What’s the number one thing that separates your dealership or business from your competitors? Silly question, huh? It’s obviously the people. The leadership of an organization sets the tempo of what the expectations are even if they “state” them or not. If you never announce what your expectations are you have actually done so by remaining silent.

I was thinking this morning when going into my local dry cleaners, why do I go there? Other dry cleaners are just as close and I know for a fact that one of them does a better job. The difference is the people who work there. They know me by name and they are friendly. Pretty simple, huh? As I think about other businesses I frequent it’s the same thing. Be it the post office, restaurant, Office Depot…they all offer the same items and/or services. I select which one I will give my business to based on the attitude of the people who work there.

Attitude does not happen by happenstance. It happens because someone has led that attitude. Attitude is not developed by having a meeting and stating what the new policy is on attitude. It’s done by example and continuous training/coaching of the entire team.

Most people would point to Ritz Carlton Hotels as having the best employees and customer service concepts. Do you think that happens just by hiring nice people, paying them well and having a new employee orientation program? You and I both know that cannot be true. First they are in the same talent pool that you are. They want to hire nice, well spoken, talented people. Second, I doubt very seriously that they pay the most money and third we all know that there is no way to maintain the level of service they do by doing an employee orientation and saying “go get ‘em.”

Most businesses do just that. They hire people and say “go get em” and they wonder why they can never achieve the level of success they would like. It’s really about developing a culture within your organization. In order to do that you need to retrain all the members of your team at least once a quarter in order to coach them on what the “Cultural Expectations” are. This needs to be in a formalized session with the Owner/Operator/GM actually doing the presentation. Do not delegate this to your HR department or other management to handle. It has to come from the top because it is so important to your survival and success.

The message should be very clear. Here is who we are and this is the way you will need to conduct yourself if you expect to continue working here. This is not about threatening them but it’s about making sure there is not an ounce of doubt as to what we expect of our team members. Part of the message for those who “get it” is that they need to make those who don’t “get it” very uncomfortable to the point that they leave on their own accord.

Daily life is very much like the military. When I was in the Marine Corps they often referred to “that 10%.” Meaning there are always 10% of the people who just can’t do “it,” whatever “it” might be. Just as in the Marine Corps, you need to run the misfits off. This doesn’t have to be mean or cruel. Just factual and to the point.

Never forget, you can train and re-train all you want, but you must set the example each and every day. You cannot operate under the theory of “do what I say not what I do.” That’s all I’m gonna say. Tommy Gibbs

Let’s talk about cars. Not the kind you drive and sell, but a report you should be doing once a week called a CAR Report. Which stands for "Cars At Risk."

If you will follow this simple little discipline I can guarantee a lot of your problem children will go away. If you’re the dealer or GM I’m thinking it’s a pretty good bet that from time to time you sit down with your used car manager and go over your aged list.

In that discussion you talk about this car and that car and what the plans are to get it sold. Often the used car manager is able to hold you off from demanding that they dump the car or whatever.

They tell you they have a deal pending or they have plans to take it to the auction by the end of the week. You know the drill. It becomes a very nice conversation with no real demands on your part as you don’t want to upset your manager because if you do, you know nothing’s going to get done today.

Stop this insanity and use my CAR process. Once a week you should meet with the used car manager to review the CAR report. It’s a list of ten cars based on whatever formula you might want to use. Just be consistent. It could be your 10 oldest, it could be your 10 most expensive, or it could be the 10 with the lowest vAuto scores. (The form is at the bottom of this article.)

Go over each car on each line. As you do so, ask your used car manager "Do you agree this car is at risk?" There will be some cars on the list that your manager will say something like "No we are ok on this car, etc." But, every time your manager says "Yes I think we are at risk on this car" have them turn the form over on the back. 

The back of the form requires the used car manager to give you one of two plans. Either a plan, (a real plan!) to retail the unit or a plan (a real plan!) to wholesale the unit.

Now, here’s what really makes this process work. Each week when your manager brings in a new CAR report for you to go over, they must also bring in the previous week’s report. You will notice on the right hand side a column that says "Did You Lie?"

In other words Mr. or Ms. Used Car Manager, when we had the meeting last week you said "You had a plan to make this car go away. So you lied to me because it’s still here. You did not follow through and do what you said you were going to do with this car."

