Could it be that you’re too smart for the car business? No really, I’m convinced that some people are just too smart for this business.

I’m not going to deny that to be in the business today requires a much higher degree of thinking and intellect than it did 30 years ago.

But, there are some people who over-analyze, over-think, over-chart, over-spreadsheet to the point where they forget we’re in the car selling business.

One of the best dealer operators I ever met would take a chance, throw it against the wall and bam, lots of cars got sold.

He didn’t overthink it. He just went for it. Oddly enough he was right more often than not and he didn’t need a spreadsheet to tell him to “let ‘er fly.”

I love being around smart people. I always learn something from them. Sometimes I learn what not to do as much as I learn what to do.

Don’t overthink it. Just sell cars. That’s all I’m gonna say. Tommy Gibbs

For some of you this isn’t going to be pleasant. Or at least it may not be if you do what I’m going to suggest.

Regardless of your position in the dealership, owner, new car manager, BDC manager, used car manager or even if you’re not a manager, go click on your website… right now, yes right now go look at your website.

Even if you think your website looks great, I dare you to go look at it. (Don’t be chicken.)

I’m only going to pick on used cars, but if you take the time to click on all your buttons I’m betting you’re going to find some things that will drive you nuts. We all need to pretend to be our own customer and see what works and what doesn’t.

Click on the used car section and tell me what you see. Take it a step further and scroll through a few used cars…keep scrolling…

1. How many photos per car do you see?
2. How many lousy pictures do you see?
3. How many are taken outside?
4. How many have shadows?
5. How many have a factory photo?
6. How many have no photo?
7. How many don’t have a price?

Depending on what you just looked at there’s a good chance you are saying, “What the heck are we doing? No wonder we’re not selling enough used cars. No wonder we’re not making much gross per car.”

Can we all agree that somewhere between 80 and 90% of all customers who shop for used cars look on the Internet? If that’s even close, how do you think you’re gonna drive traffic with photos that look like what you’ve just viewed? (Did you see any with snow on them?)

The concept of a photo booth has been around for years now. Progressive organizations that understand the real world have a photo booth.

You won’t come close to maximizing your sales until you maximize your exposure. You will never maximize your exposure by taking photos outside.

I’m exposing you by daring you to look at your website. Don’t like what you see? Don’t be sad. It’s going to be ok. Just fix it. That’s all I’m gonna say. Tommy Gibbs

The most misunderstood topic I discuss in my workshops are SETS & SUBSETS. For some dealers it’s not a good fit. For others it’s a great way to drive traffic.

I will be the first to agree SETS and SUBSETS are not for everybody. They are especially not for you if you haven’t solved a lot of your other used car issues.

I’m not going to try to sell you on SETS & SUBSETS, but I do want to show you that first, it’s not all that complicated and second, it’s something you’ve done with success in the past in one way or another.

SETS & SUBSETS are all about setting up a price leader to drive traffic to the store.

What’s so bad about that? Don’t you do that right now? I have to believe that in one way or another you do it with your new car business, so why not do it with used?

The lead or number 1 car is the most important car in the SET. You can do SETS in 2, 3, 4, or 5 car SETS. Experience has taught me that going deeper than 5 just confuses the issue and makes it much more difficult to manage.

If you had 5 similar cars and you wanted to advertise them as a group (you did this back in the program car days), wouldn’t it make sense to advertise the least desirable of the 5 as a price leader in hopes of driving traffic to the other 4, or better yet, to your store?

The lead car is simply the least nice of the group. Make it safe, but don’t make it too pretty. This is not about bait and switch. It’s about the customers transferring themselves to another car in the SET or to one out on the perimeter.

The key to SETS is picking the right lead car. It needs to be desirable in the “public’s mind,” and most important is that it should be the latest model you can find for that SET.

Two of the biggest mistakes that dealers make are trying to make a profit on the lead car and picking too nice of a car to be the lead.

The lead car is a “loss leader.” More often than not the car that dealers pick to be a lead is really a number 2 car. A 2 car is a profit maker and one that you’ve fully reconditioned, so you would want to make sure you haven’t made it the lead.

If you want SETS to work, you have to advertise your lead car at what you have in it or less. If you try to make a profit on the lead car the traffic probably isn’t going to show up. The sole purpose of the lead car is to drive traffic to the dealership.

When done correctly one of three things will happen:

1. The customer shows up and buys the lead car.

2. The customers transfer themselves to the 2, 3, 4 or 5 car.

3. The customers buy something out on the perimeter.

The key is that the customers showed up on your lot today and you have a chance to sell them something.

So, there it is. SETS described in its simplest form. It’s not all that complicated or any great trickery with the consumer. You’re just advertising a price leader and giving the customers some other choices when they show up.

