What Does a Bear Do In The Woods?

Eats corn.

My business partner for most of my adult life has been Ashton Lewis, Sr. an amazing human and Automobile Dealer in the Hampton Roads area of VA.

Ashton grew up in both the automobile and farming business. One of Ashton’s farms was located adjacent to the Great Dismal Swamp in Chesapeake, VA where corn was a primary crop.

As Ashton tells the story, he would observe a bear come out of the woods, pick an armful of corn to take back into the woods to eat or share with his friends and family.

The bear would sometimes drop an ear of corn and rather than continue into the woods, the bear would put down the armful of corn and then re-gather them all up just to save one ear of corn.

That’s what it’s like when you keep hanging onto that aged unit that you’re never going to make any money on. You spend too much time trying to make money on an aged unit and not enough time figuring out how to make money on the fresher pieces.

Your window of opportunity to make money on a used car is about 40 days or less and that’s a stretch.

Had you been smart enough to identify units that have little or no profit potential on day 1 then you wouldn’t be looking at a stone-cold loser on day 61.

The Bear-Drops ear of corn. Throws down all the others. Wastes time and energy re-gathering the ears of corn.

You-Do not identify problematic units on day 1. You waste time and money struggling with aged units on day 61. Grosses go south because you’re selling too many units late in the life-cycle. You never reach your full potential because you’re thinking like a bear.

Had the bear paid closer attention to how many ears of corn he/she could actually carry then the bear would not have wasted time and energy dealing with one stupid ear of corn.

Had you paid closer attention to what you were dealing with on day 1 you wouldn’t be beating your head against the wall trying to figure out what to do with an aged unit on day 61.

My life-cycle management process makes you a much smarter bear. That’s all I’m gonna say, Tommy Gibbs

Was March Great?

A lot of dealers had a record-breaking month in March. Some of them have already spent too much time gawking at their financial statements, poking their chest out and patting themselves on the back. And guess what? For some of them April is off to a slow start.

Let me caution you; you cannot be satisfied. You can never be satisfied. Those sounds you hear behind you are the competition coming to gobble you up. If you take just one little break, one little hiccup, it could be the very thing that puts you into a downward spiral.

People are successful for a variety of reasons, one of them being “fear.”

The fear of failure.
The fear of falling back.
The fear of giving up all they have worked so hard for.

It’s that fear that causes the successful ones to keep pushing and to keep looking for new and better ways of doing things.

Scott McNealy, CEO of Sun Microsystems, once said, “You either eat someone for lunch, or you can be lunch.” No truer statement has ever been made.

Being a hard-charging competitor can be craziness at its best. Competing is fun. Trying to get better is the lifeblood of competing, leading and winning.

Study it. Embrace it. Love it. Use it as success fuel. Use it to take you to the top of your mental game.

Develop an unstoppable competitive mindset, and it will push you so far ahead of the competition that you won’t have to worry about looking over your shoulder.

What you have to realize is that most people are just lazy and because they are lazy they can become complacent very easily. Ultimately their lazy streak will show its head; that’s when you can “own” them.

There are times when you can have a good month in spite of yourself because the market lets you win.

No easy wins this month. Time to go to work. That’s all I’m gonna say, Tommy Gibbs

Are You Striking Out and Don’t Know It?

I would venture to guess that 80% of the dealers in the country have units over 60 days old in their used car inventory. I’m being generous. It’s probably more like 90%.

How can that be? With every piece of data known to mankind showing convincing evidence that it doesn’t work, dealers just ignore the obvious.

I’d like to think I’m a great salesman. Most great salesmen are easily sold. I wanna be sold. I’m begging to be sold. I’m begging you to sell me.

So come on, sell me on why it’s ok for you to keep used car inventory past 60 days. Heck, even past 45 isn’t working out so well for you.

Recently, I’ve had a few dealers tell me inventory is so hard to find that they are keeping cars longer.

How does that help your inventory problem? Come on, sell me.

Does keeping a car longer ever make you “more gross?” Come on, sell me.

If you finally retail a unit at 90 plus days at X price, couldn’t you have sold it for the same price back when it was 45 days old? Go ahead and sell me that you couldn’t. I’m waiting.

