Need a Haircut?

When I’m in town I work out at a small 24-hour gym on Treasure Island in a little strip mall. Three doors down from the gym is a real barbershop. Looks and feels like one from yesteryear compete with the barber’s pole that can be traced back to the Middle Ages.

The other morning, I couldn’t help but notice the barber was sitting in his barber’s chair staring at the front door. Immediately it flashed through my mind that’s what I often see in dealerships today.
I see two types of people staring at the door.

1. Salespeople staring at the door waiting for that special up that the dealership has been so kind to advertise for. (Will we ever fix this?)

2. Management staring at two doors. The old school door and the you might fail door.

The might fail door can be pretty scary. Every once in a while, you walk over, crack the door, and take a peek. Your body starts shaking with fear because of what you’re seeing.

You’re seeing grosses and in some cases volume heading south. You’re seeing today’s pay plans not working, and you’re seeing today’s new hires leaving as fast as Superman and a speeding bullet.

They aren’t buying into your hours and your selling processes which aren’t much different than they were 25 years ago. And, they hate your pay plan.

Aside from being prettier, the physical work environment is about the same. You still have desks and you’ve fancied them up by putting computers on them. It’s sort of the lipstick on a pig theory. When the customer walks in, they still see a pig.

You’re also seeing the approach of some of the public
companies and bigger dealer groups by changing their hiring practices and hours, and adding iPads, sofas, and kiosks in the showroom.

You’re starting to wonder if you’ll still be around 10 years from now.

But you’re making a profit so why change? You need to change while you can afford to change.

You’re sort of like that barbershop. The only thing that’s changed for the owner is the chair is a little different and there’s no strap to sharpen the straight razor with.

That’s a really nice chair you’re sitting in. Enjoy your seat. That’s all I’m gonna say, Tommy Gibbs

What’s Next?

It’s Thanksgiving and time to give thanks. If you’re like me for sure you have a lot to be thankful for. Among many things I’m thankful for are your friendship and support.

Thanksgiving also starts the closeout of the year. It centers around Black Friday and rolls through the last week of the year. Like it or not, 2019 is already here.

I’ve listed some very basic ideas you need to take into consideration that will help you finish strong and get ready for your best year ever.

A. Re-commit yourself- and your thinking towards being the very best you can be. Take stock of all those great ideas running around in your head. Write them down and make a commitment to get them done by certain dates. Post it on the wall in several places that you will see frequently. If you have a private restroom, put it on the mirror.

The dealers and GMs with the most successful used car operations are those who have taken ownership of the used car department. The more involved you get, the more success your dealership will have. If you’re not committed to the used car business, it’s a safe bet your team isn’t either.

B. Re-evaluate-the appearance of your inventory. Let’s do a little checklist:

1. Look at your inventory online. Are they all there? Actual photos & prices posted?
2. Take a lot walk. Are the vehicles in straight lines?
3. When was the last time the entire lot was rotated?
4. Are you using angles to display your inventory?
5. Do you have hang tags? If so, do they all have hang tags?
6. Are they nasty, dirty on the outside?

C. Refocus Your Disciplines-To be successful in the used car business you have to have daily/weekly/monthly disciplines that you live and breathe by.

One of those disciplines might be to do a weekly lot walk. Every car in your inventory must be touched. If it’s in service, touch it. If it’s in prep, touch it. If it’s in the budget center, touch it. Everybody touches it. Even if you think you have your disciplines well defined inside your head, you’d be well served to make a written list and check them off from time to time.

D. Re-Recon-Take every unit over 30 days old back through a recon process. (You’ve already missed your best window of opportunity to make gross; that would be the first 20 days.)

E. Re-Invest-in yourself and your management team. Do something to gain some knowledge. Hire me, visit CarMax, or visit a dealer friend in another state that does a good job in used. Attend a workshop. Join a Twenty Group. Join a Used Car Twenty Group. Do something besides sitting there and waiting for something to happen.

F. Re-think- your management team. Do you have the right person running your used car operation? Yes, that person may have been with you for years. Loyalty sometimes equals mediocrity. Maybe they have some great skills, but the fact is that you may not be making the best use of their talents.

I’m thankful for lots of things this holiday season and I’m especially thankful that you’ve taken the time to read my little Zingers. That’s all I’m gonna say, Tommy Gibbs

What About October?

By now you’ve closed out October, twisted over the numbers and gone back to work.

Not so fast.

October is the perfect month. “Perfect for what?” you ask. Perfect for figuring out where you’ve been and where you want to go.