Might be a good fit for you. Might not. That’s all I’m gonna say, Tommy Gibbs

Can I get an amen that it’s hard to find good technicians? Heck, can I get an amen that’s it hard to find technicians period?

I’m going to be more specific. How about used car technicians? Tough gig isn’t it?

Regardless of how you slice it and dice it there are only about 3 models to pick from when you think about how to get used vehicles through the mechanical shop.

1. Goes thru your regular shop, assign vehicles to technicians in the same rotation as a retail customer. Everybody in the shop works on your used vehicles. Works well for the shop, not so well for the used car department.

2. A separate used vehicle shop. Works much better for the used car department, but there can be issues with keeping the technicians busy when there is any kind of slow down with incoming used vehicle inventory. And, very difficult to do due to space restraints.

3. Within your regular shop you have separate used vehicle technicians that only work on used and a used vehicle service writer who coordinates their activity. Of the three choices, given the issue of facilities and staffing this is the one that has the most potential to create efficiency and harmony.

The major problem when service managers think about having someone dedicated to working on used is they don’t want to pay them what they are worth.

There are many reasons for this and one of them of course is the service manager doesn’t want to upset the top “franchise” technicians in the shop by paying the used vehicle technicians at the top level.

And even more to the point, they have been taught very well that they must keep their cost of sale in line in order to make a profit and for their numbers to look good to upper management.

The reality is a good used vehicle technician needs to be one of the highest paid technicians in your shop. A good used vehicle technician’s skill level has to be equal or greater than whoever your top dog might be. And, you need to pay them as such.

So, if you’re mentally fighting with the cost of sale thing, let me suggest that you can keep your cost of sale in line for service and let the used vehicle department participate in some of the additional compensation required to get and maintain top level used vehicle technicians.

It might be an incentive that’s paid based on some formula that in the end compensates the used vehicle technician for what they are really worth, not for what the shop thinks it can afford.

Paying more is not always the answer. But, paying people what they are worth is far better and a lot more productive than paying them what the shop thinks it can afford.

If you can improve your speed and efficiency it’s money well spent. That’s all I’m gonna say, Tommy Gibbs

Can you believe it? The year is half over. Time really does fly doesn’t it?

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.

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.

That’s all I’m gonna say, Tommy Gibbs

Make a list and attack your 10 most expensive units every day. 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. Most dealers bonus their sales staff when the units have aged. Do it early, you will be much better off.

Make sure the service manager gets a copy of the list every day. If one of those units happens to be in the service department, the service manager has to understand they must get it out of the shop in a hurry because it’s one of your 10 most expensive units.

Also give copies to the sales managers and F&I managers every day. The entire team needs to have top of mind awareness that these vehicles need to go.

In many cases your top ten most expensive are also some of your oldest units in stock. Duh…that’s because there are fewer butts that can fit in those seats. That’s all I’m gonna say, Tommy Gibbs

A number of months ago, I wrote an article comparing constipation to aged inventory, or to be more clear, those units over 60 days old.

When you’re constipated, it’s virtually impossible to be as productive as you might otherwise be. Having units over 60 days is the same as being constipated.

Exercise, drinking lots of water and in some really bad cases taking a strong laxative can often relieve the problem and get you back on your “A Game.” You can never perform your best when you’re all stopped up.

Until you get the water out of your used car inventory you will never be but so good. You will have a few good months, but unless you commit to a good diet of solid processes you will always struggle.

One of the best ways to fix the problem is to reappraise the entire inventory, extract the water, give each unit a new birthday and put in my “Life Cycle Management Process.”

As long as you have aged units aging, then you’re going to have a lot of water. When you have lots of water, the more the sales people will walk around the aged units.

They don’t want to sell a unit they can’t make any money on. Believe it or not, the managers don’t want to sell them either. They would much rather sell something that they can make some gross on. This isn’t rocket science.

Here’s the tip of the day. If you ever decide to write your inventory down, you have to change your overall strategy of how you’re going to manage your used car department moving forward. It does little or no good to write down your inventory and go back to your stinky old ways.

Constipation is fixable. Aged inventory is fixable. When you fix it, you feel better. When you feel better, you make more money. That’s all I’m gonna say, Tommy Gibbs

I’ve always been a big believer in trying to retail everything that has a breath of life left in it. Certainly you have state safety laws to abide by and of course you may have your own standards for safety and reconditioning.

Often dealers draw the conclusion that they don’t want to mess with the older used vehicles because they don’t want to damage their reputation. I’ve never understood that part. The customers buying the older, cheaper units are thrilled to have that vehicle. It’s not going to hurt your reputation.

In case you’re sitting on the fence on a “Budget Center,” ask yourself these simple questions.

1. What about all the parts and service gross that would have been generated on the less expensive cars going through service and reconditioning?

