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CIADA INSIDER C O L O R A D O I ND E P E ND E N T AU T O M O B I L E D E A L E R S A S S O C I AT I O N

CIADA QUALITY DEALER OF THE YEAR

CONGRATULATIONS, SOUTHWEST MOTORS

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January/February 2018

CIADA INSIDER

INSIDE

FRONT RANGE CLASSES |

06 ............................... Maximizing Impact and Focus in 2018 08.....................................Annual Social Media Policy Review 10................................................. NIADA Government Report 12........................................ CIADA Quality Dealer of the Year 16..... Burning Tracks to Insufficient Sales Performance Data 19.....................................Combating Dealer Margin Declines

WHAT’S NEW

NIADA ACQUIRES NABD

NIADA has acquired the National Alliance of Buy Here-Pay Here Dealers. The acquisition was finalized in December. Look for details in upcoming NIADA publications. See you at the NIADA/NABD convention June 18-21 in Orlando!

ADVERTISERS INDEX

ALLDATA.............................................................................. 9 AmTrust Financial ................................................................7 Dealers AA of the Rockies I...............................................FC Lobel Financial .....................................................................3 Loveland Auto Auction........................................................ 5 Manheim ............................................................................ 11 Manheim Denver ................................................ Back Cover NextGear Capital ...............................................................12 STARS GPS.........................................................................15 VAuto ............................................................................... IBC

COLORADO INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION PRE-LICENSING CERTIFICATION Colorado state statute requires anyone applying for a used motor vehicle dealer’s license or a used powersports dealer’s license be certified through a pre-licensing course. This seminar is also offered to salespeople to be able to pass the New Mastery Examination Test. Class is held at least once a week. Check our website for dates.

Call CIADA for information on these classes, or to get your forms and/or Dealer/Salespersons Bonds.

Lakewood, Colorado Education & Training Center 950 Wadsworth Blvd., Suite 101 Lakewood, CO 80214

www.ciada.org phone 303.239.8000

BASIC TITLE TRAINING CLASS Join us to get updated information to learn the CORRECT way to fill out your paperwork at time of sale and other topics including title compliance, do’s and don’ts for titles and more. This class is held once a month for half a day.

All classes are subject to change without notice. Please check our website www.ciada.org for any changes.

OFFICE

For information on how to become a member of CIADA, please contact Todd O’Connell 950 Wadsworth Blvd., Suite 101 • Lakewood, CO 80214 303.239.8000 toddo@ciada.org

NIADA HEADQUARTERS NATIONAL INDEPENDENT AUTOMOBILE

DEALERS ASSOCIATION WWW.NIADA.COM • WWW.NIADA.TV 2521 BROWN BLVD. • ARLINGTON, TX 76006-5203 PHONE (817) 640-3838 For advertising information contact: Troy Graff (800) 682-3837 or troy@niada.com. CIADA Insider is published bimonthly by the National Independent Automobile Dealers Association Services Corporation, 2521 Brown Blvd., Arlington, TX 76006-5203. Periodicals postage paid at Dallas, TX and at additional offices. POSTMASTER: Send address changes to NIADA State Publications, 2521 Brown Blvd., Arlington, TX 76006-5203. The statements and opinions expressed herein are those of the authors and do not necessarily represent the views of CIADA Insider or NIADA. Likewise, the appearance of advertisers, or their identification as members of NIADA, does not constitute an endorsement of the products or services featured. Copyright © 2018 by NIADA Services, Inc.

BOARD OF DIRECTORS OFFICERS

STATE MAGAZINE MGR./SALES

Troy Graff • troy@niada.com

President

Tim Gaylord Gaylord Leasing Company Inc. 303-667-6188

Vice-President

Mark Weida Street Smart Auto Brokers 719-434-8443

Secretary

Teshome Tesfaye Norfolk Motors 720-298-1796

Treasurer

Mike Whistance Country Truck and Auto 303-857-1281

Dan Berkenkotter Berkenkotter Motors 303-809-1618

Dean Gunter Mile High Car Company 719-570-7800

John Lindberg Auto Warehouse 970-490-2886

EDITORS

Jacinda Timmerman • jacinda@niada.com Andy Friedlander • andy@niada.com MAGAZINE LAYOUT

Christy Haynes • christy@niada.com PRINTING

Jim Bode J. Bode Used Cars 303-366-1535

Nieman Printing

DIRECTORS.

Lucas Jozefkowicz Denver Autos 303-573-1333

Chairman

Stan Martin Stan’s Auto Sales 303-650-1011

Mike Widhalm Reds Auto and Truck 303-726-5520

PAST PRESIDENT / DIRECTORS Jim Bahne Bahne, Inc 720-934-9806

Mike Bonicelli Nevada Auto Sales 719-635-2533

Dave Cardella Mountain States Auto Group 303-887-8977 Peppe DeMarco Highline Motors 970-206-9963

Roger Kirlin Roger Kirlin Auto Sales 303-526-7805 Joe McCloskey McCloskey Motors 719-594-9400

Dean Strawn AutoTrek 303-934-5600

CIADA INSIDER

January/February 2018

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ACCELERATE | BY GWC WARRANTY

5 NEW PROFIT SOURCES YOU CAN START TOMORROW Small Changes Can Give You a Big Boost

At a certain point, every business – even the best ones – can go stale. Numbers are good, customers are happy, but there’s always the lingering thought of “could it be better?” Often, the answer to this question can lie in the little things – small changes you can make quickly that give you the boost you’re looking for. Trying new things can be difficult and sometimes uncomfortable, which is why it’s important to start small. Giving a new approach, product or service a shot could be the first step you take toward major changes that greatly benefit you and your dealership. With that in mind, let’s take a look at five of these “first steps” you can easily integrate into your dealership. Try a New Product Your vehicle service contract approach might be spot on. Your penetration rates are high and you know just what to say to get a customer on board with a service contract purchase. But if you’re looking

for a little extra F&I profit or simple ways to better protect your customers, a new product might be just what you’re looking for. Products like GAP, Certified, Service Lane and more are good opportunities for you to apply your F&I skill set on small, but impactful new products. Try a New Strategy If your vehicle service contract presentation is lacking the effectiveness you desire, trying to attack it from another angle could help give it a breath of fresh air. Luckily for you, there are plenty of online training resources available – some at no charge – that can lay out these new approaches and processes in a simple, easy-to-implement manner. Try a New Tool Customers are more savvy than ever before, especially when it comes to technology. If they’ve spent hours researching a vehicle and landed at your lot, replicating that technology experience can help them drive away in a new vehicle. Even the F&I process can be done on tablets with apps and other useful tools your provider might offer. Try a New Follow Up Plan Do you make follow up calls? Are they achieving what you’d like? Do they appeal to the modern-day customer we just discussed?

