Many years ago I had the pleasure of meeting Dave Mullen who was the General Manager of JM Lexus located in South Florida. I was in absolute awe of that operation. At that time they were selling 750 new Lexuses a month. I must tell you I just couldn’t think that big. In a meeting with Dave one day I asked him, “Dave, as a General Manager of a store this big what do you spend your time doing each day?” He said “I see my job as doing one major thing each day and that is to guard the processes.”
Even if you have a well disciplined organization, your processes will still evaporate. It happens in every business. Dave fully understood that and you should too. So here are five easy processes you should refocus on:
- 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.
- Press Your Cost Down-This is probably the simplest and most effective thing you can do to improve your business. Know your average cost per unit 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 less expensive units and making sure the more expensive ones turn fast.
- 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.
- Attack the 10 Most Expensive Units in Stock-Make a list each day of your 10 most expensive units in stock. Make sure they are priced really, really right, with one exception. The one exception is that 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.
- Think Fast, Be Fast-You are working with a depreciating asset. Everything, including decisions on what to keep and not to 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.
Consider putting bonus money on these 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.
What is your oldest unit in stock right now? I will bet you it has a story tied to it. The bottom line is probably that it was a problem in one way or another from day one and someone either didn’t recognize the problem or they chose to ignore it hoping a miracle would happen. That’s all I’m gonna say. Tommy Gibbs