Happy New Year! Let's set some goals that will give us the best chance in the pre-owned vehicle business for 2009.
Objective #1: Install a daily disciplined management process that controls the inventory as it ages, not after it ages. Manage to a hard-turn policy of 40 days or less.
Forget the old 90-day turn rule. Current market conditions change daily. If your pre-owned vehicle manager is waiting 90 days to decide to wholesale a stock unit, expect financial pain. Fresh units also have a higher probability of sale.
Objective #2: Stock fewer vehicles.
But stock the right vehicles. Don't stock based on how many spaces you have on the lot. Put the right vehicle on those spaces. Ask yourself why you want that particular model, make and year vehicle on the lot before you invest. No more frivolous purchases. Don't ever buy another vehicle at auction solely because it was cheap or you needed one more vehicle to fill the carrier.
Objective #3: Invest in vehicle-management software. Then use it!
The information that is available at your fingertips these days is astounding, but as it is with anything else, if you don't use it or you are uncomfortable with the technology, it is useless. With systems such as VAuto, aaX, or First Look, you can know what is selling, what it is priced at and days' supply in your market almost on an hourly basis. Why should dollar-minded customers be the only ones to make full use of web-based technology?
Objective #4: Merchandise your physical and virtual lots.
Stand across the street from your pre-owned vehicle lot. Would you go in there? Are the vehicles beyond just clean? Do they sparkle? Are sales people there because they didn't look presentable enough for the new-vehicle showroom? How about your virtual lot online? Your website must present your dealership and the inventory in its best light and provide information of interest.
Objective #5: Train your people.
Spend as much time and effort training your pre-owned vehicle people as you do your new-vehicle staff. Give your pre-owned vehicle manager equal time in all sales meetings and training sessions throughout the store.
Objective #6: Track everything.
It is not enough to know how many demonstration drives, write ups and closed sales you have. These are mere numerical symbols that represent the result of an action or inaction. Concentrate on installing sound, repeatable processes and manage the behaviors that produce the numbers. Track the number of test drives, phone calls and web hits. Know how many appraisals you do, how many you take in and how many you miss. Know who worked the deal and which manager appraised the trade. Track each individual's results.
Objective #7: Benchmark variables.
Keep below 35% of your total gross profit your combined commissions and salaries. Keep your advertising below 15%. Manage your policy and delivery expense.
Question every expense and know what is going into every account. Get by with as few support people as possible. Track total productivity per employee. In total employee counts, be better than 60/40 productive versus non-productive associates. These are certainly not all the objectives we should have if we are to continue in this great business of ours. But if you can accomplish most of these, the rest will likely take care of themselves. You might just be amazed.
So where do you want to go this year? Survive, thrive or maybe you feel you have been around too long and just don't have the energy anymore? The business has changed; it is so much harder than it used to be.
Final Objective #8: Remind yourself every day that you are an American car guy. No one has ever given you anything free and all you ever asked for was an opportunity.
Tony Albertson is executive conference moderator for NCM Associates. He is at [email protected].