Something like Covideo can go a long way toward ensuring your message is heard. The union of personalized video messaging and email delivers your message in a candid way via a communication tool today’s customer prefers. Try New Lead Generation Even just one phone call a day can add up when it comes to your efforts to drive new leads into your dealership. If you’re selling vehicle service contracts regularly, knowing which contracts expire when can be a good start to build your call list. For GWC Warranty Elite Dealers, we even do that check for you with our Elite Lead Generator. You can also set reminders for when service contracts expire so you know when to call a customer who might be in the market for a new vehicle or another VSC. By giving one of these simple new tools or tactics a try, you’re taking an important first step toward making small changes that have the potential to make a big impact. And once you’ve perfected one, don’t be afraid to try another. The best dealerships are constantly improving, which most times means making small changes along the way that add up to major profits over time.

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January/February 2018

CIADA INSIDER

| BY JUSTIN M. OSBURN

MAXIMIZING IMPACT AND FOCUS IN 2018 Designing the New Year for Better Success

No matter what position you hold in your operation, the nature of an auto dealership, especially Buy Here-Pay Here, can cause daily chaos in every department. In sales, an unexpected visit by an unhappy customer over a service; in collections, a vehicle that has gone off the radar; in accounting, attempting to cover an immediate cash flow crisis can quickly take your day off the intended course. Before you know it, you look at the calendar and another year has passed and many of the building blocks you intended to design are still sitting on the shelf. There are a few easy steps you can master to assist in maintaining control of your time and priorities while designing the new year to result in a better organization than you started with. Step one: Spend a few minutes to reflect on the areas of the business in which you make the most productive difference. Production means selling cars, collecting dollars, and/or controlling expenses. What skills and talents do you possess that offer the greatest impact on the ability to affect these areas? Once you identify a few primary contributions you offer that make a big impact, begin to set daily priorities focusing time to exploit these gifts and skills. Step two: Take your monkey with you. Dave Ramsey wrote in his book EntreLeadership he imagines everyone who comes to him throughout the day has a monkey (or problem) on their back. Their goal is to take that monkey (or problem) off and put it right on your desk for you to deal with, most of the time unintentionally. He suggests we encourage that team member to take their monkey with them. If there is a challenge that arises during the day, do your best to allow your team to solve it within their capabilities. Have them take their monkey with them and come back with solutions to the problem. This will eliminate many distractions from your day and allow you to oversee their solutions while nurturing their ability to solve problems. Step three: Recognize priorities in your operation and dedicate time to those priorities. In The 7 Habits of Highly Effective People, Stephen Covey outlines four quadrants people spend time in throughout their day. The quadrants are: Urgent/Unimportant, Urgent/Important, Not Urgent/Unimportant, and Not Urgent/ Important.

CIADA INSIDER

January/February 2018

If you think about it, we spend a great part of our day in the Urgent/Unimportant area putting out fires as they arise. Making a decision to focus more resources on the Urgent/Important and Not Urgent/ Important quadrants will lead to more impact in the operation over time. Step four: Build a financial forecast for 2018. If you have never built a financial forecast for a year, I offer some simple tips to make it less intimidating. Simply export your 2017 monthly profit and loss statement to an Excel spreadsheet. Look over the areas of income and expense you would like to improve in 2018. Add columns between each month for 2018 and type in these targets. Then, each month, add the actual numbers and see how you did.

SPEND A FEW MINUTES WITH THE MANAGERS AND REVIEW T H E I R A C T U A L S . H AV E T H E M C O M M U N I C AT E T H E I R R E S U LT S – WHY THEY MISSED THE AREAS THEY FELL SHORT IN A N D W H AT W O R K E D . H AV E THEM DO THE SAME WITH THEIR RESPECTIVE TEAMS. This can also be done by managers in their departments, and front-line team members on their individual production. Brief meetings with each team member and their supervisor to look over the forecast can create opportunities to enhance the forecast as well as align each forecast to support the overall goal. For example, if the owner increases the sales income for 2018, do the sales professionals’ projections support hitting that increase? Step five: Recap and review each month. Much of this is a waste of time if there is no review. The point of these actions is to invest your time in areas that make an impact and stay focused on the targets for your business in 2018. Go grab some coffee and come in the office late or go into the office early one morning each month and review how the operation did that month compared to your goals. Spend a few minutes with the managers and review their actuals. Have them communicate their results – why they missed the areas they fell short in and what worked. Have them do the same with their respective teams. These very simple actions will assist your operation in growth and foster focused review by the entire team. These are activities common in a 20 Group, with the benefit of having other dealers share their financials and goals, which you can compare. If you would like more information on a 20 Group or if you would like me to send you a sample forecast, email me at justin@niada.com. Justin Osburn is a moderator, consultant and trainer for NIADA Dealer 20 Groups, offering more than a decade of experience in retail and Buy Here-Pay Here executive management. He can be reached at justin@niada.com.

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MAXIMIZING IMPACT AND FOCUS IN 2018

RETAIL READY

SOCIAL MEDIA

| BY KATHI KRUSE

ANNUAL SOCIAL MEDIA POLICY REVIEW Why It Is a Best Practice It’s 2018 and you know what that means – it’s time to assess and realign things for the new year. Do you have a social media policy in place for your dealership? If so, how often do you review it?

PROTECTING COMPANY ASSETS It’s a good business practice to regularly assess company assets. Public or private, a dealership’s market value or equity is based directly on the assets it retains. Assets both tangible – such as cash, property and buildings – and intangible – such as your digital reputation, policies and procedures, and social media presence – are directly responsible for a store’s market value. Social media policy falls under the intangible asset category, and reviewing your policy on an annual basis is a best practice. Just as a regular review of expenses and operations results in many benefits, so does a social media policy review. WHY DO AN ANNUAL SOCIAL MEDIA POLICY REVIEW? There is often a lot of angst and fear around social media, and an annual review takes some of the sting out. You can’t control everything, but with a good policy in place and regular reviews, you’ll leave a lot less to chance. Reaffirm company guidelines for employee use of social media. When hired, each employee should have signed an acknowledgment of receipt of the company’s social media policy. A process to conduct annual reviews of company policy on everything is always a good idea but it’s crucial for social media. Why? Because social media changes often and a dealership’s social media policy should change along with it. It’s an insurance policy in the event of a social media crisis. We’ve seen enough social media debacles at Kruse Control in the past nine years to know it’s not a matter of if, but when it could happen.