This simple weekly process avoids these ongoing conversations about what you are going to do with a car. Yes, it takes discipline to do this every week. I will guarantee you that by taking 15 minutes of your busy schedule to do this every week that your inventory is going to shape up, your volume will get better and your grosses will improve.

Almost everything we do in this business, or any business for that matter, gets down to "the pain of discipline or the pain of regret." You will have one or the other. And the best part is you get to choose. That’s all I’m gonna say. Tommy Gibbs

 (CLICK HERE FOR THE FORM)  

It is not unusual for dealers to struggle with either the lack of volume or the lack of a high average gross profit per car sold. In either case that can lead to a decline in total gross which is how we pay the bills and pay ourselves. There are very few cases when you will achieve both high volume and high average gross profit. It goes against the laws of nature or something like that.

Either way has challenges. If you have decided to be a high average gross dealer then it’s a pretty sure bet you will see decline in your traffic. If you go after volume, which means aggressively pricing your inventory on the Internet, then it’s likely you will see traffic go up and average grosses go down.

It’s also very easy to convince yourself that there are no cars to be bought. I want to remind all of you once again that CarMax, Texas Direct and Drivers Select are still buying lots of cars. (Drivers Select is cool, CLICK HERE to check them out.)

Going after volume means you have to up the ante when it comes to finding replacement cars. There is a lot more to acquiring inventory than just running out and buying more cars for the sake of a larger inventory. It requires a strategic plan of staffing and research or you will find yourself with a lot of aging purchased cars.

Assuming you get a solid plan in place to find more cars is there anything you can do to actually improve gross? Yes. Can you do $3000 a copy on the front? No.

I have some ideas for you:

1. Goal setting. If you are now at $1000 a unit on the front, it’s a real stretch to set a goal of $1500. You would be far better off to bonus the management team for bumping the average up by $50 a unit for this month and then repeat the process the following month. To say to them you want a $500 bump in one month is unrealistic and if you do bump it up the $500 you can bet your volume will take a hit. You can ultimately get to the $1500, but you need to eat the elephant one small bite at a time.

2. Do a better job of training the sales people (and sales managers) to sell the value of your company and the value of the vehicle, and your grosses would be a lot better. The Team needs to learn to say "no" and to convince the customer that you have the best deal going.

3. Provide more information. The more information your sales people have about your inventory and how it’s priced to market the more likely they are to do a better job of convincing the customers you’ve got the best car at the best price. You have to sell the sales staff before you sell the customer.

4. Rethink "Buckets." Many dealers have become sold on buckets. Buckets are a solid discipline process, but you can’t take a position that all cars in the first 20 days are priced a certain way and at day 21 another and so on. There are some that need to be over market and some under market regardless of age. All cars have to be evaluated on their own merits and must be done daily, not in 15 or 20 day windows.

5. Track GAP and ROI. Dealers who are tracking GAP and ROI are seeing a big difference in their average grosses.  If you’ve not bought into this process then maybe it’s something you should take a hard look at. If you need the GAP/ROI spreadsheet, send me an email and I’ll get it right to you. (It’s Free!)

6. Fix your reconditioning timeline. If your most profitable car is a 20-day car (and it really is) how can you allow the service department to bog you down with it spending 7 to 10 days in the shop? This is one of those things that’s fixable, but it has to be done by the dealer. If the dealer wants to fix it then it gets fixed. Speed wins; the lack of speed kills. It’s as simple as that.

7. Re-do your website. How does your website look? Your website is the "New Showroom." Do your pictures tell a good story? Do you have 12 to 20 photos? If that’s all you have then you are not in the game. You need at least 40 and they need to be done in a photo booth. If you don’t have a photo booth you need to make a commitment to get one. Saying you don’t have the space is a poor excuse. You can make it happen if you want to. Kind of like the issue in service. You can fix it. You just need to do it.

8. Install EWR into your "Trade Walk." Have you read my article on EWR and Life Cycle Management? Early Warning Radar Here it is. Even if you’ve read it, read it again.

I’m thinking you can increase your volume and average gross profit, and "That’s all I’m gonna say." Tommy Gibbs

You have opinions, I have opinions, We all have opinions. My opinion today centers around the "Turn Over" or commonly referred to as a "TO," which may be one of the most misunderstood aspects of the car business. For those readers not familiar with the process it’s generally a salesman turning over their customer to a manager to "close the deal."