Do you make a greater ROI when you sell a car at 90 days vs. 30 days? Come on, sell me.

Do you make more gross at 90 than you do on day 30? Come on, sell me.

When you keep a car longer, do you make more money on it than if you sold it sooner? Come on, sell me.

You can’t get the units through reconditioning fast enough, so you want to keep them longer? Come on, sell me. Say hello to my Recon Tool.

You can’t find inventory, so you want to hold them longer? Come on, sell me.

The big volume players such as CarMax, Texas Direct and Carvana have to buy most of their inventory. You can’t find cars, so that’s a valid excuse for keeping them longer? Come on, sell me.

Do you really think holding cars longer is the answer? Come on, sell me.

You trying to justify keeping vehicles past 60 days and making money is like me trying to hit a 95 MPH fastball. Ain’t gonna happen.

I’ve never had a dealer who was committed to a short turn say they regretted the strategy.

I’ve had lots of dealers regret keeping cars past 60 days. Come on, sell me.

I like being sold. Come on, sell me. I’m waiting. I’m still waiting to be sold. That’s all I’m gonna say, Tommy Gibbs

When Does the Clock Start?

By and large, most dealers and managers have come to understand it’s not the big that will eat the small but the fast that will eat the slow. We all know the faster we can get a car on the lot and online the more we increase our odds of making a respectable profit.

If you are committed to 60 days or less (which you should be) then any days in the cycle in which the unit is not available for sale is a killer.

The question often comes up, “When does the clock start ticking?” Does it start with the acquisition, the day you own it, or does it start when the car goes on the lot/online?

Let me make this as clear as I possibly can. It starts the moment you own it. Period. No exceptions, no ifs, ands, or buts.

But Tommy, it’s been in the body shop for 20 days? Nope, no, no, no. The clock is ticking. Your money is tied up from day one. You’re working with a depreciating asset. If you try to think any other way, you are lying to yourself. Don’t lie to yourself.

10 Things To Help You Win The Clock Ticking Game:

1. If you are in a state where there are title issues there has to be a clear line of communication with the office on a minute by minute basis to alert you when the title arrives. Any breakdown in communication is costing you money. Staying after these title issues cannot be left up to chance. Somebody has to take ownership of chasing after the titles.

2. It’s a fact that you are having to go further out of your area to buy cars at auctions, but you have to be selective and know what the timeline is that you are dealing with. Anything you can do to reduce transportation days is better. You might even want to consider paying the trucker a bonus for fast delivery. Our software helps you keep track of days in transit.

3. How hard are you trying to buy cars in your own market? Do you have a procedure set up so that when someone comes in and wants to sell you a car that you give them the full routine with a written appraisal? Does your website have a self-appraisal link so the customer can get real numbers from you quickly.

4. Mine your customer base. For sure, you know which cars you always do well with. Often they are right under your nose hiding within your CRM. Vin Solutions has some great tools for finding those vehicles and giving you a chance to buy the car, trade the car or ultimately sell the owner a new car.

5. How about a unique and separate website that drives the customer to your website to sell you their car?

6. If you’re in a market with CarMax, consider promoting that if the customer brings their CarMax appraisal to you within 7 days of the appraisal, that you will give them more for their car than CarMax or give them $100 cash if you can’t beat CarMax’s offer. What do you have to lose? Suppose you buy 10 extra cars this month and also pay out $1000 in loser fees. Do ‘da math, what did you make on the 10 extra cars?

7. Fix your service and recon issues. I know it sounds likeI’m picking on service a lot and that’s not my intent. I just know in most dealerships it’s the same old, same old. How many total days are being wasted from the time the car is acquired until the time it gets on the lot and online? In today’s age of speed, you have to find every day that you can if you’re gonna win the “meter game.” My UpYourGross software comes with a free “Recon Tool.”

8. Make sure you include in your “save-a-deal” meeting every morning a list of all vehicles that are either in transit or tied up due to title issues. The more you pick up the intensity on these units, the faster things will happen.

