take a look at the banking industry. They are stuck with some serious “legacy buildings” that at some point are going to come home to roost. ATMs have turned into online banking. Online banking could turn into a thumb-print and you’re done.

Who needs to take a check to the bank when you can make the deposit with a photo and a few clicks on your phone? Go into any bank today and you will see very few staff members. What the heck are they going to do with all those buildings as we move into the new era?

Every piece of research indicates the car buying consumer wants to handle more and more of the purchase online.

In a recent article in Automotive News, Tom Kinney, manager of the General Motors Pre-Owner Collection Division, while discussing the Collection strategy stated, “The way the dynamics are changing in the marketplace, consumers are clearly demanding this type of a process, on a large scale, all in one place and more of it online. We’ve built this to keep us and our dealers relevant so we can be ahead of that curve.”

Sounds like they know the curve is moving more to online yet they want you to build and maintain big facilities. You can replace the words GM with Toyota, Honda, or Mercedes. They are all the same when it comes to facilities requirements.

Think about what’s happening right now with Cadillac. In the not too distant future, some of the smaller Cadillac stores won’t have any inventory and will order cars online for their customers. Push a button and maybe the car will show up before they buy something else.

What size is your current store? What size does it need to be? Makes you wonder how much longer you’re gonna need that big expensive showroom, doesn’t it?

I think the factory is speaking out of both sides of its mouth. That’s all I’m gonna say. Tommy Gibbs

Memorial Day is just around the corner so here’s an idea for you.

Odds are you are saying you’ve been there and done that. Probably not the way I’m going to explain it. Depending on the state you’re in, most dealers have had some experience with off-site “tent sales.”

Going off-site creates lots of issues. Many of those issues can be eliminated by doing an on-site “tent sale.”

Try This:
Put the tent up as close to the road as possible. Pick the best strategic position on your lot.
Put tables and chairs in the tent.
Put ALL of your people in the tent.
Everybody goes in the TENT!
Work all deals in the TENT!
If at all possible move your computers into the tent and do F&I in the TENT.
Hang banners from the TENT saying “TENT SALE.”
Promote it with Direct mail and/or with a “private invitation” only deal for Thursday before you kick off your regular ads.
Do anything you can to make it look like a circus.
Rent those jumping air things for kids.
Get Port-a-Potties. (People think something special is going on when they see them. Make sure you put them close to the road.)
Balloons and more balloons.
Pop Corn, Sodas, Hot Dogs.
Lots and lots of spiffs for your sales people and managers.
Do a great kick off breakfast on Thursday for your staff. Don’t just do it for the sales staff; get as many of your employees involved as you can. (Feed everybody lunch every day of the event as well.)
Send out memos and emails to all employees explaining in detail what’s going to be happening.
Rope off special parking for customers. Hire an off duty police officer or security guard to direct them.
Answer the phone XYZ Dealership Tent Sale in Progress.
Use any ideas you can think of to create attention.
Do a fundraiser at the same time for the local little league or whatever.
Post the event on your website.
Do an email blast to all your customers advising them of the sale. If your CRM system is sophisticated enough, make sure you tell them you need their specific trade and will pay top dollar for it during the sale.
Giveaways generally don’t do much except cause people to show up to get their gift and leave, but having people register for a free car is a good way to get info on them when they show up. Pick out a $1000 or $2000 car and give it away.
Along that same line, give the salesman who registers the winning ticket some sort of prize. Gift card, $200, whatever floats your boat…
Make up a bunch of signs like real estate signs that say “Tent Sale in Progress” and put along the grass in front of the dealership.
If you’re close to the interstate do some signs with arrows and put up close to the ramp. (Oh come on, the worst that can happen is they make you take them down.)
Rent a chicken suit or some kind of character and have them walk up and down in front of the Dealership with a placard that says “Tent Sale in Progress.”

You just have to be creative. Get some of your key people together and throw around some ideas. Event advertising works. You won’t spend that much more money than you normally spend on a big weekend, but you will get better results.

