I love winning. I love winning at anything. Sports, checkers, or the game of business. You name it and I love winning.

In last week’s newsletter I said I wanted to be sold on the logic of keeping inventory longer because used cars are hard to find.

That newsletter was written to see if someone could justify holding inventory past 45 to 60 days just because they can’t find replacement inventory.

I was very sincere when I said in the newsletter to “sell me” on the logic behind doing so.

Over 7,000 people get my newsletter each week. I get an extremely high open rate. Sometimes as much as 30%. Trust me, that’s a big number.

Now guess how many people attempted to sell me on the strategy of keeping cars longer? None. Not even one.

If you won’t try to sell me, how are you able to sell yourself and your staff? Sometimes I think someone is selling you on a bad business strategy instead of you doing what you know is the right thing.

Many of you are winning because you know turning your inventory in 45 to 60 days always wins. Yep, I win, you win, we all win when you turn your inventory. I love winning, that’s all I’m gonna say. Tommy Gibbs

I’d like to think I’m a great salesman. Most great salesmen are easily sold. I wanna be sold. I’m begging to be sold. I’m begging you to sell me.

So come on, sell me on why it’s ok for you to keep used car inventory past 45 to 60 days. Recently, I’ve had a few dealers tell me inventory is so hard to find that they are keeping cars longer.

How does that help your inventory problem? Come on, sell me.

Does keeping a car longer ever make you “more money?” Come on, sell me.

Do you make a greater ROI when you sell a car at 90 days vs. 30 days? Come on, sell me.

When you keep a car longer, do you make more money on it than if you sold it sooner? Come on, sell me.

You can’t get the units through reconditioning fast enough so you want to keep them longer? Come on, sell me.

You can’t find inventory so you want to hold them longer? Come on, sell me.

The big volume players such as CarMax and Texas Direct have to buy most of their inventory. You can’t find cars, so that’s a valid excuse for keeping them longer? Come on, sell me.

Do you really think holding cars longer is the answer? Come on, sell me.

I’ve never had a dealer who was committed to a short turn say they regretted the strategy. I’ve had lots of dealers regret keeping cars past 60 days. Come on, sell me.

I like being sold. Come on, sell me. I’m waiting. I’m still waiting to be sold. That’s all I’m gonna say, Tommy Gibbs

It’s that time of the year when dealers attempt to increase their used car inventory in order to take advantage of the summer selling season.

There are many sources for acquiring inventory and more often than not some of them are right under our nose and we either can’t see them or choose to ignore them.

I was at the CarMax store in Clearwater, FL recently and spoke with a very chatty sales person. He proceeded to tell me that 70% of the traffic they get at that CarMax store is from people who want to sell them a car.

Do you think their campaign of “We will buy your car even if you don’t buy ours” is working?

If you have not put a big push on to buy cars in your market maybe it’s about time you did. You may not get instant results, but over time you will. You must remain consistent in your advertising and marketing of the concept.

You will be wasting your time and money doing so if you do not set up internal procedures to handle these sellers when they show up. It’s a combination of the paper work, the offer, the documentation of the offer and the way the sales person greets and handles the customers when they show up that makes it successful.

What CarMax has figured out is that the person showing up to sell them a car is a “Customer.” They don’t treat them any differently than someone who comes in to buy a car. They all get the “full routine.”

One of the things we all know to be true is we get the nicest cars and trucks at the front door. Without exception almost every dealer and manager I work with will tell me “We never missed a trade at the door.” Really? Do you really believe that?

If you are not using the vAuto appraisal tool then you should. You should be tracking “Look to Book,” for your store and each manager who appraises used vehicles. You should always be looking to drive your “look to book” up. Don’t fool yourself by thinking a certain percentage is acceptable unless it’s 100%.

Yes, that’s silly, but that should be your thinking. Until you get it to 100% you haven’t gotten it right. Duh, you never get it right.

You should demand that every vehicle that’s appraised is put in the system. Since I know you are holding a “Save-A-Deal” meeting every morning you should make sure that you review every appraised trade from the day before during the course of that meeting. You’re going to find some cars in that stack that you will now go back and put some extra money on. Voila, you make another deal and get another nice used car or truck for your inventory.

