Well, maybe not, but I will if you’re not at the NADA Convention in just a few days. So, if you’re not going I’m wondering why? Why would you not go? Short on staff? I guess that’s a maybe. You went last year? Ugh, I guess that might be a maybe also. Can’t afford the expense? Another maybe goes up on the board. Those excuses and most others are not great reasons for not going.

Some of you live in a little box and wonder why things never change for you. Most of you are coming off a pretty good year. Maybe you think you have it figured out or maybe you know things are starting to slip a bit.

There’s no better time than right now to open your mind and shoot some WD 40 into your brain to loosen things up a bit. It’s winter, it’s cold and if you’re not careful your brain will freeze up and not thaw until sometime in August.

If your mindset is “the Convention is always the same” then you are dead wrong. The only reason the Convention is the same is because you’re the same. If you’ve gone to the Convention in the past to rub shoulders with the factory guys and attend the parties then I guess it would be the same for you. You get out of something what you put into it.

If you go to the Convention and are determined to take real ideas back to your dealership and make things happen the odds will be in your favor of making things happen.

It’s hard for your vision to change when you sit there and stare at those same walls and same people day after day. It’s a cancer that eats away at your soul. That’s why you need to go. You need inspiration. You need to see the possibilities. You need to go and learn something.

If you show up and find me I’ll even give you a little book titled “The Little Used Car Book, Volume 5.” My little book is not a cure-all for your used car business but it’s guaranteed to give you some ideas and wisdom to help your bottom line.

By helping your bottom line, it will more than pay for your little trip. I’ll be hanging out some at the vAuto booth (booth #2318) so look me up. I’d hate to miss you this year. That’s all I’m gonna say. Tommy Gibbs

I’ve always loved selling budget cars. I’m thinking we all define budget cars differently, but let’s just say they are the cheaper cars that in the past you let “Bubba and the gang” have.

If you’re going to sell budget cars then you may want to think differently about how you recondition them and how you charge for that reconditioning. The key word is to make them safe but not perfect.

Most customers understand they are not buying a new car. Furthermore, charging full retail from your service department will eventually cause your used car manager to “throw the baby out with the bath water.” If you are using packs you may want to at least lower the packs on these units.

The one thing you should not skimp on is the recon or clean up. Spend whatever you have to spend on it to make it pretty. If you ultimately have to sell the unit in the wholesale market you will more than get the clean up money back.

These units need to be on a very short shelf life of 20 to 30 days and gone. Just because you don’t have a lot of money tied up in them, it’s not a justification to keep them hanging around. If you let them sit around too long, “lot rot” will kick in. Common sense should tell you, if it’s an inexpensive car and it doesn’t sell immediately then it’s time to move on.

Budget Center cars need to have their own location on your lot. It needs to be clearly marked off as to what it is. “The Budget Center,” or whatever clever name you can come up with. Over the years mine was called the “Chicken Coop.” There’s a long story on that which I won’t go into today. You might call yours the “Budget Corral.” Just come up with something. At the very least mark the area off with safety cones.

In most dealerships sales people are always complaining that they need cheaper cars to sell. One of the most effective things you can do on your “lot walk” each week is when you get to the budget center explain to the sales staff that if these units aren’t sold by next Wednesday, then you are going to wholesale them. Creating a sense of urgency in their mind is a good thing.

Depending on the size of your store it could easily mean another 5 to 20 sales a month. Gaining more customers is always a good thing when you do the math. Being in the “Budget Center” business makes good business sense. That’s all I’m gonna say, Tommy Gibbs

I’m thinking most of my readers are familiar with the “Rule of 78s.” If not, it’s a term used in lending that refers to a method of yearly interest calculation.

I have a new rule of 78s that will help you improve your average gross profit. I call it the “Gimme $78 more” rule.

Most of the sales managers I work with today are very competent and many of them got the job because they were good closers. Therefore I believe most of them can get another $78 from every customer just by asking.