CIADA INSIDER

January/February 2018

Are you prepared should it happen to you? First, it should be determined and documented what a social media crisis is. Having a company-wide plan in place will empower you to act quickly and effectively when a crisis begins. Instead of wasting time debating how to handle things on social media, you’ll be prepared to take action and prevent the crisis from growing out of control. It helps avoid legal trouble and exposed liabilities. There’s a lot of pressure for dealers to communicate online today. It’s easy to overlook that social media brings certain responsibilities to mitigate liability. Some of the places a dealer could get into trouble are: • Using work without permission. • Defaming competitors. • Promises not kept. • User privacy. • Contest violations. Pro Tip: The use of social media increases the risk of accidentally committing libel, slander, copyright infringement and privacy invasion. All those tweets and posts can lead to lawsuits, but a general liability insurance policy can help. It includes protection for “advertising injury,” meaning claims from your competitors that you badmouthed them in an ad. It safeguards against accidental leaks of confidential information. Social media is a growing security risk as a source of data leaks and misinformation. Vigilance and training are crucial to minimizing risks for individuals and the company. Employees using personal electronic devices discuss all sorts of work-related topics on social media – both during and outside of work hours and locations. As a result, confidential data can leak directly. Another security concern about social media – which continues to make headlines – is criminals can exploit social media to rapidly disseminate “fake news” and other forms of misinformation. Such devious tricks impact more than just politics. They can be used to manipulate stock prices, harm personal or business reputations, or even cause people to take actions that harm innocent parties while helping criminals. In Kruse Control’s clients’ customtailored social media policies, we

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spell out the consequences that come from accidental leaks of confidential information. We determine where risks lie and recommend actions to prevent them. It protects a company’s digital reputation. Businesses around the world ranked damage to their reputation or brand, magnified by social media, as their top risk management concern, according to Aon’s 2017 Global Risk Management Survey. Warren Buffet said, “It takes 20 years to build a reputation and five minutes to ruin it.” That is especially true today, as highprofile crises including cyber attacks, product recalls and damaging social media posts become more prevalent. In the current environment, protecting reputation and actively managing risk can take on strategic importance. Yet for many organizations, managing reputation presents challenges. Many dealers do not have a written process exclusively for reputation management. Truthfully, until social media showed up, you didn’t really need it. Reputation management was left to the marketing and PR people. Today, every employee is a marketer. A review of social media policy will support ongoing efforts to build and protect a company’s digital reputation by spotlighting internal practices and processes. It keeps HR in the loop on marketing. More and more, dealers are using social media as a recruiting tool. With the addition of “social selling” into the sales process, it’s easy to see that HR is fast becoming a necessary participant in the social media marketing process. There’s a trend toward hiring employees who already have a current social media following because they are influencers and are often seen as subject matter experts, especially if they’re in sales positions. A review of social media policies and procedures should include an update on how HR folds into social media and outlines its stake in decision-making around social media. Kathi Kruse is an automotive social media marketing expert, blogger, consultant, author, speaker and founder of Kruse Control Inc., which coaches, trains and delivers webinars focused on integrating social media and online reputation management into dealership operations. She can be reached at kathi@krusecontrolinc.com.

INDUSTRY NEWS | BY GWC WARRANTY

AUCTION NEWS

| BY USED CAR NEWS

NAAA HONORS BRASHER AS PIONEER Auction Veteran Recognized The National Auto Auction Association has named auto auction veteran Larry F. Brasher a pioneer of the industry for his achievements and contributions to the remarketing profession. The honor was presented to the former owner and chief executive officer of West Coast Auto Auctions during NAAA’s 69th annual convention. This Industry Pioneer Award, given to those who have worked in the wholesale motor vehicle industry and/or NAAA, recognizes an individual who has innovated or enhanced methods of improving services to remarketers through NAAA member auctions, has championed NAAA member auctions as providing services for motor vehicle remarketers unavailable from any other source, and has consistently followed the standards of the NAAA Code of Ethics. The NAAA represents more than 340 auction members and 100 associate members in North America.

GWC WARRANTY WELCOMES NEW DEALER CONSULTANT TO DENVER David Puckett GWC Warranty, provider of used vehicle service contracts sold through automotive dealers, is proud to announce the arrival of a new dealer consultant in Denver – David Puckett. Puckett, a seasoned automotive F&I professional, will call upon existing GWC Warranty dealer partners and all used car dealers throughout Denver and the surrounding areas to help them sell more cars with the assistance of GWC’s best-in-class service, products, training and technology. A former Marine and University of Denver graduate, Puckett joins GWC Warranty following 18 years with dealership F&I departments and F&I product providers. Puckett’s track record of outstanding customer service is a natural fit for GWC Warranty, where every employee is dedicated to providing best-in-

class service to dealers and end customers that helps avoid post-sale dissatisfaction and protects dealers’ reputations. As part of APCO Holdings, GWC Warranty has helped protect more than 8.5 million drivers from costly, unexpected out-of-pocket repair bills by paying more than $3.5 billion in claims to date. This longstanding record of excellence has earned GWC an A+ rating from the Better Business Bureau and designation as a Motor Trend Recommended Best Buy for Independent Dealers. In addition to these honors, in 2017, GWC Warranty was once again named a Bronze Level Corporate Partner of the NIADA and recognized in SubPrime Auto Finance News’ SubPrime 175 and Auto Remarketing’s Power 300. For more information about GWC Warranty please visit www. GWCwarranty.com.

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January/February 2018

CIADA INSIDER

WASHINGTON UPDATE | BY SHAUN PETERSEN

NIADA GOVERNMENT UPDATE

Latest Government Issues and Activity

NIADA IS YOUR VOICE IN WASHINGTON D.C., ADVOCATING FOR INDEPENDENT DEALERS, THE USED VEHICLE INDUSTRY AND SMALL BUSINESS. HERE’S A LOOK AT THE LATEST NEWS AND NIADA EFFORTS REGARDING LEGISLATIVE, REGULATORY, PAC AND GRASS ROOTS ACTIVITIES.

LEGISLATIVE The future of the Consumer Financial Protection Bureau’s controversial indirect auto lending guidance could now be in the hands of Congress. On Dec. 5, the Government Accountability Office, responding to a request from Sen. Pat Toomey (R-Pa.), issued an opinion that defined the guidance document as a CFPB rule for the purposes of the Congressional Review Act. That ruling opens the door for the guidance to be overturned by a simple majority vote of both houses of Congress. According to the CRA, all federal agencies must submit their rules to Congress and the Comptroller General before they can take effect. Congress can then repeal the rule with a vote of disapproval – as it did last year when it voted to overturn the CFPB’s Arbitration Rule. The indirect auto finance guidance, issued in March 2013, claimed dealer discretion on interest rates creates a “significant risk” of unintentional disparate impact discrimination and spelled out the bureau’s intention to pursue enforcement actions on that basis. Its critics have pointed out that the CFPB’s theory is based on shaky methodology for determining disparate impact and that the guidance was put in place without comments from stakeholders, public hearings or studies of its impact on the cost of credit to consumers.

