I sold my first car off my dad’s clunker lot on Broad St. in Richmond, VA when I was 12 years old. The summer of my junior year in high school I sold cars at Manchester Mercury on Semmes Ave.
Back in those days the customer signed 3 or 4 blank contracts and got roughed up by the dealership personnel. The keys to their trades were thrown on the roof, trades often hidden, and they were told they had to buy a car because their car had already been wholesaled.
Back in 1972, after a couple years of teaching and coaching I, like many of you, got in the car business until something better came along. Obviously nothing better came along.
In those early days, selling systems were the latest and greatest thing to hit since man landed on the moon. Turning the customer over multiple times was the norm and “if I could, would you,” became the closing tool of the day.
The business has changed a lot over the years.
Back them we didn’t have the Internet. We didn’t have third party leads. We didn’t have Google. We didn’t have vAuto. We didn’t have Vin Solutions. We didn’t have Auto Trader. We didn’t have Manheim online auctions. We didn’t have social media.
We didn’t have millennials as customers and employees. We didn’t have customers in their 50s, 60s, 70s and 80s who would rather shop online than spend 3 to 4 hours in a dealership negotiating a deal. We didn’t have 7 year old kids that could figure out your iPhone in a New York second.
What we did have were people in the business who had street savvy and a desire to make a lot of money. They had a strong work ethic and a willingness to grind it out 12 hours a day. And, we still had some questionable business practices. Truth in lending was right around the corner.
For many years, managers have worked deals from cost up and have been able to achieve a desired gross profit regardless of paying full retail in parts and service and/or having packs added to the cost of the cars. The skill level of those passing through the business back then was extraordinary.
No doubt a lot of things have changed over my many years in this business.
But, guess what hasn’t changed? Pay plans!
Most dealers are still paying sales people and sales management on gross profit with volume bonuses thrown in here and there.
With so many customers shopping the Internet, does it still make sense to pay on gross profit?
With a different breed of team members coming into the business, does it still make sense to pay on gross profit?
With prices being established well before the customer gets to the dealership, does it still make sense to pay on gross profit?
With customer’s expectations changing so much, does it still make sense to pay on gross profit?
With 90% of the dealerships using a pricing tool, does it still make sense to pay on gross profit?
With 90% of the public walking around with a personal device that can pull up pricing in a heartbeat, does it still make sense to pay on gross profit?
With the factory having so much control on how you price your cars and such low margins, does it still make sense to pay on gross profit?
With you paying so many flats and minimums, does it still make sense to pay on gross profit?
I’m just asking, does it still make sense? That’s all I’m gonna ask. Tommy Gibbs