Unless you’ve already gotten the customer to pay the Internet price then for sure you can go back in and convince the customer to pay $78 more. Sure you can. I know you can.

And, if you have already gotten the customer to agree to the Internet price and if there happens to be a trade involved, surely you are strong enough to hold back $78?

So your goal this month is very simple. Get $78 more on each deal. Then next month do the same thing. In two months you’ve improved average gross profit by $156. Then do the same thing over the next two months…and now we’re at $312 improvement in average front gross.

Far too often we get hung up on kicking the average gross up by $300 or $400 at one time. We give up at some point because the elephant is too big to eat in a month’s time. Take a small bite each month and you will soon be there.

Don’t gimme a bunch of excuses as to why you can’t do it. Just gimme the rule of $78. That’s all I’m gonna say, Tommy Gibbs

It’s January and we’re off and running. Actually, some of you are running, some of you are walking. The runners have been training hard for the last few months. The walkers have been talking about training hard.

The runners were getting into shape back in November and December by laying down “the plan” for 2014. The walkers were thinking they needed to get in shape and get a plan for 2013.

Runners are never happy. I’ve never seen a runner smile. Walkers are well, walkers. They often smile because they are dreaming of the things they would like to do. Whatever they are dreaming stays in their dreams.

The runners have a firm plan going into 2014. The walkers have a “kind-a-sort-a” plan going into 2014. Walkers talk about a plan, runners actually execute the plan.

Walkers are afraid if they make a plan they might have to change it. Runners know there are mud puddles and they just have to jump over a few to get where they want to go.

Runners like challenging their leadership skills by changing the plan. Walkers are afraid of change and would rather go with the flow than rock the ship.

Runners love Dave Anderson’s book “If You Don’t Make Waves You Will Drown.” Walkers would rather read “Winnie the Pooh” and dream about Pooh Bear.

When I do a workshop I recommend, suggest, and urge those in attendance to write out an action plan for the next 90 days using the top 3 or 4 processes from the workshop. At the end of 90 days re-write the action plan adding 3 or 4 more processes to it.

Any time you’re planning, there should be 30 day, 90 day, 180 day and 365 day action plans. The weather and the terrain are going to change and you need to be ready for change.

Walking along whistling a happy tune will make you feel good for that one little moment in time. Running hard with a flexible plan will exhilarate your soul and brain and will allow your team to leap tall buildings with a single bound for a long time to come.

Runners take money to the bank. Walkers go to the bank to borrow money so they don’t go out of business…yet.
Becoming a runner means harder training, greater commitment and disciplines that most people don’t have and will never have.

That’s why there is so much room at the top. Some will, most won’t. What about you? That’s all I’m gonna say, Tommy Gibbs

With so many customers shopping online and knowing what they want and having a price when they finally get to the store it’s easy to try and justify the lack of a professional demo ride.

Dealers are always complaining about average gross profit going down. One of the biggest killers of gross profit is not doing those things that we know to be important. Allowing the demo ride to evaporate to little or no meaning is something management cannot allow.

The demo ride creates value. The touch, the feel, the smell and the opportunity for the sales person to have the customer’s undivided attention is priceless. The closing ratio and the gross profit goes up when you return to the most fundamental basic of the car business.

The demo ride is an art. Don’t let it be a lost art. That’s all I’m gonna say, Tommy Gibbs

Many of you who read my material are convinced I’m against packs and charging full retail in service, etc. The reality is I’m not actually against either. Whenever I’m working with a client who utilizes those strategies, I tell them if it’s working to keep doing it.

I’m also quick to point out that they need to be ready for the change, because change is coming. It’s going to become tougher and tougher to run your business the old fashioned way.

In a recent article published in “MSN Money,” Alison Spitzer, of the Spitzer Auto Group states “Today, customers find the car first, then the dealership.”

Part of finding the car means finding the car they want at a price they want to pay. Allison could just as well have said, “They find a price and then they find a dealership.”