CIADA INSIDER

REGULATORY The Federal Trade Commission ended the year with a flurry of enforcement actions. Last month the FTC reached a consent agreement with Cowboy Toyota in Dallas over charges of deceptive advertising of loan and lease terms in a Spanishlanguage newspaper. The FTC said Cowboy Toyota ran full-page ads in Spanish that highlighted favorable terms for buying or leasing a vehicle. But the limitations for those terms ran in English fine print at the bottom of the ads. In addition, the FTC said the ads did not clearly and conspicuously disclose required credit or lease terms, violating the Truth in Lending Act and the Consumer Leasing Act. The complaint also accused the dealership of violating the FTC Act by misrepresenting various claims – among them that no down payment was required and that certain new 2016 models were available for purchase when they weren’t. A month earlier, the FTC reached a $1.4 million settlement with the Los Angelesbased Norm Reeves dealership group for allegedly violating a 2014 FTC administrative order banning it from misrepresenting the cost to finance or lease a vehicle in its ads. The FTC said the group ran deceptive ads that claimed customers could pay nothing up front to lease a vehicle but did not mention large fees and other costs.

January/February 2018

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GRASS ROOTS Michigan IADA has begun a push for legislation to require pre-licensing education for the state’s independent auto dealers. While a bill has not yet been introduced in the state legislature, MIADA president Otto Hahne said the association has been busy paving the way, hiring a lobbyist and setting up a state PAC fund to raise money for the effort. “We’re building up our soldiers to get out there and get it done,” he said. “We’ve already got support from people in legislative areas, so hopefully, we’ll be able to pull it off.” MIADA is modeling its proposed education program on the one already in place in Ohio, working with OIADA and executive director Wendy Rinehart on designing the program. “They’ve already got the curriculum and various things that will save us a lot of time and money,” Hahne said. “They’ve laid the groundwork for us. We’ve already been down there to see what they do. Wendy has been absolutely awesome to work with.” Hahne said the plan is for MIADA to conduct the classes, and he said the association is hoping to implement an idea that came up at a recent state presidents meeting. “What we want is for the bill to establish MIADA as the stateapproved provider of pre-licensing education,” he explained. “That will ensure the program is done right.”

PAC As the campaign season begins for the 2018 mid-term congressional elections, NIADA-PAC is keeping a close eye on a number of key races. In particular, the focus will be on several seats that will be vacated by legislators who have announced they are not running for re-election, including some currently held by legislators who are supporters of independent dealers, the used vehicle industry and small business. Among those are three Republican House members from Texas: Rep. Jeb Hensarling, Rep. Joe Barton and Rep. Sam Johnson. Hensarling, chairman of the House Financial Services Committee, has been mentioned as a potential candidate to replace Richard Cordray as director of the CFPB. Barton is vice chairman of the House Energy and Commerce Committee. House Judiciary Committee chairman Bob Goodlatte (R-Va.) has also said he will not seek re-election, as have Sen. Jeff Flake (R-Ariz.) and Sen. Bob Corker (R-Tenn.), chairman of the Senate Foreign Relations Committee. NIADA-PAC will watch those races with interest, looking for candidates who will continue to fight for the interests of our industry and small business. Shaun Petersen is NIADA’s senior vice president of legal and government affairs.

ASSOCIATION NEWS |

CIADA QUALITY

DEALER OF THE YEAR

Southwest Motors

Congratulations to Mike Zavislan, his wife Randi, and his terrific team at Southwest Motors. He is CIADA’s Quality Dealer of the Year. “At Southwest Motors, we have built a talented team of likeminded individuals who believe in providing the very best carbuying experience for our customers,” said Mike. “This attitude from the top down has driven our growth.” And grow they have. Mike and Randi were firmly entrenched in the cattle business when he was approached to start a dealership. They decided to take out a personal loan on the ranch and started trading cars instead of cows. That was over 20 years ago. Starting with 12 cars they have continuously upgraded and expanded the business. Today Southwest Motors’ main lot, on Highway 50 in Pueblo, has four and a half acres, a service center with 10 bays, a 10,000-square foot detail building with another two acres used for customer and trade-in parking. Southwest Motors has been featured as one of the top 10 independent dealers in sales nationwide for three years in a row along with being named the Best Auto Dealer in Pueblo. In addition, Southwest Motors has partnered with the Pueblo Chieftain for a “Citizen of the Week” award and with CSU Pueblo for its “Entrepreneurship” contest. Pueblo natives, Mike and Randi make numerous contributions to their hometown. They contribute to organizations such as YMCA, 4H State Fair, Text for Tuition and AMR Safety Jam. They also act as sponsors for youth dances, clubs and sports, Stroll for Stroke and Rotary Race. Plus, Mike helps recondition the local law enforcement vehicles. CIADA is proud to have Mike and the outstanding crew at Southwest Motors representing Colorado at the National Quality Dealer of the Year awards program featured at this year’s NIADA June convention in Orlando. Also, special thanks to Regis University for its partnership and role in the selection process. Congratulations to the fantastic group at Southwest Motors and best wishes for continued success.

CIADA INSIDER

January/February 2018

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ACCELERATE

| BY GWC WARRANTY

AVOID POST-SALE COMPLAINTS Three Easy Steps With the voice today’s modern consumer has on social media and online review sites, it would be naïve to think a dealer’s obligations end the day of a sale. How a vehicle performs in the months following a sale – and how you prepare your customers – can go a long way toward shaping your reputation both online and in your community. The fundamentals of avoiding postsale complaints begin with protecting your customers from the unexpected. Nothing helps guard your customers against being blindsided by repair costs better than a vehicle service contract. With this in mind, the following steps will help you properly prepare your customers who purchased a vehicle service contract for the unlikely event of an unexpected mechanical breakdown. Train Yourself There’s no way you can effectively present the benefits of your service contract without first educating yourself on all the ins and outs. Knowing the