Consider following up after your “Tent Sale” weekend with a Big Used Car sale the next weekend with a theme of “we have to move all these trades because of the big success of last weekend’s Tent Sale.”

This might not be a fit for everyone, but maybe it’s a fit for you. That’s all I’m gonna say, Tommy Gibbs

Like many things in life, either we over-think them or we don’t think about them at all.

I have a little drill for you. Take a look at your retail used cars sales over a 24-month period. Graph out the sales for each corresponding month.

You should be able to spot trends in your sales that are directly tied to each month of the calendar year.

Even though we want to be optimistic and are always thinking of increasing our sales, we also need to be realistic. Maybe realistic is a 10 to 20% increase for each month. I like the term “optimistic-realist.”

The problem I often see is that dealers’ inventory stocking levels are the same for the slow months as they are for the busiest months. If you know January is your slowest sales month, then why would you have the same stocking levels as you do in July?

I have a hard time buying into the concept that you are stocking up on inventory in January to sell in May. If you’re totally sold on that idea then do yourself a favor and run the ROI on those units when you finally sell them and let me know how it turns out for you.

It’s ok to be optimistic, but don’t be “stupidmistic” (yes, I make words up) when it comes to how many you’re going stock. That’s all I’m gonna say, Tommy Gibbs

You’re looking for more and better sales people. You’re looking for more and better used cars and trucks for your used car department.

The reality is that there is no simple fix for either of these problems.

If you think hiring a rock star buyer will solve your inventory problems, in the end you will probably make them worse. If you think hiring a full time trainer/recruiter will be the fix-it for your need for sales people, then it’s probably not going to work out that well.

But of the two, hiring the recruiter/trainer will probably work out better than the buyer. These are the two toughest problems facing all automobile dealers and there is no one fix and voila it’s done.

Finding great players is a full time, never ending job. It’s just like being in the coaching field. Great coaches are always scouting and recruiting. If you are looking for a magical ad to put in the paper that’s going to attract your next superstar you may be waiting quite a while. (Try Hireology)

If you are looking toward the next great job fair and think you’re going find 10 college graduates for your sales team that will carry you to the promised land you are in for a very long day. It doesn’t happen. It doesn’t work that way. If you wait to hire people when “you need” them you are never going to find the people you need.

You and your assistant coaches have to be recruiting every minute of every day. You should be recruiting your customers, the sales clerk at the shoe store, your next-door neighbor, the waiter or waitress you meet at lunch or the enthusiastic hostess you met at Applebee’s. One of the most successful General Managers I know was working at Wendy’s when he started selling cars.

I love college graduates. It’s not so much what they actually learn, but it does show they can stick to something. However, the odds of them sticking with you are not very good. Most college graduates don’t see selling cars as a “step up” in their life.

What you should be looking for is someone who feels they missed the boat and this is their big chance. Someone with a year or two of college is a great selection. They think they screwed up by not finishing school and they see what you offer as a super opportunity. And of course if they have a sports background all the better. They are used to getting knocked down and getting up.

As for finding more inventory…Hey coach it’s the same thing. It’s a constant thing. There is no one answer. If you are going to succeed in finding used car inventory you cannot leave any stone unturned. Trades, mining your customer base, online auctions, auctions, for sale by owner and any other brilliant idea you can come up with. (Try StockWave)

But, none of them in and of themselves will give you the inventory you need. If you are only looking for cars when you need them you are going to end up with a lot of cars you don’t need.

When it comes to finding people and finding inventory they both require an ongoing effort by the entire management team. When you dabble in finding people and cars when you most need them, it’s like plowing a field uphill with a mule.

When you and your team accept the responsibility of looking for inventory and people as part of an every day discipline then you increase the odds of finding what you need.

It still won’t be easy.

Everybody wants easy.

It’s never been easy.

It will never be easy.

Stop looking for easy. Start looking for people and used cars and trucks.

That’s all I’m gonna say, Tommy Gibbs

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