In theory, managers have better closing skills than the average sales person so managers are often times expected to go in for the close. Bear in mind I said "in theory," which doesn’t always hold true.

Many dealers are still running the business with what they believe to be a tried and proven method of negotiating the deal. Dealers who negotiate the transaction most often employ the concept of a "TO" to management.  If you’ve read much of my material you know I believe the best business model today is that of CarMax and non-negotiation.

Since so many dealers have not yet, and may never move towards the CarMax model I want to address the "TO" concept.  Even if you have moved to the "one price," non-negotiating model, you still may be utilizing a "TO" at some point in the transaction.

There are many things changing in the automobile business these days, but one of the core principles that should not change is a sales person should never let a customer leave without checking with a manager first. That fundamental principle is critical to the success of the business. There is no argument that can be presented that will lean in favor of the sales person having the latitude to decide when to let a customer walk.

The customer belongs to the dealership, not the sales person. Maybe, just maybe the sales person created the lead from friendship, prospecting or whatever, but the dealership has far more invested in the generating of that customer than the sales person will ever have. Thus, management should be allowed to determine when and how the customer goes out the door.

Whenever I hear dealers talk about the type of sales manager they have or want to have one of the things that they seem to want is a "good closer." They want someone who will get off their duff and go in and close the deal.

I’m not sure we are going to agree on all or any part of this, but one of the things God blessed me with is common sense, and to me this is all about common sense and human nature.

I believe the TO can and should take place at any point in the sale, not just during the negotiating process. Managers have to have a keen sense of what’s going on around them. Call it peripheral vision if you may. Far too often they have their head stuck in a computer or better yet stuck in the sand. They just don’t see what’s going on around them.

So, the TO could take place immediately after the sales person greets the customer. No, really I’m not kidding. If you sense there is bad chemistry between the customer and the sales person from jump street then do it right away before the deal gets all screwed up and you never have a chance for the sale. In Tommy’s little world the "TO" could occur from that moment up until the customer is "put out the door." (Getting a little old school talk here.)

So, let’s fast-forward to a "TO" being utilized to "close" the customer. Many dealerships operate on the theory of the sales manager going in to close the customer. Let me say this as nice as I can. As long as you continue to follow that practice you will never develop a strong sales force. You just won’t.

I’m sorry to report that the average sales person is lazy. (Don’t get testy, I said average.) As long as you keep closing their deals for them they will continue to let you do so, and all that does is make them weaker and in your mind makes you stronger. And of course in the dealer’s mind you are a strong sales manager because you close deals.  (Kind of like the Government giving handouts, the more they hand out the stronger the Government. Yikes, I don’t believe I stuck that in here.).

I believe the first "TO" should be handed to another sales person not the sales manager. Of course the manager makes that decision as to who, when and how. The manager decides who they are going to send in on the "TO" and that person is introduced as the Assistant Sales Manager.

If you’re a sales person, doesn’t it stand to reason that if you know you’re going to have to give up a half a deal that you are going to work that much harder to close the customer as opposed to running to the desk asking the manager to do your job for you? The more you do for them the more they want you to do for them. (More political message here.)

Sales people will never get any better at their job as long as you keep doing it for them. Is there still a time and place for the manager to go in on a "TO?" Of course there is, but the first point of attack should be to send another sales person in, not the manager.

If the manager is running around closing all the deals who’s running the desk and managing people and processes? Don’t take this to mean that the manager shouldn’t have good selling skills. They should, because they are always selling something, cars, concepts, ideas, processes, etc. just like I’m doing right now. I’m trying to sell you on my way of thinking. That’s all I’m gonna say.   Tommy Gibbs

That could mean a lot of things couldn’t it? It might mean we are half way through the year or it could mean you go about things in a half-way manner.

That doesn’t necessarily mean it’s you that’s approaching business half way, maybe it’s the organization that you work for. But either way you end up with half the results you could be getting.

We all have things that tend to drive us nuts and one of the things that drives me nuts is "lip service." I see it at all levels of business. I see managers who say they are "all in," and I see dealers who say yes, we do this and that everyday.

