Gross Is A State Of Mind

For years we have used the terminology, “Gross Profit Is a State of Mind.” That may have been true years ago. Not so much today. Gross is a state of pricing, processes, and doing a lot of little things each day. Money A

Tips On Improving Gross Profit:

1. 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.

2. 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.

3. Do more and better research. The more research you do on what’s hot and what’s not in your market, the better off you will be. Grosses go up when you are selling a product that’s high in demand and low in supply. Key components for you to utilize are vAuto Stocking Tool, Auto Trader Data and data from Auto Count USA (Experian.)  If you’re still making decisions on what to buy based on gut instinct, you may want to rethink that.

4. Rethink “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 way 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 this must be done daily, not in 15 or 20 day windows. One of the biggest problems I observe is that cars don’t get re-priced soon enough. You might want to start to pay close attention to how often cars are re-priced. Some of your older inventory may have been ignored along the way.

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.” If you’re not familiar with Early Warning Radar, read this article. EWR will help you eliminate your problem cars.  Early Warning Radar Even if you’ve read it before, read it again.

The used car department takes a lot of energy and effort to achieve the volume and gross you need to make big money. You can say that “gross is a state of mind” all you want, but what really creates gross is your mind getting in gear and fixing the things that impact gross, not sitting around thinking about it.

My state of mind is, “That’s all I’m gonna say.” Tommy Gibbs