I can’t say that math was one of my best subjects, but I can divide by 10 real easy. At a glance, I know what the averages are for any line item expenses, sales volume, and gross profit.

What also makes October a perfect time is it sets the stage for the next year. Now is the time to start planning for 2019. Waiting until the last week in December to get your plan together is a really bad strategy.

This is the perfect time to dig in and firm up your fundamentals in all departments. This is the time to get back to basics. This is not the time to cut back on your training.

This is when you need to amp up your thinking, stretch your organization and stretch your imagination. If you don’t have a solid foundation of basic processes you will never maximize your success.

This is the time to take control of the evaporation factor that’s been occurring all year long. This is the time to stop the process bleeding.

Your long-term plan should include joining a Twenty Group and attending the NADA convention.

We all get lazy and get caught up in our daily routines. Attending these meetings gets you revitalized. It gets you outside of your daily box and opens your eyes up to what the possibilities might be. Seems like a no-brainer.

This is the time to make those plans. Teamwork is critical if you’re going to maximize your bottom line. To keep your team on the same page you have to constantly communicate to them what the expectations are and what processes they are expected to follow.

There is no shake ‘n bake solution. You don’t fix it and walk away. You fix it and re-fix it.

What to do?

1. Ask yourself if you can improve your processes? If you focus on revamping your processes, what effect do you think it will have on your business? It’s just a fact that regardless of how well disciplined you are, over time your processes are going to evaporate.

The best piece of advice I can give you is to lock yourself and your management team in a room and review every detail of your selling processes. Be brutally honest with yourself. Then take the necessary action to get yourself back on track.

2. Can you improve your team? Got the wrong players? Now is the time to make the changes. If you already have the right team in place then it’s time to let them know what your expectations are and show them the plan and the path to achieving those expectations.

3. Don’t think of your planning as you now having
a plan. Think of it as a “mission.” Plans can fall apart. When you’re on a mission you stay after it until you succeed and then you stay after it some more.

I’m on a mission to get you to re-think what you’re doing. I’m on a mission to get you ready. That’s all I’m gonna say, Tommy Gibbs

Maybe You’re Thinking About It Wrong?

There are a number of factors that go into achieving a better gross profit than what your store is currently producing.

None are more important than how you price your units and how you pay your staff. We often price units that we have the greatest profit potential too low and price units with a lesser profit potential too high.

There’s no disagreement that pricing plays a role in the equation. There’s another hidden element that’s often ignored and it’s what kind of a deal that you’re willing to take.

And that’s where pay plans have the greatest influence.

I will give you a couple of examples:

You have a nice trade.
It has a wide cost to market in your favor.
It has a low market days’ supply.
It’s 12 days old.
You have it listed with a gross of $2700.
After some negotiating the salesman and you are staring at a $1500 deal.
You take the deal.

How can you not? You’re both being paid on gross. You just gave away $1200 that maybe you shouldn’t have.

Here’s the flip side:

You have an auction purchase unit.
You have a cost to market not in your favor.
High market days’ supply.
It’s 56 days old.
At 56 days of age you still have it listed with a $1500 gross profit.
After some negotiating the salesperson brings you a deal that’s a $500 loser.

You don’t want to take the deal because there’s nothing in it for you or the salesperson. (Actually, there may be for the salesperson because you have a $500 bonus on the unit to make it go away.)

You take the deal and moan all day about how Internet pricing is killing your grosses.

The reality is your pricing was off from jump street.

If you find yourself holding on to some of these low-profit potential cars longer than you’d like, you might find that you’re letting what you paid for vehicles influence what you are listing them for.

You priced it wrong because you wanted a certain margin going in. You may have priced the unit with the same margins as you would with a nice trade.

Both of these examples add to your gross profit woes.

If you want to improve your gross profit you need to change your thinking when it comes to pricing, paying on gross and the deals you’re willing to take. That’s all I’m gonna say, Tommy Gibbs

Why Am I Screaming?

I’m done playing nice. I’m done being soft spoken. I’m done not telling you like it is. I’m done with you telling me you drank the Kool-aid and all is good.

Unless you drank my super Kool-aid, it’s not all good. Some of you have. Some of you haven’t. If you haven’t, you should.

I’m screaming. Yes, screaming from the rooftop that you need to be using my life-cycle management process. The reason you need to be using it is that it makes good sense. You cannot deny that it makes good sense.

I guess you could, but you’d be wrong.

You could say, “My team and I don’t have the discipline to utilize it,” which would be a shame, but you can’t say, “It doesn’t make good sense.”