9. Pick up the intensity level. Not just you, but the entire team has to understand that any day that a vehicle is not on the lot/online it’s costing the dealership big money.

10. Consider hiring a “Chaser.” A chaser is just that. It’s someone who chases your units through the system to ensure nothing sits any longer than absolutely necessary.

Pop Quiz:

When does the clock start? When you own it.

What can you do to improve the clocking ticking? Re-read 1 thru 10.

Control what you can control. That’s all I’m gonna say, Tommy Gibbs

Improving Gross Profit Part 3

1. Think in terms of improving gross in small increments. Try paying the managers a bonus for achieving nominal increases each month. Start by improving gross by $50 a unit. Do that over the next year and you will see a slow and effective way to increase your gross. You can only eat the elephant one bite at a time.

2. How could I talk about your grosses without mentioning “Life Cycle Management?” Life Cycle Management is designed to help you create a sense of urgency on those cars that are most likely to kill your grosses. The faster they go away the better your gross will become. My UpYourGross software tool puts you on the path to better grosses and more efficiency.

3. Track GAP and ROI. When you do, grosses go up. How much are you giving up once the customer shows up at your store with a price from the Internet? If you don’t know then you can’t fix it. (GAP-Give-Away-Profit)

4. Improve your look to book. You make the most money on units you trade. You will trade for more if you get serious about improving look to book. Review every appraisal from the previous day in your “save-a-deal” meeting every morning. Someone in management should be responsible for calling every customer that had a trade and up the ante.

5. Shoot the moon on the right stuff. Since the beginning of the car business, higher grosses are driven by some home run cars. You have to understand which ones are home runs, singles, doubles, and triples.

6. Try some old-school. If you’re not a true one-price dealer serve up an under-allowance on every trade. It should be part of your discipline each time you appraise a unit.

7. If you’re still struggling with gross maybe it’s time to let me train your entire management team? My message is powerful and long-lasting.

Fix what you can fix. That’s all I’m gonna say, Tommy Gibbs

My Wish-List

1. I wish we could do away with packs.
2. I wish every sales person worked his or her entire deal on a tablet.
3. I wish we could eliminate cashiers.
4. I wish we had salaried salespeople with annual bonuses.
5. I wish we had salaried management with annual bonuses.
6. I wish we didn’t have to rely on processing fees to make a nice bottom line.
7. I wish we had two-tiered pricing from the service department to the used car department.
8. I wish every service writer presented the menu on a tablet.
9. I wish we didn’t have to negotiate prices.
10. I wish we didn’t have “towers of power.”
11. I wish salespeople didn’t sit behind a desk to work with a customer.
12. I wish sales management & salespeople had a 40-hour workweek.
13. I wish we could get units through service in 3 days.
14. I wish we never would have any units over 60 days
old.
15. I wish we didn’t have new car rebates.
16. I wish auction fees could be reduced.
17. I wish we focused more on “leading” rather than “managing.”
18. I wish every dealer was in a 20 group.
19. I wish your showroom didn’t look like a showroom.
20. I wish I’d see you at the NADA convention.
21. I wish 75% of a sales transaction could take place online.
22. I wish you’d get 12 turns per year.
23. I wish we could rid ourselves of “Legacy Thinking.”
24. I wish you would finally hire me.
25. I wish you a great holiday season.
That’s all I’m gonna wish for, Tommy Gibbs

Bonus Wish: I wish I didn’t send you so many newsletters, but I can’t resist myself. That’s all I’m gonna say, Tommy Gibbs

Still Making a Plan?

Tip # 1-Dissect each department. Break them all down. Pretend you are starting from scratch. Don’t assume anything. Nothing is sacred. Be ready to change and perfect any and all processes.

Tip #2-Analyze, analyze, analyze. Make the numbers work.

Here’s a number you need to make work. 120%. Once you have figured out how many units you should be selling, think of how many salespeople you will need to get the job done. If you think your volume number is 100 and you think your team will average 10 units each then the number of sales people you need is 10. Right? Wrong!

