Latest / Auto Collabs / Pain of Discipline vs. Pain of Regret with Tommy Gibbs

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Pain of Discipline vs. Pain of Regret with Tommy Gibbs · Auto Collabs

• 0:00
  This is what I love about what's happening right now. [upbeat music] This is Auto Collabs. [laughs] We are, all three of us, sitting in front of microphones- [laughs] We... We're trying to figure-...
• 0:16
  and trying to figure out how to talk to each other through our Apple Watches. Not only that, but at much, at much effort, we traveled to Philadelphia to do this.
• 0:25
  [laughs] This is the most expensive conversation- We're like-... we've ever had. We have to figure this out, 'cause if we can't walkie-talkie to each other, then- While we're sitting here... we're doing it wrong.
• 0:34
  Oh, I just added Michael Cerullo. I don't know. Walkie-talkie's supposed to be a function. I invited you. I don't know. We'll figure this out by episode 28. Will we be able to record podcasts like this? [laughs] No. No.
• 0:46
  Definitely no. Okay. So admittedly, I know nothing about Tommy Gibbs. You do, though, because you just moved to Texas and your son is now playing high school football. And he's a high school football coach. There you go.
• 0:57
  He was. I don't know if he still is. Did he say if he still was? I, I don't think he is. When you hear him talk, you're like, "This is totally the high school football coach." Like, the real one, not, like, the fill-in.
• 1:05
  Like, the one that your son probably reports to every day. Like, Head of Boys' Athletics- Yeah... kind of a thing. Yes. Yeah. Da-da-da, da-da-da. Director of that. Well, so Tommy Gibbs for me is, uh, someone that
• 1:17
  ha- like, restructured my approach to used cars even, uh, back probably seven, eight years ago when I was, you know, in the dealership and starting to understand how to approach inventory, how to approach age, how to approach merchandising.
• 1:34
  Um, and so, like, uh, sometimes you can look at people that have been in the business for so long, you're not really su- like, have they carried through on some of the things that are cha- changing and shifting?
• 1:44
  And what I appreciate about Tommy is he, he understands the blocking and tackling that's always been a part of automotive, and he, he also approaches that with the fact that technology now exists and that, and that there are new inventory dynamics, and he's always watching exactly what's going on.
• 2:00
  Um, you know, I, I highly encourage people that are in the industry, practitioners, especially dealers, that are trying to figure out how to manage their inventory better, he's got a newsletter.
• 2:10
  Um, you should check it out. And- Oh, yeah... it is a lot of green, I will tell you that. [laughs] But other than that, like, the content- You'll know it is... the content is great.
• 2:18
  He's branded himself really well, and he's just got a really, really clear mind and approach to inventory and used car management. Well, we hope you enjoy this interview with Tommy Gibbs.
• 2:28
  [upbeat music] All right, we are hanging out with Tommy Gibbs. And if you don't know Tommy Gibbs, uh, shame on you.
• 2:44
  But [laughs] What? But I- Start with the shame. Start with the shame. Hey, I said it. I said it. [laughs] So we're starting off strong, uh, with today. Tommy, uh, thank you so much for joining us, sir.
• 2:55
  Hey, thanks for having me. It's exciting. Uh, absolutely.
• 2:58
  So the first time I wo- well, air quotes for those that can watch the video, met Tommy Gibbs, uh, was actually not a meeting, but it was a forwarded email, uh, from my previous COO and managing partner, uh, back probably in 2014, I think.
• 3:16
  Maybe it, it might have even been 2013. And, uh, it was a forwarded email- [laughs]... of one of Tommy Gibbs's, uh, weekly newsletter updates.
• 3:25
  And it is, if you've ever gotten the update, you know it's in your inbox 'cause it's got the green. It's very, like... It, you know that Tommy is writing and it feels like he's writing directly to you. It's all business.
• 3:35
  Yeah. [laughs] And on this particular email- [laughs]...
• 3:38
  there was attached, and, and Tommy, I think you still share this today, but it was, it, it was a, a simple document and it's your at-risk inventory, like, lot walk. I can't remember exactly what the document was titled.
• 3:51
  And it basically takes- [laughs]... your oldest 10 cars at risk.