2. What about the fact that you could have put more money in some trades because you intend to retail them vs. wholesale them? How many more car deals do you end up making because you have a better plan?

3. Does the increase in volume from the less expensive units impact the attitude of the sales staff and their ability to earn additional income? Isn’t it true the best time to sell a car is when you just sold a car?

4. What’s the benefit of having someone driving a car, any car, high dollar, low dollar, that they purchased from you?

5. Is there a chance you just sold a car to someone who might never have set foot in your store simply because you had a vehicle at a price point they could afford to pay?

6. Is it possible that this new customer has a friend or relative who might one day come buy something because of the way this new customer was treated during the buying experience?

7. Are the odds in your favor that they may come back for an oil change or other service?

8. Does doing business generate business?

9. What’s the “Return on Investment” on selling these less expensive cars? Relative to the amount of money tied up, aren’t they a far better investment than what you would make with a $25,000 car? How many times in a year can you turn over a $7,000 to $10,000 investment vs. a $25,000 investment?

10. Doesn’t it make sense that if you can sell more cars with less money tied up that it’s a good thing? There really isn’t much of a downside to increasing volume and decreasing investment.

It’s found money, that’s all I’m gonna say, Tommy Gibbs

In a recent workshop, a conversation came up about selling used cars and trucks in volume versus selling for high grosses.

Depending on your definition of high grosses and high volume, the concept of doing both goes against Tommy’s laws of nature.

That’s not to say that there isn’t a happy medium, because if you do a lot of little things right you can achieve a respectable volume and higher gross profits at the same time.
(Life Cycle Management will change your world.)

It’s petty much a sure bet that you’re not going to do $3,000 on the front and sell 300 used vehicles a month, which most people would agree are pretty strong numbers.

Think about it this way; at the beginning of the month you start out with zero gross on the books. It takes a lot of gross to pay all the bills. The name of the game is how fast and how much gross we can pile up.

Does it really matter how we get there?

You can sell 50 units at $1,500 which equals $75,000 or you can sell 25 units at $3,000 a copy and you still get to the $75,000.

I think you know where this is going. In both cases these numbers are plus F&I, plus trade-ins, plus the parts and service work. Plus you now have another customer in your family of customers, who are likely to purchase other vehicles, parts and service from you.

When you think volume, you work harder to step up on more trades at the front door. When you work harder to buy more deals at the front door, you sell more new and used vehicles. When you sell more new and used vehicles, you pile up more gross in all departments including parts and service.

When you pile up more gross you make more money.

Let the piling up begin. That’s all I’m gonna say, Tommy Gibbs

The first of everything in life is the best. Your first love, your first computer, your first car, your first job, your first house, your first management position.

How about ice cream and coffee? The more you eat the ice cream cone and the more coffee you drink the less enjoyment there is. The first taste of anything is always better than the second and so on.

Call it the “The Point of Diminishing Return of Satisfaction.” (I made that up; I make lots of things up, just work with me.)

Used cars are no different. Think of the first day that you own a used car as if it’s the first taste of coffee or ice cream. It tastes a lot better if you sell it on day one than it does on day 61.

The longer your coffee sits, the colder it gets. Not so good. The longer ice cream sits the more it melts and the less ice cream you get to enjoy. The longer a used car sits the less you make on it. The less you make on it, the less enjoyment you get to have.

But even if the coffee stayed warm, and the ice cream stayed cold, your second taste of either is never as good as the first.

You’re going to hear a lot about the “Life Cycle” of your used cars this year. My definition of “Life Cycle” would be how long you allow a car to hang around and more important, what elements impact and extend your “Life Cycle.” The management of “Life Cycle” is the most important element of maximizing the potential of your used car department.

Doesn’t it stand to reason that if you can shorten the Life Cycle of your used cars that you’re going to enjoy them a whole lot more and make more money? Dealers and used car managers are always looking for that magic bullet. We all know there is no magic bullet, but if there was one it would be called the bullet of “Life Cycle Management.”

When you shorten the life cycle you make more gross and sell more used cars.

Poor “Life Cycle” management impacts:

A. Slow Turn
B. Aging
C. Volume
D. Gross
E. Poor ROI
F. Attitudes
G. Ability to Trade at the Door
H. Future Acquisitions

There are many factors that create a slow turn and a long life cycle:

A. Acquisition to Write Up
B. Write Up To Shop
C. Shop & Parts Issues
D. Willingness to Re-Route (Sublet and/or jobber for parts)
E. Detail/Clean Up Issues-Same as “D”
F. Photos-Quality and Quantity
G. Posted on Internet
H. Pricing
I. Gross Attitudes
J. Pay Plans

If you focus on fixing “Life Cycle” factors then your coffee is always warm and your ice cream is always cold and the taste doesn’t get old. That’s all I’m gonna say. Tommy Gibbs