What you really need to get the job done is another 2 salespeople. It takes 120% of what you think you might need. There are always a few sales people having a bad month. You fire some. Some quit. Someone is sick, broke a leg or whatever. You cannot hit your number doing straight up math. Think 120%. That’s how you will get your number. Don’t worry about overloading your sales force. You need to worry about overloading your bottom line.

Tip#3-Relocate; as in send some folks packing. Loyalty is a wonderful thing. Too wonderful. Yes, it’s a people business, but darn it, it’s a business. You’re not running a charity. There are some people that just need to go. If you love them so much you can’t part with them, then send them to the farm and mail them a check each month. Get someone on board who can get the job done.

Tip #4-Now that you’ve analyzed and figured out your team, lay out the new plan. Bring your key players into the new plan. Let them have some input. It’s ok to let them think it’s their idea. The more they think it’s their idea, the better.

Tip#5-Present it to the entire management team. Your key managers have to help sell the plan and create “buy-in.” Buy in is critical to the success of the organization.

Tip#6-Educate the team. It doesn’t matter how long you are in this business you need to continue to look for opportunities to ramp up your performance. Educating the team is never an expense. It’s an investment in them and your future.

Tip#7-Turn your used car department upside down. Look at it from every angle possible and start making changes.

Tip#8-Put the plan in play now. Not January 1. Now is the time to get the kinks out. It’s like spring training. You want to be able to rock and roll on January 1, not March 1.

2019 isn’t going to be easy. Now is the time to light the fire. You will win in 2019 by preparing to win right now. That’s all I’m gonna say. Tommy Gibbs

Should You Take a Walk?

Most health magazines would tell you that walking 20 minutes a day has huge health benefits. There are also some huge business benefits if you would make yourself take a walk. Try these three walks and your health and business will improve:

1. The Meet Your Team Walk-The first walk occurs each day as soon as you arrive at the dealership. Generally speaking I’m directing most of my writings at the dealer and/or General Manager of the dealership, but in this specific case it can apply to anyone and will pay huge dividends regardless of your position.

Start at the back of the dealership and work your way toward the front. Your mission should be to speak to as many team members (call them what you want) as possible. Over time you should get to know them.

Make it a point to stop and talk to every technician, every porter, every service writer, etc.

Work your way into the body and parts departments and do the same. Then visit the office staff and sales department. Of course, the sequence may depend on your actual job and role in the operation, but you get the point. In time you need to at least learn the following:
Their name. (Duh!)
Where are they originally from?
How long have they worked there?
What drew them to the type of work they are doing and to the company?
Married/single?
Spouse’s name?
Children, ages/boy/girl?
Hobbies/what do they like to do in free time?
What are their long term goals in life?
Find out something from them that others would be surprised about.
As I was writing this I considered explaining the benefits of taking a “team walk” each day, but concluded that if you can’t figure it out yourself it’s hopeless and you might be in the wrong business.

2. The Trade Walk-there should be a staging area where all trades are parked. All members of management must go on the trade walk every day at a specific time, preferably after your “save-a-deal meeting.”

All managers means GM, GSM, Used Car Manager, F&I Manager, BDC Manager, Internet Manager, New Car Manager and most importantly the Service Manager. Stop at each car and talk about the car.

You will be amazed at how many more trades you will end up keeping and how many more deals you actually are able to put together by getting insight and suggestions from the various members of your management team. It is very foolish to allow one person to make decisions on which trades to keep and not keep.

The concessions and input you will get from your service manager will pay valuable dividends. It’s a total no-brainer. (My software mobile app will help you.)

3. The Lot Walk-The lot walk takes place once a week preferably after your weekend kick off sales meeting which should be on Friday. (I’ve never understood the concept of having a kick off sales meeting on a Saturday.) After the meeting, all sales people and all the members of the management team including the service manager will take a lot walk. Stop at each vehicle on the lot and talk about the unit.

This is how you get your entire sales team involved in selling more used cars. The more they know about your inventory the more they will sell. You have to force feed them. You will find out why certain cars have not sold because as you stop to talk about the specific cars the salespeople will tell you why that car is still sitting there getting stale.

Oftentimes there is an issue with a car as to why it has not sold. By having the service manager on the walk he/she will jump all over the issue and get it handled for you. It’s called the “embarrassment factor.”