Just because you say you’re the Queen of England doesn’t make you the Queen of England. Saying something and doing something are two totally different things.

Regardless of how good you are or how disciplined you are, your processes always want to evaporate. When you have turnover in management they evaporate even faster. It’s not unusual for upper management to have blinders on and don’t want to acknowledge the obvious. To ignore the evaporation factor is like saying I still have checks so I must have money in the bank.

It takes a strong will to get up each day and look in the mirror and be honest with yourself. Most of the days when I look in the mirror I say, "you suck." I really do, because even as much as I apply myself and as hard as I think I might be working, I know I can always do more.

If looking in the mirror and telling yourself that you are "the greatest" works for you then I would suggest you keep doing it. But, really at some point you have to come to the realization that you are leaving a lot of "you" on the table. You have to realize you and your company have so much more potential than you are hitting.

Isn’t it fascinating that when a dealership gets taken over by new ownership that all of a sudden it rocks? Do you really think the new owners are all that much smarter than the previous one? Probably not, but what they were able to do was to view the landscape with a different set of new glasses as opposed to those old fogged up and dirty ones of the previous owner.

If you are like most people in business back in December you probably did one of three things:

1. Made some New Years Resolutions
2. Developed a Forecast for 2011
3. Put together an Action Plan.

Assuming you did one of those three, how about taking your list out and give it a serious review. How’s it shaping up? Was your list made up of "pie in the sky?" Was it based on fact or fiction? How much of your list have you actually accomplished?

Frequently when we have not achieved the results we were looking for we tend to want to blame someone or something for our lack of accomplishments. Always keep in mind that "if it is to be it is up to thee."

So, the Calendar says it’s June and that means we are half way there. The question I have for you is are you half way there or are you half way? That’s all I’m gonna say, Tommy Gibbs

I give a lot of thought to the information I share with dealers. One of the things I do in my workshop is I give dealers a lot of information fully realizing they can’t or won’t do it all.
 
Either my ego or my wisdom tells me that for each item they actually do (WITH CONSISTENCY) that their business will improve by at least 10%. So, if a dealer does 10 things I put on the table (WITH CONSISTENCY) then their business could actually double from their current production.
 
I’m going to share 10 relatively simple things I’ve picked from the many I present in my workshops for you to dwell on and for you to consider doing WITH CONSISTENCY.
 
Let’s pretend you are now selling 100 used cars a month. Doing all 10 suggested processes will get you to 200. If you’re not selling 100 just make the adjustment based on 10% for each process you are willing to commit to on a CONSISTENT basis. Here you go:
 
1. Study The Data– Be a student of the game. Use Auto Count’s Reports each month to confirm what’s selling and what’s not. Use vAuto’s stocking tool to determine the fastest moving units to stock. Combine those reports with Auto Trader’s reports and you will have a competitive edge. Make sure you keep these lists at the tower/desk so when one comes to the door to be appraised you step up and make a deal on a car that you are going to be able to retail in short order. The more units you step up on the more cars you sell at retail. =10 more units
 
2. Press Your Cost Down-This is probably the simplest and most effective thing you can do to improve your business. Know what your average cost per unit is every day and do what you can to reduce it. If you are at $15,000 today, do what you can to get it to $14,500 and so on.  There is no magical number. It’s about keeping the lesser expensive units and making sure the more expensive ones turn fast. =10 more units
 
3. Know Your ROI-Every deal should be tracked for ROI. As you are working a deal you not only need to know how much gross you have, but what the ROI is. Go to FixROI.com and plug in three numbers. Your cost, your gross, and the number of days the unit has been in stock. Bingo, you have your ROI. Shoot for 110 to 120 ROI. By knowing your ROI you will know what’s working and what’s not. =10 more units
 
4. Attack the 10 Most Expensive Units in Stock-Make a list each day of your 10 most expensive units in stock. 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. Lastly, make sure the service manager gets that list each day and 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. You have lots and lots at risk with these units.  =10 more units
 