MARKET WATCH

subtle differences between coverage levels and the finer details about component coverage, claims procedures and limits of liability will help you pass this knowledge along to your customers. If you’re going to educate your customers in a way that protects your reputation, you will first need to be a subject matter expert yourself. Delve Into Details Getting deep into the details of a service contract isn’t recommended for your F&I presentation, but once a customer is on the hook, it’s important to go over what they can expect from a repair experience. Even if you don’t do a full dive into some details, directing your customers to where they can look up claims procedures, component coverage details, labor rate information and more will provide them the resources to have a smooth claims experience. You can even direct them to the service contract provider’s website and helpful tools there that can assist in obtaining coverage details and finding a local service facility. Provide a Resource Let’s be honest. Going over component coverage, claims procedures and limits of liability at the end of an exhausting F&I presentation can be information overload for a customer. But if you have a place on

| BY AUTO REMARKETING STAFF

HONDA NAMED MOST RELIABLE CAR BRAND Data from RealWorld Vehicle Repairs

Honda currently outpaces all brands when it comes to reliability, according to a new analysis based on real-world vehicle repairs. Three of Honda’s most popular models – the CR-V, Civic and Accord – are among the top 10 most reliable cars on RepairPal. com’s recently introduced Reliability Rating that is based on vehicle repair orders from the company’s network of over 2,000 shops. “We wanted to take a fresh, data-driven approach to reliability,” RepairPal chief executive Art Shaw said. “While other studies are based on subjective surveys, we are in a unique position with our nationwide network of shops to use actual repair data. The best way we can help consumers is by

your website where customers can go to learn more about the service contract they just purchased, you’re providing them a place to learn more once they’ve come down from the excitement of driving off in their new vehicle. This spot on your website should point to your service contract provider’s resources so customers can quickly find out how to look up coverage, find a service facility and more. These three steps will help you protect your reputation and avoid post-sale complaints with actions you can take before, during and after a sale. By becoming an expert in your service contract products, passing this knowledge along to customers and providing a post-sale resource for them to use as a reference, you are fortifying your reputation by ensuring any post-sale mechanical failures can be corrected quickly.

SAFETY WATCH

providing research tools that enable them to make the most informed decisions about their cars.” The Reliability Rating scores are derived from vehicle repair orders on model years 2010 through 2017. Scores range from zero to 5.0. Four-point-five is considered excellent, 4 good, and 3 average. Asian automakers Honda, Lexus, Hyundai, Mazda, Kia, Toyota and Acura have an excellent rating of 4.5. Excellent ratings on its ES, IS and RX models earned Lexus the title of secondmost reliable brand and highest-ranked luxury brand. Additionally, the Toyota Yaris, the only model to score 5.0 out of 5.0, has been named the overall most reliable car due in part to its low cost of ownership. Behind the top Asian brands, Chrysler and Buick received the highest scores for domestic brands, and Volkswagen took home the top reliability ranking among European automakers. Each vehicle reliability score is based on the cost, frequency and severity of repairs.

TOYOTA RECALLS PRIUSES FOR CAPACITATOR PROBLEMS May Not be Properly Bolted Toyota Motor Engineering & Manufacturing is recalling six 2016 Prius vehicles. A capacitor within the hybrid system may not have been properly bolted to the inverter housing. Toyota will notify owners, and dealers will replace the inverter, free of charge. Toyota’s number for this recall is H0U.

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January/February 2018

CIADA INSIDER

MANAGEMENT MATTERS | BY DAVE ANDERSON

HOW EFFECTIVE LEADERS HANDLE MISTAKES

Strategies to Help You Master this Important Skill I recently filmed a DVD program for my online training platform on the topic of handling mistakes, and the response was even more robust than normal. I believe that’s because handling mistakes – ours and others’ – is such an ongoing, realworld leadership responsibility that affects everyone, both at work and at home. How you handle mistakes also goes a long way in determining the level of trust, buy-in, connection, and positive impact you can have on your team. Here are some thoughts and strategies to help you master this important leadership skill.

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HOW TO HANDLE YOUR OWN MISTAKES Admit a mistake as quickly as possible. Waiting to acknowledge a mistake gives the perception you’re either oblivious to what you’ve done, or you may be looking for a way out of taking responsibility. As a result, delayed confessions allow a hiccup to become a cover-up, and then a conspiracy. This perception will break trust and build disgust among the ranks. Don’t try talking yourself out of something you behaved yourself into. Own it. You don’t have to make a big deal out of it, just own it. The objective is to bring closure to a mistake quickly so you can focus on moving forward. As an aside, if you admit an error, don’t marginalize your effort by making an excuse for it. Own it. This models a positive leadership example your team will pick up on. Leaders with bloated egos or gross insecurities never manage to execute this first step. They wrongly believe admitting a mistake makes them look weak when the opposite is true. Admitting mistakes requires strength, and earns respect because others know how difficult it would be for them to do the same thing in your situation. Learn from the mistake, then don’t repeat it. This well-known quote sheds insight onto this point: “You can never make the same mistake twice because the second time you make it, it’s not a mistake, it’s a choice.” Coach Paul “Bear” Bryant offered sound advice along these lines when he said, “When you make a mistake admit it, learn from it, don’t repeat it.” The reality is anyone who tries new things, seizes the initiative, and makes decisions is going to make mistakes. We all do “stupid” things from time to time. But the key to growth is doing “new” stupid things, not the same old stupid things. Doing the same stupid things indicates you are unaware, unteachable, undisciplined, or worse. Doing new stupid things demonstrates you’ve left your comfort zone, tried something different, and now have an opportunity to learn what didn’t work so you can get it right next time. Teach others from your mistakes. This builds trust, connection, and bondedness with team members. John Maxwell put it well: “If you want to impress others, talk about your successes. But if you want to impact them, talk about your mistakes.” Get over it and move on. Continuing to rehearse, rehash, or blame yourself for the mistake is a mistake that compounds the original mistake. If you’ve admitted it, learned from it, and adjusted because of it, move on to gaining new ground.

