A good friend of mine who passed away this past year had a saying and it goes like this: “You can justify anything you want to justify.”
Dealers and managers will often try to justify keeping units past 60 days. If you’re a believer in the value of keeping up with ROI, I doubt there are many cases in which you can prove the justification.
Take a look at the chart and the bullet points below.
1. The first one is a car that you make $1200 on, hold 25 days and end up in the sweet spot of 117% (Sweet spot 110 to 120%)
2. The second one shows that if you keep that same car for 60 days that in order to achieve the same ROI you would need to make $2900 in order to get to the 118%. Is that doable?
3. The 3rd example shows that if you hold that same car 60 days, make $1200 on it that you end up with an ROI of 49%…not good, but if you held it 60 days you are probably happy to make the $1200.
4. The 4th example shows that if you make a $1200 gross on a car that you hold for 90 days you end up with a horrible 32% ROI…is that a good use of your money?
5. The last example shows that if you hold that same car for 90 days that in order to hit the sweet spot you would need to make $4300 gross. Can you really do that after 90 days?
Holding cars based on the theory that you can’t replace them is what I call “false justification.”
Sometimes when we justify things in our own mind, we are simply lying to ourselves and those around us. That’s all I’m gonna say, Tommy Gibbs