5. Life Cycle Management-Read this statement then read it again. There is nothing, absolutely nothing you can do that will improve all aspects of your used car business more than understanding my process of "Life Cycle Management." Think Fast, Be Fast-You are working with a depreciating asset. Everything, including decisions on what to keep and not keep has to be done fast. Pull the trigger quickly on units that you are suspicious about. Don’t hang on to them hoping and wishing something good is going to happen. Early losses are far better than late losses. If you are paying attention and recognizing problem units early in the life cycle then you will have a lot less need to take units to the auction and lose money on them at 45 or 60 days. There are certain "Trigger Points" you need to focus on during your daily "Trade Walk." Knowing how to use EWR (Early Warning Radar) pays big dividends. =10 More Units (Probably even more)
 
6. Lot Walk-Nothing new here. If you do a lot walk once a week with all the members of your sales and management team then without a doubt you will sell more units. And, you’re going to see a lot of things you’re not going to like. Do you remember doing "Phone POPS?" You know, it’s the deal where they place mystery phone calls to your sales department then play the results back to you. They are never, never, never very good. Makes you just want to scream. So, initially you will have the same feeling when you do the lot walk. But, the bottom-line on the lot walk is it gets your entire team to know and understand your used car inventory. The more knowledge they have the more they sell. =10 more units
 
7. Daily Inventory Pricing-The market changes every day and so should your pricing. Sometimes you can ask more, sometimes you can ask less. You cannot and will not achieve maximum results by changing prices every 10 to 20 days. Pricing takes intense management. It’s not something you do when you get around to it. You would be far better off if someone priced the car who is not in charge of appraising and buying them. =10 more units
 
8. Analyze Your Wholesale Pieces-Look at the numbers. How many units are you wholesaling each month? Go over each unit. How many of them could you have retailed if you opened your mind a bit either relative to pricing and/or the type of product you’re willing to keep? Are there early wholesale units or late wholesale units? You need to know the difference between the two. If you have lots of units being wholesaled late (at the end of the cycle) the odds are you are either stocking the wrong stuff or pricing them wrong. If you are wholesaling a lot of units early in the cycle it’s probably because someone on your staff doesn’t want to "mess" with certain types of cars. The probability is there may be a problem getting them through service in a timely manner or the used car department feels ripped off by your service department. The good news in in either case it’s a fixable problem. You just have to want to fix it. =10 more units
 
9. Photo Booth-and 40 pictures per car. If there is one thing I would do if I opened a dealership today it would be to do whatever it takes to have a photo booth. If you haven’t accepted the fact that the Internet is your new showroom then you are doomed. You cannot and will not be able to remain competitive until you get with it. It’s the biggest no brainer since the invention of the wheel. =10 more units
 
10. SETS & SUBSETS-simply put, SETS is an easy way to set up a price leader with several other vehicles for the customer to pick from when they show up. SETS & SUBSETS are designed to drive traffic and increase volume. You can do as few as two cars in a SET, but never more than five. It’s not as complicated as it first appears. Don’t over think this. =10 more units
 
110%-Here it is. It’s called Save-a Deal-It’s the basic of all basics. From the first day I got in the business we did a save-a-deal meeting every morning. Back it those days we didn’t call it that. I learned that term back in the 80s from my good friend Mike Casey with JM&A. Call it whatever you want, but it’s an easy way to increase your business another 10%. Simply put, you go through all your pending deals and ups from previous days. You will always find that two heads, three heads, etc. are better than one.
 
Suppose I’m wrong? Maybe you won’t hit 110% increase in sales. Maybe you will only get half that? Not so bad! It takes 21 days to create a new habit. How many of these are you willing to focus on for the next 21 days? Today is day one. Go do it.
 
That’s all I’m going to say. Tommy Gibbs

This is a great time of the year, especially if you like baseball. The baseball playoffs are in full bloom. Having been a baseball player and fan most of my life, it’s a special time of the year for me. If you prefer football, hockey or basketball because it’s more exciting, I can certainly understand that, but when you really know the game of baseball there is a lot more to it than meets the eye. To the casual observer it appears there is a lot of standing around, and that is somewhat true, but on every play (and before every play) every player has a job and responsibility and a place to be regardless of where the ball is hit.

If you happened to watch the Boston Red Sox game this past Monday, one of the key plays in that game was a missed bunt. Yep, a missed bunt. Even if you’re not a baseball fan, I’m sure you know what a bunt is. It’s the most fundamental skill of the game. Kids learn it on day one. Los Angeles had put a squeeze play on and the batter missed the ball. A squeeze play is when you have a runner on third, less than two outs and the batter sacrifices himself by laying down a bunt. The runner scores easily because he heads for home as the pitcher releases the ball. It’s impossible to defend when executed correctly.