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HOW TO HANDLE THE MISTAKES OF OTHERS Don’t get personal. Focus on the issue without getting personal with the individual that caused the issue. There’s a big difference between calling an action idiotic and calling someone an idiot. Attack the performance. Coach the performer. Address a mistake in direct, professional terms, without unnecessary drama or exaggeration. Again, be direct and professional, but also be conversational. There’s no need to pile on by injecting unnecessary hype or drama with statements like, “I can’t believe you could do something so insipidly foolish and careless! If ignorance is bliss you must be the happiest man on earth!” Focus the person on solutions, not scapegoats. An employee mistake is an unparalleled coaching opportunity. Look at it as a teaching tool, not a battering ram. Help the person think for themselves and take ownership concerning what they could have done better and how they’ll improve next time. Asking questions like: “What should you have done better, or instead?”, “What do you recommend we do from here?”, and “What did you learn and how can you ensure you don’t repeat the error?”, are nonconfrontational, collaborative ways to help the person grow by causing them to think and commit to act. When confronting a mistake, don’t rattle off their rap sheet of past unrelated mistakes. Again, this is a coaching opportunity, not an indictment. You’re not proving a case in court – you’re addressing and correcting a behavior. Keep the main thing the main thing. Rehashing past, unrelated mistakes is debilitating and distracts from the matter at hand. Engaging in “rap sheet rehearsal” will also break trust and credibility if you do the same with family or friends. It’s a recipe for ending up miserable and alone in your life. Encourage the person to take another shot. Making mistakes can cause others to procrastinate, become passive and lose their killer instinct, especially when a mistake is handled improperly. It’s a shame when this happens, because mistakes are a part of the growth process. When someone stops trying, both they and the organization miss out and fail to cash in on the mistake’s benefits of learning from the errors, learning a better way, and growing as a person. In such cases all they, and we, pay is the price for the error and never get the payoff the price could have brought. Dave Anderson is president of LearnToLead.

MANAGEMENT MATTERS

| BY SCOTT BATES

BHPH INCOME OPPORTUNITIES Long-Term Profitability Dealers who want to keep control of their portfolio but also increase profitability in the long term need to focus on customer longevity. In an effort to keep their customers in a vehicle longer, more Buy Here-Pay Here dealers are offering some kind of warranty. Many more have optional service contracts available. Offering mechanical protection up front with a car sale increases the chances a customer will contact the dealer if the car breaks down. Some warranties include an option for free towing, which gets the car – and customer – back to the dealership to resolve any issues. With warranties and service contracts, of course, you need a well-run service department. The service department staff needs to focus on a good customer experience, not just keeping a car running. Staff also should understand exactly what is covered under the warranty or service contract to communicate with the customer and handle proper repairs. For example, a dealer might explain up front that the customer has a full or limited warranty on any mechanical repairs for a set period of time. That option is designed to stay in contact with the customer and make small repairs to avoid bigger ones. Frequently, a broken down car equals stopped payments. Instead, the dealer offers to make repairs, eliminating a common excuse for nonpayment and staying in contact with more customers. By staying in contact with customers, the dealer can offer more options to keep them happy and making payments. • Get the vehicle in and inspect it proactively/ make repairs. • Provide a discount. • Add missed payments or big repairs to the end of the existing loan. • Get customers into another vehicle through refinancing. • Adjust the payment schedule to support changes in circumstances. Consider offering regular spot checks on vehicles or letting customers upgrade to a nicer model while keeping payments the same. Extra service can sustain thousands in payments each month while reducing the need to sell as many cars per month. One of our BHPH clients recently spoke to us about outsourcing bookkeeping services to free up his time to spend on repairs. He calculated time spent in service was more valuable than in the back office if it meant getting more cars back on the road – and getting payments in the door. In this competitive environment, the industry is advocating decisions like this, focusing more on customer longevity and extra service options. Dealers who free up their time from the back office or sales can focus on service and collections practices, including:

• Reviewing all existing customers weekly and identifying which customers are currently behind on payments. • Contacting customers and inviting them to the dealership to talk about getting current on payments. • Offering a list of options that can support up-to-date payments. • Training staff on a welcoming experience that demonstrates your interest in keeping the relationship. • Monitoring payment habits and communicating as soon as there is a change. Ultimately, a customer-centric approach will help your dealership become selfsufficient – with enough cash flow to

reinvest in dealership operations and enough efficiency to focus on attracting new customers and new revenue streams. If your vision is to provide a valuable service to the community for people who need a car and can’t get one any other way, a customer-centric approach is certainly the right business model. Cornwell Jackson works with BHPH dealers frequently to adopt new approaches to service, cash flow and profitability. For more information, visit www.cornwelljackson.com. Scott Bates, CPA, is a partner in the audit practice and leads Cornwell Jackson’s Business Services Department. Contact Scott at scott.bates@ cornwelljackson.com or 972-202-8000.

STARS

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January/February 2018

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MANAGEMENT GAMEPLAN | BY SCOTT BERGERON

BURNING TRACKS TO INSUFFICIENT SALES PERFORMANCE DATA How to Successfully Integrate a KPI Tracking System

As your flight prepares to take off, how would you feel if you knew the pilots were only handling some of the items on their pre-flight checklist? While not a literal matter of life and death as it could be on an airliner, dealerships crash and burn every year because they fail to track critical sales performance data on every salesperson. Many focus on the number of done deals without tracking how many sales may have been left on the table. Insufficient daily tracking of such key performance indicators as number of clients contacted, number of test drives, and number of callbacks can make a vast difference in a dealership’s annual revenues. KPIs are the critical information needed to maximize time and make course corrections before molehills turn into mountains. It also can make a major difference to someone’s career and a dealership’s employee retention. If not held to a high accountability protocol, a salesperson can fail to make the grade and move on. Much like a football team without high performance standards that are constantly reviewed and improved, an entire sales team can flounder. There’s nothing worse than getting to the end of the month and realizing someone isn’t getting a paycheck, or is getting one they can’t live on. It’s bad for the rep, management, and the dealership as a whole. You need to know right away when someone is missing their numbers. Despite all these reasons to develop comprehensive KPIs and require each sales team member to be accountable to them, it often doesn’t happen. Why not? Reasons – or excuses – include the following: • Lack of time. Most of us feel overwhelmed much of the time. “One more thing,” even if it can make the difference between dealer success and failure, can feel like too much. • Lack of willingness. Particularly in smaller, independent dealerships, “seat of the pants” is the prevailing sales philosophy. Freewheeling sales teams exhibiting typical instinctive entrepreneurial traits succeed or fail based mostly on personality, charm, and intuition. While these are all important strengths, it’s vital to complement them with reliable adherence to objective tracking standards. Using the football analogy again,