• 3:55
  And it was like, it was basically an email that said this: "If, if you don't go out there and do this with your inventory at your store today, I will cut you." [laughs] Right?
• 4:05
  [laughs] And, uh, and so that was my, uh, that was my first introduction to Tommy Gibbs. Now, he wasn't the one saying, "I will cut you."
• 4:15
  It was my, it was my manager, and he's so much more gracious than that- [laughs]... but that's the way I felt it and took it. Oh.
• 4:20
  [laughs] Uh, but, but that's kind of the way that you serve the industry, which, with, uh, which is with these types of tools.
• 4:26
  So, um, you know, Tommy, I kind of wanted to hear, because that was the first time I got to meet you. But, uh, you've been in the industry much longer than that.
• 4:35
  So, um, give us a little, like, go all the way back to kind of where you started in the industry- Oh... um, and, and what, uh, what gave, gave, uh, what, how the industry gave us Tommy S- Tommy Gibbs. Yeah.
• 4:49
  Well, I, um, I, um, I got out of college and I was a head football coach at a military prep school. And then did that a couple years. Wasn't making any money so I said, "What the heck?
• 4:59
  I'll start selling cars 'til something better comes along." You've heard this story before. [laughs] You know, nothing better ever came along. [laughs] I sold cars. This was in 1972.
• 5:08
  I sold cars for a little less than a year, and then they made me used car manager.
• 5:12
  And the only reason they made me used car manager was because they caught the current used car manager stealing, which was pretty commonplace in those days, and they figured I wasn't smart enough to steal 'cause I didn't know squat.
• 5:22
  [laughs] And, um, so then after about a year of that, uh, the guy who was a general sales manager opened his own store and he went there and opened a Lincoln Mercury store in 1974.
• 5:35
  And I went with him to be his general manager. And that didn't last real long 'cause in 1974 the energy crunch hit. And, um, those were really tough times. We were selling Lincolns and gas went through the roof.
• 5:47
  There was no gas. There was gas lines. You guys probably don't recall any of that 'cause you weren't born yet, but there were gas lines. We saw pictures. We saw pictures. Yeah, yeah. I got it. I got it.
• 5:54
  [laughs] And, and then, um, then I s- went to work for an F&I training company out of Raleigh, North Carolina.It was a really great experience because what we did was, um, we did kind of what JM&A does today.
• 6:04
  Now, JM&A was a nothing burger back then. The only accounts they had back then were the, uh, Toyota stores in the Southeast, and now they're, they're the biggest and they're certainly the best.
• 6:14
  And so we had 800 dealers in nine Southeastern states. So I did that a few years, took that company over, and then, um, my current employer, um, had a dealership available.
• 6:25
  He invited me to come back and be a partner, and that was in 1980. And so I was a, became a new car dealer in 1980. Had some really crappy franchises. Had Pontiac and Volvo, and they really sucked back then.
• 6:36
  Uh, had Isuzu. That wasn't very good. Got Hyundai, which was, uh, good for just a short period till they just went in the tank because the engines were blowing up. People don't remember all the bad things. Had Suzuki.
• 6:47
  It really sucked because they were doing really well- [laughs]... and they turned upside down. You may have heard stories about Isuzus rolling over. Not Isu- I say Isuzus, I mean Suzuki. Suzukis were rolling over.
• 6:58
  Um, it was a real, real problem. And so had some tough franchises, but the good news was it caused me to focus on used cars- Mm... and became really good at used cars.
• 7:07
  And, and what I learned through that is what I try to share with dealers, is if you're really good in used cars, you can always survive. And then I got a Toyota dealership in Tallahassee, Florida.
• 7:17
  It did, it was doing really, it was a poor r- operating store. We got it up to some really great numbers, and then we cashed out. And I'd always wanted to be in the training business.
• 7:26
  I really love being in front of people. It goes back to my coaching days and that sort of thing. So- I was thinking that...
• 7:31
  in, in 2002 I, I launched this business after I cashed out of those stores and, and doing that, this since 2002. And I got my real break in this business because 20 Groups let me speak to them. Ah.
