The Point of Diminishing Return of Satisfaction

The first of everything in life is the best. Your first love, your first computer, your first car, your first job, your first house, your first management position.

How about ice cream and coffee? The more you eat the ice cream cone and the more coffee you drink the less enjoyment there is. The first taste of anything is always better than the second and so on.

Call it the “The Point of Diminishing Return of Satisfaction.” (I made that up; I make lots of things up, just work with me.)

Used cars are no different. Think of the first day that you own a used car as if it’s the first taste of coffee or ice cream. It tastes a lot better if you sell it on day one than it does on day 61.

The longer your coffee sits, the colder it gets. Not so good. The longer ice cream sits the more it melts and the less ice cream you get to enjoy. The longer a used car sits the less you make on it. The less you make on it, the less enjoyment you get to have.

But even if the coffee stayed warm, and the ice cream stayed cold, your second taste of either is never as good as the first.

You’re going to hear a lot about the “Life Cycle” of your used cars this year. My definition of “Life Cycle” would be how long you allow a car to hang around and more important, what elements impact and extend your “Life Cycle.” The management of “Life Cycle” is the most important element of maximizing the potential of your used car department.

Doesn’t it stand to reason that if you can shorten the Life Cycle of your used cars that you’re going to enjoy them a whole lot more and make more money? Dealers and used car managers are always looking for that magic bullet. We all know there is no magic bullet, but if there was one it would be called the bullet of “Life Cycle Management.”

When you shorten the life cycle you make more gross and sell more used cars.

Poor “Life Cycle” management impacts:

A. Slow Turn
B. Aging
C. Volume
D. Gross
E. Poor ROI
F. Attitudes
G. Ability to Trade at the Door
H. Future Acquisitions

There are many factors that create a slow turn and a long life cycle:

A. Acquisition to Write Up
B. Write Up To Shop
C. Shop & Parts Issues
D. Willingness to Re-Route (Sublet and/or jobber for parts)
E. Detail/Clean Up Issues-Same as “D”
F. Photos-Quality and Quantity
G. Posted on Internet
H. Pricing
I. Gross Attitudes
J. Pay Plans

If you focus on fixing “Life Cycle” factors then your coffee is always warm and your ice cream is always cold and the taste doesn’t get old. That’s all I’m gonna say. Tommy Gibbs