So, here’s the bottom line. Start walking. Walking is good for your health. Walking is good for your business. That’s all I’m gonna say, Tommy Gibbs

Making Mistakes?

A wise man was once said the key to his success was “I’ve made lots of mistakes.”

And therein lies one of the keys to you becoming an even better leader. Allow yourself, and especially those around you, the latitude to make some mistakes.

The key is to learn from the mistakes. As a dealer for over 20 years I know I made a lot of mistakes and I’m sure I made some of the same ones twice. But, I’d like to think I learned something from each mistake.

Far too often when dealing with team members, leaders don’t use mistakes as a teaching moment, but as a criticism moment. It’s absolutely imperative that we learn from our mistakes and that we don’t continue to make the same ones over and over again.

As it relates to used car management why would you allow the same buyer to continue to go to the same auction sites, buy cars and 60 days later you take them back and lose money on them?

To be real, it may or may not be 100% the buyer’s fault. It may be that there’s no strategy to deal with vehicles that have a high market day’s supply and a high cost to market. In either case, there’s a consistent mistake being made that you as a leader are allowing to happen. Shame on you.

The key is to give your team enough rope to make some mistakes, but not so much that they choke themselves and your business in the process.

When people are allowed to make some mistakes, your organization becomes more innovative. Without innovation, your organization becomes stymied. (Get innovated, join a 20 Group.)

It’s very difficult to be a great mentor when you micro-manage every decision that’s made.

When you micro-manage you end up with micro-growth. Team members like working in an environment where they feel like they are allowed to grow. When they grow, you grow.

You’re making a big mistake if you don’t manage your mistakes. That’s all I’m gonna say, Tommy Gibbs

Is Now The Time?

You may be running out of time. The year is closing out fast.

You’ve been contemplating hiring me to improve your used car operation, but keep procrastinating thinking your used car department will fix itself.

Part of that contemplation is you’re concerned about the investment and my material making waves with your team.

You will earn the investment back overnight and I’m not going to screw up what you and your team are already doing well.

I come to you. Your team stays in place. You save money and you make more money when you hire me.

I am going to enhance what you do well and give you some powerful concepts to take you to the next level.

Here’s the biggie; I’m going to get your team on the same page.

It’s a pretty safe bet that you have a management staff that all have their own way of thinking about your new and used car business. Some of their thinking is spot on. Some of it not so much.

I’ll destroy the myths and line the moon, stars and earth up.

See if any of this applies to you:

1. You’ve had evaporation. Regardless of how good you are or how well disciplined you are, there’s going to be an evaporation of processes over a period of time. Bam! I can fix that!

2. You’ve had some turnover. Most people do. Turnover isn’t a sin. What’s a sin is not ensuring that the new guys and gals get it. If you don’t give them the right tools, they don’t have a chance. Bam! I can fix that!

3. The business is changing. Your team needs to understand the changes taking place and how to attack them. Bam! I can fix that!

4. Your team has gotten a little complacent, either because business has been pretty darn good or they have accepted the status quo. They need to be re-energized and see the possibilities. Bam! I can fix that!

5. Your average grosses continue to decline. Mostly they decline because someone’s not paying attention to the little things. Bam! I can fix that!

6. You have aged inventory and wholesale losses. Aged inventory helps create #5. Aged inventory causes wholesale losses. Bam! I can fix that!

7. You have a team that struggles to get on the same page. You have old school thinking. You have new school thinking. You have no thinking. Bam! I can fix that!

8. The number of days it takes to get a car online and on the line is killing you. Bam! I can fix that!

9. You’re sick and tired of listening to the bickering, excuses, and lack of forward movement. Bam! I can fix that!

10. You need a coach. You need someone to lean on. You need another set of eyes on the subject. Bam! I can fix that!

A quote worth remembering: “The purpose of training is to tighten up the slack, toughen the body, and polish the spirit.” Morihei Ueshiba

You’ll become smarter when you hire me. Becoming smarter is always a bargain, something you can buy for a lot less than it’s worth.

Is now the time? That’s all I’m gonna ask, Tommy Gibbs