• 7:43
  And that was a great marketing tool. If not for the 20 Groups, I'd have never got off the ground probably. Huh. But it really gives you a lot of great exposure.
• 7:50
  So as your business grows, and you guys are already well-known, but I think sharing free information with 20 Groups is a, a really good, um, good way to, good way to get known and good way to launch a business.
• 8:01
  And then I be- started speaking at the NADA conventions, and I don't know how many of those I've spoken at, maybe 15 or so. I'm speaking again this year, so I hope I'll see you there.
• 8:10
  Oh, we will def- That's kind of my journey... we will definitely see you there. Okay, so- And we will hawk you down with microphones, I promise. [laughs] Without a doubt. We will have microphones at all times.
• 8:19
  So here's, this is what I at, at least at first wanna lean into because, um, being that your start was you said '72, right, in the business? Yeah. Yeah.
• 8:29
  You know, what I think that, um, a lot of times if, if people are young in the business or have only been in for 5 or 10 years, and even including myself, you know, I've been in it now 13 years, um, we can get caught in this trap thinking that what's happening right now is brand-new and the, and history has never experienced it before.
• 8:49
  And, and what, what I want to learn- Mm...
• 8:52
  from people like you and others a- and, and yourself is, and, and ki- I want you to talk through the cyclical nature of our business and the way that things may not come up exactly as they ha- ever have been, right?
• 9:03
  It's not, you know, Suzuki and Isuzu forced you to be a great used car operator, similar to how today inventory issues on the new car side force us to be great car, used car operators. Yeah. And so- Yeah...
• 9:19
  talk us through some of the, the cycles that you've seen and, and things that are maybe even coming up today that you're looking back going, "Hey, it's not exactly the same," but if we can point to some of the things that w- allowed us to be successful in the cyclical nature of the business, we might ha- reframe some of the things that we're looking at today, you know, with all of the digital and all of the things happening and all of the market forces.
• 9:41
  If we just- Yeah... if we just look back a little bit in some hindsight, we actually may be able to draw forward some insights that i- if we only look at it as today, then, then we're gonna trip up.
• 9:50
  What, what are those cyclical things that you've seen? Well, we've been through lots of cycles, no doubt.
• 9:55
  I think the, the one common theme that keeps coming back to me is if you, if you exercise, and I know this word is overused, but if you exercise good common sense and, and you have the great technology we have today, you will always do well.
• 10:08
  So what, what I've noticed in the business is that, um, that when we go through these good times, like, uh, we're going through right now, this is when we get really sloppy, and this happens every cycle. Every cycle.
• 10:20
  We have good times, and then when it, when things kind of get tough, we get back to our core basics. We get back to doing the things we know that are important. Mm-hmm.
• 10:28
  And then what happens is right when we start to go back to the good times, we make a lot of money because we got our ship in order, if that kind of makes sense, I guess. Yeah? Mm-hmm. Yeah.
• 10:38
  So, so I th- I think that that's the common thing, though, that, that the dealers, they go through those cycles. But the ones who do it well all the time make the most money even in the good times.
• 10:48
  So everybody's having good times right now, but trust me, there are some people out there that ha- that are doing it really, really super well, and they're making a ton more money than those other people that are making it, um, just by happenstance.
• 11:00
  Some- sometimes, you know, you have success in spite of yourself, and some, and some of it right now is been down that path.
• 11:07
  And, and so again, if you, if you have these core disciplines and you stay focused on the right process and do the right things all the time, you always win in this business, no matter what happens in, in the cycle.
• 11:19
  I hear people talking about a recession is coming or, or inventory's short, and I go, "Who cares?" I mean, I really don't, I don't think you should really care if you're doing the right things that you should be doing.
• 11:29
  Because if your inventory is, is being handled correctly, if you don't have a lot of aged units, or any aged units for that matter, if you don't let that happen to you right now while times are good, it's not gonna matter what the, happens to the value of cars.
• 11:43
  Because you're always operating in today's market. You're not dealing with inventory from yesterday, so to speak.
• 11:49
  So if you own that mindset of turning inventory every 30 days, if you're operating on this 30/30 concept, then how can you get in but so much trouble? You can't.You know, we're in August right now, so- Mm-hmm...