One of the greatest opportunities to find more cars and trucks is from your existing customer base. This list can be a powerful marketing tool for finding great cars and trucks to sell. You absolutely know which cars of your own brand you do well with. You should be contacting these customers via direct mail or email with an offer to purchase their vehicle.

I go after my customer base each week by staying in touch with you via this newsletter. It’s my way of asking for the business. One way you can stay in touch with your customer base is by letting them know you want to buy their car or truck. It’s not rocket science, it’s just smart. That’s all I’m gonna say.Tommy Gibbs

This may be the simplest and easiest way to get out of the NEWSCAR business and into the 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.

When average cost of your inventory moves up and up and the factory comes out with rebates, incentives, low interest rates, or employee purchase plans, you get crushed because you are sitting there with all that high dollar inventory.

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.

There is no set of circumstances you can lay out that negates this concept. So, if you were to say any of the following, you would be wrong:

We do a great job with highline cars. (Irrelevant.)
We do a great job with high dollar pick-up trucks (Irrelevant.)
We do a great job with high dollar SUVs (Irrelevant.)
We don’t have software that can separate our inventory by Cars, Trucks, SUVs and Wholesale Pieces (Irrelevant.)

You should require your used car manager (If you’re the used car manager, just do it) to print the report each morning, circle today’s average cost, and put his/her initials inside the circle and lay it on your desk.

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 you 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. But, what I am saying is 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.

One of the most important things you can do is to quit letting “Bubba and the gang” have your cheaper cars. There is absolutely no reason to not retail any vehicle that has a piece of life left in it. You can present all the excuses you want, and they are just like the rear anatomy that we all have.

There is no question that if you just pay closer attention to what you are buying and what you are keeping to retail that your average cost will go down. Only good things end up happening.

As you monitor your average cost it is going to bump up from time to time. There are two reasons for this. First, it’s because you traded in some high dollar stuff, which you will naturally have to do and second it’s because you got goofy and went to the auction and bought some high dollar cars.

In both cases it’s a matter of paying attention to it daily and getting back on track.

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. Don’t be concerned with that. If you do a good job with $25,000 SUVs, you will still sell $25,000 SUVs, but by pressing your average cost down it just makes you that much better.

Getting better is a matter of making things easy and simple. This is easy and simple. That’s all I’m gonna say, Tommy Gibbs

From time to time I hear dealers complain that they got killed when they followed the recommendations from their software vendor about what they should buy. Maybe their interpretation of a recommendation was construed to mean you “must buy.” Or you “absolutely must buy.”

Their conclusion is bolstered by thinking that if they don’t buy these recommended units that the competition will gobble them up and they will be left out in the cold. They have surmised that this is “the answer,” and the only answer to improving their used car business.

Years ago I taught a workshop titled, “When Common Sense Meets Technology.” That’s a very appropriate title when it comes to managing your used car inventory.

For some, it’s a natural instinct that when they make a mistake on inventory they want to blame someone or something, so the easy target these days is the software provider.

See if this sounds familiar. Let’s say you’re a Ford dealer (Located right beside a Honda and Toyota dealer,) and you look at the data in your market and there is a high demand/low day’s supply for Honda Accords and Toyota Camrys. You take the recommendation (advice) and run out and buy 10 Accords and 10 Camrys. They sit and sit.

You have concluded the data was all wrong and that there was no way you could be competitive because those Honda and Toyota dealers have a certified program.

You dump the cars in the wholesale market and lose a bunch of money, swear off the software and go back to doing it the old fashioned way. And, you fire the software company and hire a new one.

As I often hear young people say “Really?” The software did
not go out and buy the cars. You are the one who loaded yourself up with too many units and paid too much.

Wouldn’t it have been smarter to test the water with onezies and twozies? How could you not see the writing on the wall?

Isn’t it logical that if you buy some high demand/short-supply units you’re going to have to pay a premium for them?

Wouldn’t it stand to reason if you’re going to go head to head with a certified program that you would have to have a price advantage?

Wouldn’t it also stand to reason that a certain percentage of the Honda and Toyota dealer’s core cars would have been traded?