If you don’t believe that’s so, drop all your photos and pricing from your website, Auto Trader, etc. and just put stuff on your website telling the consumer how great your service is and see what happens to your traffic.

The following quote from the article tells the real story when it comes to today’s consumer and where pay plans are heading.

“Today, buyers call or walk into a showroom already armed with a car’s invoice price, competing dealer bids and discounts from the manufacturers, and can get updates on their cellphones while standing in the store. They can access online reviews of the salesperson and dealership.

That has led many dealers to eliminate commissioned pay, price new vehicles closer to their own costs and station more staff in front of computers, where they are rewarded for generating sales quickly and in higher volumes, rather than trying to talk a customer into buying a more expensive model.”  (Read FULL ARTICLE)

I’m going to state this one more time. I’m not against packs as long as they are working for you. I do question whether they are really working or not.  As my good friend Marvin Barnes has always said, “You can justify anything you want to justify.”

The more the industry moves towards non-negotiating and not paying on gross, the less of a need you will have for packs.

The showroom is no longer the showroom. The Internet is the showroom. Today’s consumers go there to look at photos and to get a price. That’s all I’m gonna say, Tommy Gibbs

I hate it when I ride by a dealership and see a tent up with cars parked under the tent and the dealership is promoting a “tent sale.” Many of you have read my document on how to put on a real “Tent Sale,” which is not the same as what I’m sharing with you today.

Today’s subject is a “Mark Down Tent.” A “Mark Down Tent,” is not a permanent fixture. It’s to be used from time to time when you are trying to unload problem cars. You know those units that you all of a sudden discovered you are killed in and have had hanging around way too long.

As close to the road as possible, put up a tent that can hold 3 or 4 units. If permissible, hang banners around it that say “Mark Down Tent” and use the little signs that you can stick into the ground with arrows to the “Mark Down Tent.” Promote the “Mark Down Tent” in all your ads including your website. You might want the telephone operator to answer the phone, “ABC Motors, have you heard about our “Mark Down Tent?”

Using a marker, start off by putting a very, very high retail price with the date on the front windshield. You will be marking the price down each day by $500, with the date beside the new price until sold. Draw a line through the old prices and dates. The sales person’s commission on day one will be $2000. Each day that you mark the car down by $500 the sales person’s commission will be reduced by $100.

Now don’t panic. I said to start off with a really high retail price. If you get to a point where you are uncomfortable with the pricing going too far south you can always pull it from the tent.

The idea is to create a sense of urgency with both the customer and the sales person to take action. The reason you now need to put cars in the tent is you didn’t have a sense of urgency soon enough in the first place. That’s all I’m gonnna say, Tommy Gibbs

I often have conversations with dealers and managers about units they have had in their inventory too long 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 probably 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. That’s all I’m gonna say. Tommy Gibbs

I was talking to a dealer last week about the challenge of playing the “race to the bottom” and how much he wants to stop pricing his inventory so aggressively. He wants to move to a model of selling the value of his product and organization. He believes that if he stops chasing price that he will achieve a higher average gross profit. He thinks the velocity mindset is hurting his average gross profit. He’s tired of playing his competitors pricing war games.

If you’ve followed my thoughts on this subject you know that I’m pretty convinced that if you pull back on your pricing that your grosses will go up….and, and, and…you know what’s coming don’t you? Your traffic will go down.

Screaming from the rooftops that you are a great place to buy a car won’t work for you unless you can scream it loud and clear and for a very long period of time. Your ultimate knee jerk of back to price wars would occur probably before you ran out of money.

If you follow CarMax you know they are the number one seller of used cars and don’t play much of the pricing game. Their cars are usually more expensive than yours. They have done a consistently good job of telling people, this is a great place to do business, we have lots of inventory and we will buy your car even if you don’t buy ours. That’s pretty much what they do. And, they don’t negotiate the price or the value of the trade.