In the top of the ninth Los Angeles pinch hitter Kendry Morales doubles off the wall in left center. Howie Kendrick sacrificed pinch runner Reggie Willits to third, giving Erick Aybar a chance to be the Los Angeles’ Angels offensive hero for the game.  Aybar, hitting against Many Delcarmen whiffed on a squeeze attempt and Willits was caught halfway down the line by Red Socks Catcher Jason Varitek. Runner out, and as it turns out game and series over for LA.

What’s the point to all this? How can a pro baseball player, making millions of dollars not be able to bunt the ball? It’s fundamental, it’s basic and it’s relatively simple. There is a simple answer: A lack of practice and execution. A lack of practicing the basics. It’s just like your business. Your people don’t practice their basic selling skills. They want to get in the game, take some big cuts, hit a home run, but they aren’t willing to work on the fundamentals of their game in order to be successful.

One could debate the wisdom of calling the squeeze play in that game, and blame the manager for a poor call. It wasn’t the call that was the problem. Yes, the manager should be blamed, but he should be blamed for not demanding his players practice this fundamental skill until it becomes automatic. You would think players at that level would have enough pride to do so. Think again. The players on your team are no different. They want to take their swings, hit a home run, but they are not willing to do what it takes to squeeze home the potential winning run at the end of the month. Don’t blame them. The blame squarely lays on you for not demanding they be properly trained in the first place.

As much as we all hate these very difficult economic times we are going through, in the end it makes us all better or at least those of us that are smart enough to get back to the basics of doing the fundamentals correctly. I hated Marine Corps boot camp. I’m a better man today because of it. Your people may come to hate the demands you put on them to be better. But in the end they and your dealership will be all the better for it. As my friend David Ferrez says, “Would you rather have the pain of discipline or the pain of regret?” That’s all I’m gonna say.

1. Leaders never let circumstances dictate the outcome. Leaders learn to respond to their circumstances. They know that they cannot always control what happens, but they can control how they respond to what happens.
2. Leaders are persistent. They have their big idea and they stick with it.
3. Leaders take a realistic inventory of their talents and abilities. They recognize their personal strengths and weaknesses. They play to their own strengths and overcome their weaknesses by capitalizing on the strengths of others.
4. Leaders are resilient. They recognize that failure is an opportunity to learn and grow. They do not fear failure, they embrace it. They see every failure as a step closer to the realization of their dreams. They become masters of overcoming obstacles and staying focused on a positive outcome.
5. Leaders have passion. They are faithful and they pursue their dreams with a constant vigor. They do not fear rejection and loss as much as they fear living without a purpose.
6. A good leader has key people around them who they can confide it, share ideas with and in general use as a sounding board. It is only through listening that we develop and maintain close relationships, in which there is enough freedom to express feelings and observations honestly. It’s one thing to listen and another to listen with the intent to understand…when you listen with the intent to understand you are focused on receiving the deep communication of another human soul.  One of the very best practices to help you with this is to make sure you repeat out loud what the other person has stated. Something like “Let me make sure I understand what you are saying…”  Many times those around us have the solutions to our problems, but we just don’t allow them to participate in a meaningful way.
7. Leaders accept chaos as an existing precondition, and they don’t struggle against it or attempt to resolve it instantly with short term solutions. Leadership means among other things, summoning the ability to cope and bring about change. That is to say, true leadership may be thought of as the art of not quitting when something unexpected happens. Or another way of thinking about that is not to panic.

That’s all I’m saying.

When I was 14 years old, I took my girlfriend to the Va. State Fair. I wanted to win her a Teddy Bear. You know one of those really big ones. I had $25.00 to my name and played one of those games of chance where you have to get three balls out of five through a hole. Every time I would lose, the carnie would say, “Here try it one more time and if you win I’ll give you all your money back.” It didn’t take long until he had my $25.00 and I still didn’t have a Teddy Bear. To say I was devastated is an understatement.