For your entire career, you’ve either stated or heard others state, “All units must stand on their own.” Yet, you treat them all the same. What are you thinking? How’s that working out for you?

Life-cycle management requires you to have a unique strategy for every unit on day one. If you have a unique strategy on every unit on day one, none will see day sixty-one.

My software helps you manage it, but I don’t care if you buy my software or not.

What I care about is that you acknowledge the fact that all units don’t deserve the same shelf life.

What I care about is that on day one that you be honest with yourself about what you’ve done to yourself.

What I care about is that you understand you cannot treat a purchase unit the same as you do a trade.

What I care about is your gross going up. Using life-cycle management makes your gross go up.

Maybe you should come up on the roof with me and look down and see the view I see. If you did, you’d be screaming too. You’d be screaming at the person in the mirror. That’s all I’m gonna say, Tommy Gibbs

The Same Mistakes Over & Over?

First I want to make it perfectly clear the amount of respect I have for those who have been in this business for many years. Those that have grinded it out, those that have street savvy, and those that at times made chicken salad out of chicken poop. There is no adjective to describe the admiration I have for you.

That being said I want to speak to those of you that are in charge of the hiring and struggle to find that superstar used car manager. The used car manager you need may very well be right under your own roof, and you’re walking right by him or her a dozen times a day.

For whatever misconceived reason, when you need a used car manager, the first thing you want to do is find a used car guru that works someplace else and lure them away.

I don’t have to tell you the challenges of hiring from the outside. I don’t have to, but I will.

1. The person you hire isn’t going to have the same culture that you’ve been working so hard to develop.

2. Their thinking about the used car business isn’t going to necessarily align with yours. That doesn’t mean either of you has it right or wrong. It just means it’s going to be frustrating and more than likely expensive.

3. If you’re running an ad in Automotive News, most of the respondents are going to be from outside your area. I’m not even going to attempt to list all the issues tied to bringing someone in from afar. If you don’t understand those issues then you’ve got a lot more problems than I can help you with.

4. When you hire from the outside you are looking for a miracle worker to fix the mess left from the last miracle worker. Most likely the mess will get bigger. All you’re doing is rinse and repeat.

5. You’re doing nothing to encourage people to want to grow and develop within your organization when you keep going to the outside. You need to promote from within.

The real answer is that you don’t need someone from the outside with a bunch of experience. What you need is to commit to giving someone from within a chance and a whole bunch of your personal time and energy.

What you need is:

1. Someone that’s a young “thinker.”
2. Someone that has high energy.
3. Someone that believes in your culture and store.
4. Someone that’s coachable.
5. Someone that has common sense.
6. Someone that understands technology.
7. Someone that has integrity.
8. Someone that has a strong work ethic.
9. Someone that has good communication skills.
10. Someone that’s hungry.

If you don’t have someone or multiple someones like this in your organization then you need to rethink your organization. That’s all I’m gonna say, Tommy Gibbs

Are You Winning?

If I learned anything from being an athlete, a coach, an NCAA college basketball referee, and my time in the United States Marine Corps, it is that you have to be a well-disciplined team to win.

I, like many of you, can look back and review my career and unequivocally conclude that the success I’ve had is directly tied to discipline.

The common denominator that I observe in my dealership travels for the most successful operations is discipline. It’s there. It’s visible. It’s consistent.

You can have:

A lot of great ideas.
A lot of great concepts.
A lot of great tools and training at your disposal.
A lot of talented people.
A lot of great software.

None of it is worth the ink to write it down if you don’t have discipline.

As many of you know my team and I have developed some amazing software rightly named UpYourGross. What’s obvious is that the dealers who have the discipline to allocate 10 minutes a day to the software are getting results that far exceed their expectations and their investments.

Those that don’t are wasting their money.

This isn’t about my software. It’s about the value of discipline.

Leadership must have a clear understanding of discipline and what it means to the success of the organization.

If you’re going to develop a winning team you must be committed to the now, not later. If you’re not a person of action, not much else will matter.

When a leader is consistent in everything he/she does, then others will follow. When others follow the lead of discipline, momentum and growth are inevitable.

Never forget the enemy of discipline is procrastinating. Be disciplined. That’s all I’m gonna say, Tommy Gibbs

Should You Focus On Used?

When it comes to the automobile business, we often have a very short memory. There are many who have forgotten what it was like back in 2008-2009. The better business gets, the shorter the memory we seem to have.

For some of us, it seems like it was just yesterday, and I can clearly remember how depressing the NADA Convention was in New Orleans in 2009.

