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Dealer Ops

Ray of Hope

It is great hearing from dealers when things are going well, especially when they are longtime friends. I heard from one yesterday who called to tell me he had just finished reading my SF article, “Welcome Back to 1993” [August 2008] and wanted to congratulate me on it being dead on.

As much as I like those phone calls and e-mails, what made me happier was hearing that his business was going great, and that he had three straight excellent months. I was especially happy because he had been through a rough patch a few years back, but has come through it triumphantly. I asked him how he was accomplishing this in such tough times. His response was that he had gotten lean and mean, had cut expenses to the bone, and had some very strong and well-trained people working around him.

No sooner than I had hung up the phone, I was exchanging e-mails with another dealer friend in central California who had just posted a huge net profit month and was off to another. Again, I asked how—same story.

I recently spoke to two Ford dealer 20 groups. I walked in expecting what I had seen from other groups over the past year. I couldn’t have been more surprised—and happy. Both groups had strong profitability. One was the strongest I had ever seen out of a Ford group. More impressive was the fact that many in the group had increased profits in 2008. In talking with the dealers, I learned they too had spent the past 12 months getting lean, but they still had strong people, with strong training, making it happen.

Beginning to catch a theme here?

On the cover of the magazine is a balance scale. I think it is appropriate. On one side you have people and on the other, technology. I have always loved gizmos, but at the end of the day, they are just tools. You have to have well-trained people (think of technicians in your service department) who have to know how to best use the tools. There must be a balance.

Recently, I spoke with two other friends who are also clients. They are both in full scale-down mode. While I have been warning dealers in this column (and one-on-one) for 12 months now to get lean, I have continually told people to do it wisely. If you decide to lose 20 pounds, you don’t just go hack off an arm. Even if it accomplished your goal you still wouldn’t fit into your clothes any better and it would be difficult to function with just one arm.

These two friends were about to do the same thing to their businesses. Yes, personnel is an area where your organization can get fat, but it still takes people to make a business work. Can talented people assume more duties and enable you to eliminate a person of lesser skills? Possibly. But you certainly don’t want to get rid of your highly talented people—unless you happen to have equally talented people right behind them.

In the auto business, I still have never seen a high dive by the talent pool. Even the best of the best still churn talent at the bottom end. What this means is you still have to keep hiring and most of all, keep training.

It is no secret that 2008 has been a year of turmoil for the special finance industry. With capital constrained, finance companies exiting the business and programs tightened, volume is down about 18 percent and deal grosses are off by 20 percent.

I have seen misguided dealers eliminate talented SF managers thinking they were no longer doing the job, and therefore it was smart payroll to cut. What they didn’t realize is that it is tougher than ever to make those deals, and without that talent and training, their SF gross will likely cut itself by 100 percent. These deals generally don’t get done just by throwing them at the people in conventional finance, especially since they haven’t been trained on how to do them and there is likely no money budgeted for training right now. But the dealers saved money, right?

My point to all of this is that there are dealers doing well right now. It isn’t easy, but they are doing it. They all have skilled and well-trained people who continue to train the people they manage. This perfect storm of a retail climate isn’t likely to get better for another 12 to 18 months. You can’t just quit training.

This certainly isn’t a commercial for my training. Goodness knows there is just one of me and I am busier than I care to be. What I am referring to is my periodical message reminding you to keep training, preferably internally using your own team and a consistent regimen. If you do thin your staff, it is critical for those who remain to know what duties they are expected to perform and more importantly, know how to perform them. Also, for the record, I have not yet drunk the Kool-Aid that makes me believe I can just hire a person from someone else, have them come in knowing exactly what to do, and take the business to another level.

But I digress. There are rays of hope out there—more than a few. I know that many of you may have a hard time believing it, but it is true. With all its current woes, the retail auto industry will still be here two years from now. (I know that because while on a recent family vacation, I rode a horse to make my daughter happy. I assure you, I now know why autos were invented.) I welcome all calls and e-mails, whether it be with challenges or smiles, but I especially like the ones from those of you who have success stories to share.

Until next month, Great Business!

Vol 5, Issue 9



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