We can all agree they have a totally different model than most new car dealers. Unless you are willing to convert to one-price, change your culture and are willing to spend a lot of bucks it’s not going to work for you taking the approach of “Buy here, ’cause we are great.”

I really do think one of the biggest problems in the industry (though it is getting better) is that when the customer shows up at the front door we still discount the car. This applies to new as well as used. The number one thing you can do to improve your operation and your gross profit is to learn to say “no.” Say it by presenting all those reasons why a customer should buy your car and do business with your dealership. You can only do this by preaching the message to your team every month, every week, every day. The entire team has to believe.

I recently visited with a very successful used car dealer who specializes in high line cars. He retails about 250 units a month and he gets about 1500 hits a day on his website. He said that he has noticed a trend over the last few years that people are driving shorter and shorter distances to purchase. His analysis of that is that more dealers are doing a better job of marketing their inventory online and therefore the customer can find what they want much closer to home.

As you may know Texas Direct has always used eBay as its website. In the early days they sold a large number of their vehicles online through eBay. A few years ago they relocated to an old Auto Nation Used Car Superstore facility and now sell a lot of cars to more of the local public. Yes, people still go online to find the price and car they want, but they are doing it in a shorter distant. Here’s a recent article on eBay losing traction that more or less backs up this thought process. Article

Strategy to consider:

1. Price your vehicles smarter. Everything doesn’t have to be at market price on the first day. Some should be over. Some should be below.

2. Re-price your inventory faster. Don’t let “buckets” rule your world.

3. Train and re-train your staff on selling the value of your vehicles and your organization.

4. You have to learn to say “no,” when the customer wants to negotiate when you know you are holding the winning cards. (Cars.)

Never give up on creating value, but if you give up on aggressive pricing you will be giving up a lot of traffic. That’s all I’m gonna say, Tommy Gibbs

Get ready to dig into your October financial statement.From a timing standpoint this is a perfect time of the year. I always looked forward to analyzing the October financial statement.

I can’t say that math was one of my best subjects, but I can divide by 10 real easy. At a glance I know what the averages are for any line item expenses, sales volume and gross profit.

What also makes October a perfect time is it sets the stage for the next year. Now is the time to start planning for 2014. Waiting until the last week in December to get your plan together is a really bad strategy.

This is the perfect time to dig in and firm up your fundamentals in all departments. This is the time to get back to basics. This is not the time to cut back on your training. This is when you need to amp up your thinking and stretch your organization.

If you don’t have a solid foundation of basic processes you will never maximize your success. This is the time to take control of the “evaporation factor” that’s been occurring all year long. This is the time to stop the “process bleeding.”

Your long term plan should include joining a Twenty Group and attending the NADA convention. Look, we all get lazy, and get caught up in our daily routines. Attending these meetings gets you revitalized. It gets you outside of your daily box and opens your eyes up to what the possibilities might be. Seems like a no brainer. This is the time to make those plans.

Teamwork is critical if you’re going to maximize your bottom line. To keep your team on the same page you have to constantly communicate to them what the expectations are and what processes they are expected to follow. There is no “shake ‘n bake” solution. You don’t fix it and walk away. You fix it and re-fix it.

What to do?

1. Ask yourself if you can improve your processes? If you focus on revamping your processes, what effect do you think it will have on your business? It is an absolute fact, that regardless of how well disciplined you are, over time your processes are going to evaporate. The best piece of advice I can give you is to lock yourself and your management team in a room and review every detail of your selling processes. Be bluntly honest with yourself. Then take the necessary action to get you back on track.

2. Can you improve your team? Got the wrong players? Now is the time to make the changes. If you already have the right team in place then it’s time to let them know what your expectations are and show them the plan and the path to achieve those expectations.

3. Don’t think of your planning as “you now having a plan.” Think of it as a “mission.” Plans can fall apart. When you’re on a mission you stay after it until you succeed.

I’m on a mission to get you to re-think what you’re doing…That’s all I’m gonna say, Tommy Gibbs