And doesn’t it stand to reason they would have a little advantage cost-wise when trading for inventory? Logic would say they have an advantage you will not have.

In your mind, the data killed you. No, you killed yourself. But, you need to blame someone, so you blame the software company and fire them.

I’ll tell you what. If that had been me, I would have been thinking of firing myself. That’s all I’m gonna say, Tommy Gibbs

I don’t think any of us would deny that the car business has gotten pretty sophisticated. I wish I was a bit more analytical than I am, but I have to tell you even if I was, I think I’d still be overwhelmed at the reporting I see that some dealers and dealer groups require of their staff members.

I do see the benefit of all the tracking that’s done, but I think we have to ask ourselves, are we overdoing it? Are we taking the focus off what’s really important?

The most important thing we do is sell a car or truck. If we’re not selling a car or truck then you can track all the numbers in the world and it’s not going to matter.

When I was a dealer, one of the things we would often ask was, “Will it help us sell something today?” If not, then it wasn’t worth much to mess with it.

Without a doubt, upper manage-ment needs to be mindful of key performance indicators and they need to utilize that information to stay on top of what’s moving in what direction.

And yes, the information needs to be shared at the appropriate time, but to rant about it almost minute by minute does the opposite of helping to sell a car or truck.

Our “in the trenches management” has a ton on their plate. If we create too much focus on the wrong things then they can’t do what we are paying them to do and that’s to manage the sales department and sell more cars and trucks.

Get focused on the right things and the attitude will go up. When the attitude goes up, the sales numbers will go up. When the sales numbers go up, your bank account will go up. When your bank account goes up, you can take a nice trip and quit bugging people about the wrong numbers. That’s all I’m gonna say. Tommy Gibbs

Finally a new and exciting selling process is introduced. It has 6 amazing steps:

1. Sell Yourself-You can’t sell a car until you make a friend. Selling yourself can be confusing to some. It’s really very simple. The more you take an interest in the other person the more they will like you. The more you take an interest in the other person the more you will learn about them. Some call it “fact-finding,” some call it “qualifying.” Call it what you want, but remember you don’t sell yourself by talking about yourself. You sell yourself by asking the right questions and listening.

2. Sell the House-How much are you and your staff talking about your dealership during the selling process? Are the key points about what your dealership is all about being put on the table. What are your defining principles? What’s the history and culture of your dealership?

3. Sell the Product-Never in the history of the car business has it been so important to know your product. Are you constantly reviewing product knowledge? When was the last time you did a walk-around presentation? Do you and your sales staff walk the lot and know your inventory from one end to the other? Does the team know as much as the customers know about the benefits and features of each model? Do you and your team do a lot walk each week to review each and every vehicle in stock?

4. Write the Best Deal You Can-Even if you’re a one price dealer, the deal still has to be presented. Even ridiculous offers need to be served up. Once a person puts their name on the dotted line they are much more likely to adjust their thinking as you present a counter offer.

5. T.O.-the Golden Rule should be “never let a customer leave without checking with a manager first.” It’s the most fundamental of all selling processes. Sales would increase another 10 to 20% if this fundamental process was followed.

6. Follow Up-the mentality should be follow them till they buy or die.

So there you have it. The most amazing selling system ever invented, which by the way was the selling system I was introduced to back in 1972. Has the business changed? Of course it has. Do we shape the selling system a little differently today? Of course we do.

But the fundamentals of the business never change:
1. Sell Yourself
2. Sell The House
3. Sell The Product
4. Write The Best Deal You Can
5. T.O. The Customer
6. Follow Up

That’s all I’m gonna say, Tommy Gibbs

My best friend in high school was a wild and crazy guy who lived the last 20 years of his life in Key West, Florida. He often used the saying “Don’t panic and never follow the crowd,” when it came to evacuating the area to avoid approaching hurricanes. He never left Key West when the news media started their “run for cover” broadcasts.

Advertising is and will always be the great mystery of the automobile business. It didn’t get easier with the advent of the world-wide web, that is for sure. If anything, it has further complicated it.