There were some recent stories in Automotive News about how dealers were able to survive during those tough years.

One in particular that stood out for me was on Denny Amrhein, a managing partner at Grogan’s Towne Chrysler-Jeep-Dodge-Ram located in the Toledo, OH market.

The header in the article: “A new philosophy: Turning cars in 30 days.”

To quote Mr. Amrhein, “In 2008-09, right during the recession, my used-car manager came with a new philosophy of turning cars in 30 days – 60 days max,” Amrhein said. “We weren’t into making a lot of money on the cars -we were into turning them, so we could turn our cash fast

His store went from selling 60 used cars a month to 150-175 per month. Winning.

The way he was making money in 2009 is the same way you make money today. Turning your inventory is always a solid fundamental business principle of the used car business.

Back in 2008-2009 dealers were losing their franchises and were left with some nice empty showrooms. Many of them tried to turn those empty showrooms into used car operations. A few succeeded. Many failed.

They failed because for so many years they had ignored their used car business. They had made their money on new vehicles and paid little or no attention to used.

What better time to get your head into the used car game than right now when business is good?

You have very little control over your new car business. You can always control and make a living selling used.

We’re blessed to be new car dealers. When you focus on used, you increase your odds of remaining a new car dealer. That’s all I’m gonna say, Tommy Gibbs

Should You Shoot The Moon?

There’s a lot of talk these days about the “Velocity Method” of selling used cars and trucks.

There are some that would define Velocity as: “A method of giving your cars away so as to impact your gross to a point of a substandard amount that will make you want to throw up your hands, beat yourself over the head, and barf.”

My definition for the word Velocity: the whipping boy of the auto industry that can be blamed when we use software pricing tools as the Bible, don’t use our brains and don’t use the tool as it was intended in the first place. Software is a tool. It’s not a genie in a bottle.

If you’re in a favorable market day’s supply position, why would you not shoot the moon on certain units for 10 to 20 days? If you use your vAuto pricing tool and apply some common sense your odds of improving gross profit and volume increase.

That being said, dealers today have never been smarter when it comes to understanding inventory turn. By and large, most dealers really do “get it.”

You don’t have to give all your units away, but you have to be smart enough to know how to turn your inventory. Being smart means knowing when to pull the trigger.

Dealers often miss the chance to take a shot at making some big grosses because their vehicles are hung up in recon for the first 10 to 20 days of their shelf-life. Those first 20 days are always when you make the most money.

As you move forward, think about the choices you have:

1. Hold a high gross profit per unit.
2. Improve your volume with lower grosses.
3. Improve your volume and be smarter about pricing and gross profit.

In today’s market, your best chance is #3. That’s all I’m gonna say, Tommy Gibbs

Are You Efficient?

If you’re going to continue to make money, and hopefully make even more money, you will have to become more efficient.

Your processes will need to become more efficient. Your management team will need to become more efficient. Your entire dealership will need to become more efficient.

You will have to become more efficient when it comes to managing your expenses. And, you must become more efficient when it comes to speed and cost of your reconditioning. I know it’s a sore subject for some of you, but the sooner you address it the sooner you will move forward.

There are many issues dealers are scrambling to deal with as we move into the most competitive environment in the history of the automobile business.

In order to do volume in used cars you need to have a “costing advantage.” By “costing advantage” I mean what’s added to the car once you own it, which includes packs and reconditioning.

To have a costing advantage you have to re-think your packs (which usually gets down to pay plans) and most importantly, what you charge the used car department from your shop.

If you know your history, you know that a couple of the reasons dealers added packs and charged full retail from the service department was because sales managers worked from cost up.

This is no longer true. Your sales managers don’t have control over gross as they did 20 years ago. The market conditions such as days supply are having an impact on how you price your vehicles.

More and more dealers are moving toward becoming one-price dealers and saying “no” when the customer shows up and wants a discount. (In the near future our UpYourGross software will track this for you.)

Becoming more efficient means improving the amount of time it takes to get a unit through recon and to the front line. Every day that a unit is not on your front line available for sale is costing you money.

Sadly, most dealers do not actually know how long it takes. And even when they do, they turn a blind eye toward the problem. They let the proverbial tail continue to wag the dog when
it comes to fixing the service timeline problem.

If you’re going to do more volume you need to have an advantage when it comes to getting cars through your system and the cost tied to doing so. You must become more efficient.

The pain of efficiency, or the pain of regret. You’re going to have one or the other and the cool thing is you get to pick. That’s all I’m gonna say, Tommy Gibbs