Are you the kid still trying to win a Teddy Bear? Are you running your used car department the same old way expecting different results?  Is a little voice in your head saying “Come on, try one more time, you will win all your money back”?  Reach up and smack yourself in the head and come to grips with reality will you please? It’s not going to get any better until you become a better merchandiser and marketer. Make sure you read this entire article. You will be glad you did.

1. Revaluate-Take a deep breath. Now go look in the mirror. Better yet, go walk your lot. Take the blinders off. First thing you have to ask yourself is “Does it look like Nordstrom?” Ok, maybe it’s not going to look like Nordstrom, but does it look like WalMart after a big sale? You know, everything is just thrown everywhere. Let’s do a little checklist:

1. Are the vehicles in straight lines?
2. When was the last time the entire lot was rotated?
3. Are you using angles to display your inventory?
4. If you are using license plates do they all have one or do some have them on the front, some on the rear and some not at all? Some cars do not have a bracket on the front. Why would you even bother if you can’t put a license plate on all units?
5. Do they all have your decal on the rear of the vehicles?
6. Are all old decals removed?
7. Do you have fresh FTC stickers on each vehicle?
8. Do you have fresh window stickers on each vehicle?
9. Do you have the year of each vehicle on the front and rear windshield? Yes, front and rear.
10. If you have other decals or markings on the windshields, do they all have same or similar markings?
11. Do you have hang tags? If so, do they all have hang tags? Are some lying on the floor?
12. Do they all have at least a quarter of a tank of gas in them?
13. Are they nasty, dirty on the outside?
14. Are you making use of your entire front row for used vehicles?
15. When the public rides by or pulls onto your lot can they easily identify where the used cars are?

2. Refocus-To be successful in the used car business you have to be well focused on it and be totally committed. Your entire management team has to understand your commitment to the used car business. This doesn’t happen through osmosis and a meeting every six months. When I say entire management team I mean just that. All Sales, F&I Management, Service Management, Parts Management, Body Shop Management and the Controller. Little Johnny, the lot attendant, needs to be a part of this as well. For the next 60 days, meet with these key staff members twice a week to discuss where you are and where you’re going. Tuesdays and Fridays are best. Make sure on Fridays that they are all included in a lot walk. Do not miss a used car on this lot walk. Every car in your inventory must be touched. If it’s in service, touch it. If it’s in prep, touch it. If it’s in the budget center, touch it. Everybody touches it. You will come across issues you never knew were there and better yet you will solve them immediately. (Don’t let anyone miss these walks.) Make sure a part of  that conversation includes everyone knowing how much money you have tied up in used cars and how many of those dollars are over 60 days. Yes, they need to know the dollars, not just the number of units. Make sure they also know what percentage is dead money over 60 days. Example: You have $1,000,000 in used. $600,000 is over 60 days. Make sure they understand that 60% of your money is dead and eroding fast.

3. Re-Recon-Take every unit over 30 days old back through a recon process. (You’ve already missed your best window of opportunity to make gross; that would be the first 20 days.) Most of them should not need mechanical work done, but if they do, get it handled. Most importantly, put a full clean up back on them. I can’t imagine you having to spend more than $75 or so a car, but whatever the amount, it’s going to be worth it.

4. Re-Invest-in yourself and your management team. Do something to gain some knowledge. Hire me, visit CarMax, or visit a dealer friend in another state that does a good job in used. Attend a workshop. Join a Twenty Group. Join a Used Car Twenty Group. Do something besides sitting there and waiting for something to happen. You may think you already know all there is to know about the used car business and you will just be wasting your money. The fact is maybe you actually know a lot, but you need something to jar your brain and get it going again. You have become real good at talking the talk, but you may not be walking the walk.

5. Re-think- your management team. Do you really have the right person running your used car operation?  Yes, that person may have been with you for years. Loyalty sometimes equals mediocrity. Maybe they have some great skills, but the fact may be that you are not making the best use of their talents. Used car managers today have to be “Asset Managers.”  It is not a matter of just being a “Car Guy.”  They have to have a good blend of common sense and ability to make use of technology. In my travels, about 75% of the dealers have the wrong person managing their used car operation and they wonder why they are not maximizing their full potential? (Even if you have the right person, they have to have the right tools, processes and your full support to be successful.)