Even with the sophisticated tracking of Internet leads, it’s still no piece of cake to figure out what works and what doesn’t.

When industry leaders such as Mike Jackson of AutoNation make comments in Automotive News that they are pulling away from third party leads then it creates a panic in the industry and some will say “Well, if it’s good enough for AutoNation, it’s good enough for me.”

But is it? AutoNation operates over 200 dealerships. They have an economy of scale that most of us can only dream about. When you have those numbers you can exercise experiments and do things that are impossible for a single or small group of stores to do.

There’s no argument that the power of the Internet is here to stay. Customers will sit right in your showroom and shop another dealer on their phone or iPad. Driving all over town is a thing of the past. Who remembers those days of finding newspaper ads lying in the front seat of a customer’s car as you did the trade appraisal? Not so much anymore.

When I hear dealers talking about dropping third party lead providers due to cost or the perceived lack of leads, the first thing that comes to mind is how powerful is your exposure on those sites? Generally I find several things:

1. You’re not stocking what the market wants. Maybe it’s time to re-evaluate how and what you stock?

2. Over-pricing, not market competitive. In many cases the worst person to price your used car inventory is the used car manager. They are often prejudiced because they either appraised or purchased the unit.

3. Infrequent price changes. In some cases units haven’t been re-priced for 30 to 45 days. Did I say the used car manager was the worst person to do the pricing? They have too many things to do to be able to keep your pricing up to date.

4. Lousy photos. If 80 to 90% of all people who shop for a used car shop the Internet how do you think you can be competitive by taking photos outside? You are shooting yourself in the foot by not having a photo booth.

So, before you jump on the Mike Jackson panic bandwagon let me suggest you take a hard look at those things you can actually control.

And always remember, “Don’t panic and never follow the crowd.” That’s all I’m gonna say, Tommy Gibbs

If you follow baseball, you may remember the Kurt Gibson story. Gibson had a bad leg injury and could barely walk, much less run, as the Dodgers took on the Oakland A’s in the 1988 World Series.

In Game 1, with the Dodgers losing 4 to 3 in the 9th inning, manager Tommy Lasorda decides to pinch hit Mike Davis, who eventually walks.

Lasorda then pinched hit the injured Gibson. Gibson battles the count to 3 and 2. Now down to his last strike Gibson hits a 2-run homer to win the game 5-4. Most people remember seeing Gibson hobble around the bases.

I’m just wondering…how deep are you and your team digging when it comes to selling more used cars?

Has the team decided that it is what it is?

Or are they digging deep, getting after it and determined to make it happen?

I hear people crying all the time about three major things:

1. They can’t find inventory
2. They can’t do volume
3. They can’t improve gross profit

Yet I see others who are making it happen. They are digging deeper to find the cars and trucks they need. By finding the cars and trucks they need, they are doing greater volume. By doing greater volume, they are improving their total gross profit.

Maybe it’s time to suck it up like Kurt Gibson and dig just a little deeper. Let the digging begin. That’s all I’m gonna say, Tommy Gibbs

You may have heard these numbers by now, but just in case you didn’t I will share them with you. Last year there were 15.6 million new cars and trucks sold in this country. That’s a number you have probably read a lot about.

A number that you’ve not heard much about is the 41.9 million used that were sold.

Both numbers are up from 2012. Actually over a million more new and a million more used were sold in 2013 than in 2012.

Here’s the breakdown of the 41.9 M Used:
New Car Dealers: 15.7 M
Independent Dealers: 14.2 M
Private Sales: 12.0 M

Did you sell more used in 2013 than you did in 2012? If you didn’t, shame on you. If you didn’t, have you come to the realization that the market was there and you weren’t?

Regardless if you were up or down last year, your goal should always be to get more than your fair share. I can’t define “more than your fair share.” Only you can do that by taking a look at your total used car market.

Here’s a reality check for you. Average gross profit per unit sold continues to come down. With grosses coming down and expenses going up, can’t you see that at some point you’re going to find yourself in a “trick bag?”

You will only stay out of the “trick bag” by doing more volume and getting more than your fair share. Let the unfairness begin. That’s all I’m gonna say, Tommy Gibbs