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the greatest players possess a healthy dose of talent coupled with strict adherence to objective measurements and observations. Dealer sales reps are no different. • Lack of follow through. Sometimes a dealership – and its employees – will become enamored with a “shiny new technology toy” to set up and track KPIs that may be bundled into a CRM. However, much like a young child getting a new toy, after the initial glow fades so does the follow through. The KPI tracking system gets relegated to the shelf, where it gathers dust instead of valuable information. • Lack of decisiveness. In other cases, the problem is inability to decide what KPI system to use because there are so many choices that decision-makers have a “deer in the headlights” type reaction trying to assess the best solution for them. They default to making no decision at all. • Lack of patience. Some KPI systems can be unwieldy to set up and implement. They can disrupt normal routines, require a lot of handholding, and generally be a pain to use. This is not the recipe for success. • Lack of budget. This is often the biggest challenge. While some KPI solutions are extremely cost-effective, others – particularly the largest and most well-known – require a substantial money commitment. Often, it’s just easier to justify not using the system because of cost. What is the best way to find and integrate a KPI tracking system, and use it consistently? • Research options. Unlike some technologies that are very complex and costly, KPI tracking solutions can be very economical, easy to use, and simple to complete on a daily basis. This isn’t rocket science. Look for the key criteria you need, then marry those criteria to a system that meets your needs. • Make it a habit. High-producing leaders promote success by making sure everyone on the sales team knows what is expected of them. Regular inspection processes ensure the sales machine is firing on all cylinders. Tracking and reviewing everyone’s KPIs every day, then making changes as needed to improve numbers, must be a commitment made both by management and individual team members. • Use it as a teaching and coaching tool. With this objective data, sales managers can help individuals improve their performance. If a salesperson isn’t entering the data, a manager can go directly to the person and find out why, then provide direction to make sure it happens. It can be a case of forgetting, a cry for help, or even defiance of the whole system. Top performers especially may avoid completing their daily tracking because they believe they’re above it and the rules don’t apply to them. But they should. • Make it fun, as much as possible. KPI tracking can be done as salespeople go

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T O P P E R F O R M E R S E S P E C I A L LY M AY AV O I D C O M P L E T I N G T H E I R D A I LY TRACKING BECAUSE THEY BELIEVE THEY’RE ABOVE IT AND THE RULES D O N ’ T A P P LY T O T H E M . B U T T H E Y SHOULD. through the day on their smartphones, tablets, laptops, or desktops, in real time. The entire process can take as few as five minutes to finish – so it’s not like completing mounds of paperwork for a homicide investigation. • Make it a regular monthly appointment. In addition to daily tracking and adjusting, schedule an end-of-month session to review KPI statistics, goals, and desired changes based on the results. To make it even more compelling for individuals to comply, sales managers can review each salesperson’s results with the entire team present. This “peer pressure” can help make sure everyone is accountable, and allows top achievers a showcase for their good work. Remember, it’s about way more than the number of done deals. Former dealer executive Scott Bergeron is the founder and principal at Daily Gameplan (www.dailygameplan.com), a sales team performance company. Daily Gameplan’s “Red Book,” cloud-based CRM, and direct consulting have been used in thousands of dealerships throughout the United States. Bergeron can be reached at 303.918.3169 or scott@dailygameplan.com.

ACCELERATE | BY GWC WARRANTY

5 NEW PROFIT SOURCES YOU CAN START TOMORROW Small Changes Can Give You a Big Boost

watch. listen. learn.

Like. Totally. Tubular. Dude! In January

watch. listen. learn.

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January/February 2018

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MANAGEMENT MATTERS | BY DAVE ANDERSON

ARE YOU TRULY COMMITTED? Traits and Behaviors that

Demonstrate True Commitment In 20 years of teaching LearnToLead seminars in 17 countries, across multiple industries – both for profit and non-profit – I’ve concluded one of the least understood, most overused declarations from a performer at any level in an organization is, “I’m committed.” Sadly, most people are not. They are interested, but not committed. Being “interested” is to be curious about something. Being “committed” means to pledge oneself to something. The difference between the two is staggering, and it rarely takes long when observing one’s behavior or conversations to discern only a handful of those espousing to be “pledging themselves to something” are actually paying the price on a daily basis to validate their assertion. The rest are talking right then walking left. Real commitment is about paying a price consistently over time to achieve a goal. I’ve recorded two podcast episodes on this subject you may wish to listen to for further depth on the topic: The Game Changer Life podcast episodes “The Price is an Installment Plan” and “What Real Commitment Looks Like.” Following are seven traits and behaviors that demonstrate true commitment. There are certainly more than seven, but this is a good start. Evaluate your own commitment level toward your most important goals, and measure others against these criteria as well. Commitment manifests in sacrifice. Sacrifice is defined as “the act of giving up something that you want to keep especially in order to get or do something else or to help someone.” You may need to give up certain habits you enjoy but are unproductive, pastimes that are trivial and nonessential, excuses, attitude, and more. Sacrifice may involve spending less time with unproductive or negative people who distract you from your goals, even though they’re longtime friends. When you’re willing to give up what you enjoy now for what you want most, you demonstrate commitment. Commitment manifests in change and risk. When you pledge yourself to something you deeply crave, you’ll need to change what you’re doing to achieve it. In fact, if doing what you’re doing currently was enough to attain your goal, you would probably already have achieved it. Thus, you will need to give up what’s comfortable and familiar in some areas for what’s uncomfortable and unfamiliar

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T R U LY C O M M I T T E D P E O P L E D O N ’ T H AV E T I M E F O R E X C U S E S , B L A M E G A M E S O R O T H E R VA R I O U S “ L O S E R ’ S L I M P S ” T O E X P L A I N A WAY T H E I R L A C K O F P R O G R E S S O R R E S U LT S . to grow to the point that you can reach your goal. The old adage is true: “If nothing changes, then nothing changes.” Committed people are willing to sacrifice temporary ease for temporary discomfort to attain significant achievement. Commitment is about having a cause bigger than yourself you put ahead of your own selfish agenda. If you’re on a team it means putting the welfare and goals of the team before what’s best for your comfort zone or pride. In a family, it’s about sacrificing for your spouse, kids, and your future together. As John Maxwell said, “If you’re just in it for yourself you’re in a mighty small business.” Commitment to a meaningful cause can often draw out in you what you never knew existed. It gives purpose and passion not just to work but to life. Commitment manifests in persistence. Persistence means “to steadfastly advance in pursuit of a goal despite obstacles or setbacks.” Persistent people don’t quit when it gets tough, when they lose, or when it hurts. When you pledge yourself to something, you work through those things because what you aspire to be, or to have, is worth the fight. This is why it’s important to carefully choose to what, or whom, you commit. It needs to be worth the sacrifice, pain of change, risk, and persistence required to attain it. Commitment manifests in resilience. Resilience is different than persistence. Resilience means “an ability to recover quickly from disappointments, setbacks or defeat.” One may have persistence to keep fighting through a tough month, but lack the resilience to get back on track and motivated after the month turns