A special note to those of you in management that feel somewhat frustrated by the lack of support from your Dealer or General Manager. You may have some things you want to do, but the Dealer or General Manager keeps rejecting your ideas. Next time you have a brilliant idea, don’t just discuss it with your dealer or General Manager, put your idea in the form of a proposal totally written out with every detail. Present it to the dealer or General Manager and ask for 90 days to make your plan work. When you give it to them tell them not to make a decision right away. Ask them to review it and make a decision within the next 48 hours. Most of the time, a dealer with half a brain will let you go with it, unless it’s just totally out there in left field. If your requested is reasonable and the Dealer or GM rejects it, you might want to start looking for someplace else to hang out because you are fighting a losing battle. That’s all I’m gonna say.

Tommy Gibbs

The Japanese word “Kaizen,” means Continuous Improvement.  Kaizen is a Japanese philosophy that focuses on continuous improvement throughout all aspects of life. When applied to the workplace, Kaizen activities continually improve all functions of a business, from manufacturing to management and from the CEO to the assembly line workers. By improving standardized activities and processes, Kaizen aims to eliminate waste. Kaizen was first implemented in several Japanese businesses during the country’s recovery after World War II, including Toyota, and has since spread to businesses throughout the world.

If you’re going to have Continuous Improvement you first have to get back to the basics.  You can’t improve very much if your foundation is not solid. Most of you reading this are either in the automobile business or related to it. Thus, you have probably cut your expenses to the bone and it some cases you have cut too much and made your operation ineffective. There’s a saying that “You cannot expense your way to a profit.” Yes, you have to exercise prudent judgment, but you have to realize the fastest way to profitility is by selling your way there. To sell your way to a profit, you first need to examine your fundamentals.

As I travel the country, without exception, every dealer and manager tell me they are working a sales system/selling process. They lie! (They also tell me they have a 60 turn policy on used cars too.) At the very least they are lying to themselves. The selling processes they think they are working are not the ones they are working.

One of my favorite sayings is “You need to know what you don’t know.”  Actually, I think I originated it.  In this case, it’s probably more about facing some reality. The processes you started way back yonder have evaporated. If I gave a quiz to all your managers and sales people, and asked them to list the steps to their selling system I would get as many different answers as you have people. Furthermore, even if they listed them correctly, then my observation is they are not doing it…they talk the talk, but trust me, they ain’t walking the walk.

Historically, over time these processes have evaporated; then what happens is one day the dealer wakes up and hires another training company to come in and revamp the system. Then X number of years down the road the dealer does it all over again.

You’re sitting there once again thinking, “Ok big mouth Tommy, what’s the answer?  First thing is you need to open your eyes, use your peripheral vision and see if what I just said is true. Once you come down off the ceiling from the shock you’re in, then meet with your key managers and determine just what system you are supposed to be using. Re-write the mess. Then go on a major retraining mission to get everyone back on track.

Will you please quit worry about some of your old goats quitting. They may not be necessarily old in age, but they have old stinky thinking. They actually do stink and they are smelling up your joint. The fact is they are running your dealership into the ground. A lot of them are selling 4 to 8 cars a month and you are worried if your superstar is going to quit if you put some disciplines in place. Rock on Insanity, rock on. If you can’t figure it out yourself hire someone like Jim Ziegler, David Martin or Richard Keeney of the Mar-Kee Group. Give yourself a shot in the arm by going to a Paul Cummings or a Dave Anderson workshop. Maybe what the store really needs is a fire lit under your butt. Some people think they are burnt out…how can you be burnt out if you’ve never been on fire? (That’s supposed to be funny, probably not.)

Now try this same evaluation process in the Service Department. Oh, yea, I bet all your ASMs/Service Writers are doing a complete walk-a-round with every customer. Come on Rock Star, you can’t even get them to collect email addresses, what makes you think they are doing a complete walk-a-round? You can bet the whole process needs to be revamped back there. For some of you, the real problem is that you don’t observe what’s going on in there ‘cause you’re scared of the evil empire in the Service Department. If you’re scared, say you’re scared.

Look, I’m trying to poke a little fun at you, but odds are you really need to take a hard look at your operation. Once that’s done you need to take some action and put a game plan in place. Then you need to put “Kaizen” thinking into place.  Are you continuously improving? As Mr. W.O. Lewis used to say “When you’re done changing, you’re done.” That’s all I’m gonna say.