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out poorly. There will be setbacks and disappointments on the journey. That’s not the question. The question is: How quickly can you recover, get back in your zone – mentally and physically – and begin daily executing again what matters most? Commitment manifests in personal responsibility – owning it. Truly committed people don’t have time for excuses, blame games or other various “loser’s limps” to explain away their lack of progress or results. They are so focused on what they can control and impact on a daily basis they don’t have time to whine about conditions they can’t control. They remain humble and teachable, believing ultimately it’s up to them to make it happen – and genuinely committed people wouldn’t have it any other way. Commitment manifests in consistency. Consistency can actually work against you when you consistently execute what’s ineffective or unproductive. However, consistently making sacrifices, changing and risking to break from comfort zones, subordinating your agenda to a greater cause, and demonstrating persistence and resilience can make you unstoppable as you pursue your personal and business goals. So, if your team were grading you on these seven items as being a leader who was truly committed or simply interested, how would you fare? And how is your personal example impacting the team’s own level of commitment on a daily basis? As a leader, if you’re not committed, you can hardly expect your people to be. You have no credibility asking your people to run through a wall unless you’re willing to go first, and do it every day. Dave Anderson is president of LearnToLead.

PRODUCTS & SERVICES | BY AUTO REMARKETING STAFF

MANAGEMENT MATTERS

MANHEIM BROADENS OVE Gives Dealers Digital Sale

COMBATING DEALER MARGIN DECLINES Selling and Servicing with

Hosting Capability

For dealers with units that just won’t turn, Manheim recently rolled out another solution to solve that problem. To offer dealers more ways to meet their buying and selling needs on their terms, Manheim launched a new OVE “Dealer Direct Event” sales channel. With this offering, dealers can host digital event sales using inventory on their lots without transporting it to a physical auction location. “This is one of many ways we are helping dealers prepare for the emerging digital future,” said Manheim vice president of digital Derek Hansen. “We are bringing more options to dealers than ever before – especially outside our own locations – to give them the flexibility and control they need to more efficiently buy and sell vehicles.” Collectively, Manheim’s offsite solutions, which include Digital Assurance, Dealer Direct Event Sales and Mobile Auctions, have grown 50 percent in volume year-over-year. Manheim said significant growth reflects rising demand for – and usage of – these useful tools by dealers. The Digital Assurance solution offers unique value for dealers who have a smaller quantity of highquality wholesale units on their lots. With this solution, qualified vehicles can be listed on OVE with a complimentary DealShield 21day purchase advantage guarantee provided to the buyer, which gives buyers greater confidence in making the purchase online. Manheim’s Mobile Auctions – where the auction comes to the consignor – are designed for those who have a minimum of 100 units to sell, but are far from a physical auction location. With Manheim’s growing fleet of mobile units, company officials said the versatility of these sales has proven to be a convenient and efficient option for independent and franchise dealers, as well as commercial consignors. “Mobile Auctions generate the highest sales rates among all Manheim channels – nearly 70 percent – and dealers tell us that they enjoy more profits from these sales,” said Manheim division vice president Alan Lang.

| BY DALE POLLAK

Greater Efficiency

How many dealers figured they’d make up for ever-smaller margins in new and used vehicles by selling more cars in 2017? If you asked the question in a room full of dealers, I suspect most, if not all, hands would be in the air. “You make up your gross in volume” is the age-old rule of thumb in the car business. But what if the thumb is broken and the rule doesn’t fit anymore? That’s the situation in today’s retail automotive market. In June, the National Automobile Dealers Association reported dealers are seeing declines in two important places – on the gross and net profits they realize when they retail new and used vehicles, and in the overall number of vehicles they actually retail. Gross/net profits: NADA reported gross profit as a percentage of new vehicle selling price dropped to 5.9 percent in the first half of 2017 compared to the same period in 2016. For used vehicles, the gross as a percentage of the sales price dropped to 12 percent. Meanwhile, the net profit per new vehicle retailed fell 74 percent to minus-$396 and the net profit for each used vehicle retailed fell nearly 50 percent to $112. Retail sales: In the first half of 2017, dealers averaged 449 new vehicle retail sales, up just two vehicles from the same period a year prior. Used vehicles had a slight drop, averaging 358 retail sales, down from 362. Those dealership data points suggest dealers who believe they can retail their way to improved profits are probably kidding themselves in the current market. If that strategy worked, shouldn’t we see decidedly different numbers from NADA? The data amounts to a call to action. Dealers need a better way forward that doesn’t rely simply on selling more cars to make more money. Similarly, cutting expenses won’t provide dealers sufficient relief from the combined pressures of margin compression and a softer sales environment. The best way forward rests with increased operational efficiencies. Dealers simply have to find a way to sell and service customers with greater efficiency and lower costs. The good news here is that most dealers have three areas of longstanding inefficiency that, if addressed, can www.ciada.org

help them achieve the higher levels of operational efficiency, productivity and profitability they need to thrive in the years ahead. Human capital: Dealers continue to suffer from an average annual turnover of 67 percent in sales and 40 percent across their operations. Those figures suggest a high level of dissatisfaction. You can only wonder how many deals are lost or bad decisions made on any given day because the hearts and minds of dealership employees aren’t in the game. Dealers who have tackled this inefficiency have formalized their hiring processes around key personality traits and cultural fit and have moved away from the traditional practices of commissionbased pay and uncertain work hours. Inventory: I see signs of inventory inefficiency every day. If I had to summarize the problem, I think it’s fair to say up to a third of dealers’ vehicle inventory is effectively dead capital. Those are over-age vehicles that haven’t sold, and they’re preventing dealers from reinvesting that capital in more profitproductive units. Of course, there are a multitude of reasons behind such inventory inefficiencies but they all point to the same underlying need for more investmentminded inventory decisions. Dealers need to do a better job of assessing each vehicle’s retail prospects before they own it, then work more diligently to retail every unit more quickly, before its ROI and front-end gross effectively disappear. Technology: Dealers have invested sizable sums in technologies that should help their sales associates and service technicians work more productively and profitably. Yet sales associates still average about 10 retail sales per month and technicians about 40 hours per week – averages that haven’t changed in nearly 40 years. The statistics suggest solutions providers can and should do a better job of helping dealers achieve greater use of their tools, which would help dealers realize the promise of increased efficiency and profitability the technology and tools are intended to produce. Those three areas of opportunity don’t represent an end-all, be-all list. But they do offer starting points for dealers to push back against margin compression and a softer market, and gain back some of the profitability that seems to dissipate with each passing year. Dale Pollak is the founder of vAuto and an executive with Cox Automotive. This column originally ran on his blog. For this story and all his posts, visit www.dalepollak.com.originally ran on his blog. For this story and all his posts, visit www.dalepollak.com.

January/February 2018

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