• 12:02
  I'm getting all fired up about football season, right? [laughs] And starting... My email inbox is filling up. Yeah. I'm getting... 'Cause I got tickets- Yeah... to some games. I have to start ordering some jerseys. Yeah.
• 12:11
  And I can't help but think of the football coach analogy, right? You said you started- [laughs]... as a football coach.
• 12:17
  What are the similarities you see about, like, the focus you need to do as a football team, right, and focusing on the fundamentals and the little things? Like, how do you draw some parallels between those things?
• 12:25
  'Cause I know there are a lot of football fans in our audience, and you probably think in terms of that, so just curious to get your perspective. Well, I, I think it's n- it's, it's, it gets back down to basics.
• 12:34
  If you're a football coach, you're always focused on basics. Is this, is the player in the correct stance? Are, are, are they coming off the ball the way they need to come off the ball? Those are fundamental basics.
• 12:45
  If you come off the ball faster than everybody else, nine times out of 10 you're gonna win. If you have good peripheral vision, if you're a def- I was a defensive back in college.
• 12:53
  If you have good peripheral vision, you can see what's going on. If you're a dealer or a general manager or a sales manager, whatever, you have to have good vision and know what's going on around you at all times.
• 13:02
  There's so many parallels to this, and so you have to pay attention- So give me, so-... to what's going on around you. So if you're in the, in the business today, you've gotta be aware of what's going on.
• 13:11
  We don't panic because we hear it's, a recession is coming. We just make sure that we're doing all the things that we know we need to be doing. And it's no different when you're coaching football.
• 13:19
  It's not, not a, not a bit of difference. And it's, it's the same team concept. It's all about the team. So, so if you think about it, we have an offensive team in football, we have a defensive team.
• 13:29
  Let's just keep it those simple, two simple components, 'cause there's other pieces of it. Sure. But, but the, the sales department is the offensive team and the service department might be the defensive team.
• 13:38
  But in the end, everybody's gotta play well together. And so that's oftentimes a missing component.
• 13:43
  We have these different divisions in the dealerships, but nobody's really paying attention to what's going on and how much they're fighting against each other.
• 13:50
  And you never maximize your production when that's happening.
• 13:53
  Y- yes, in, in a normal football practice, the linebackers practice by themselves maybe, and the defensive linemen practice by themselves, and the offensive linemen, and the offensive backs, and the receivers, and whatever.
• 14:04
  But we have to bring them all together for game day to make sure we're all playing well together. It's so many parallels. I love this analogy. I love it. Who, who in the dealership is special teams?
• 14:14
  [laughs] Who in the dealership is special teams? Who you gonna peg with that, with that title? I don't know. Let- let's go with the, um, BDC or internet department. [laughs] I don't know. I love it. I love it.
• 14:23
  That's interesting. Yeah. Is it BDC or is it accounting? I guess accounting is- I was... My first thought was the office. [laughs] The... Yeah, I don't know. I don't know.
• 14:31
  Like, the office or the front office- Did you do this? Did you do that?... uh, they're, they're not the same thing. Like, the, the... It's not the same thing as in football. Yeah. No.
• 14:37
  [laughs] So I don't know, I don't know where you put those two.
• 14:38
  Special teams probably actually is some squad that is, like, some salesmen and someone in the back office and someone in service who, like, when something happens- Yeah... they kinda like come together- Yeah. Yeah...
• 14:48
  to just make a play. Yeah. Um, so when you said peripheral- But, but wait, wait, wait, wait one second. Sure. Don't lose that thought, though. I wanna add to this. Um, it, it, it's, it's sorta like this, though.
• 14:58
  In, in a f- a football team may not have the most plays, it may not have the most exotic plays, but if you run the plays they know really, really well, they're going to score. I love that.
• 15:08
  We don't have to have, we don't have to have the best selling processes, but whatever processes we have, when we own them and we do them every day, we're going to win. I'm sorry, you were asking about peripheral.
• 15:17
  No, that's, that's a great- Amazing... I, I love digging in, because I think the, the fancy plays, right, trick plays, this and that, like- Yeah... I just would use the word technology, right?
• 15:26
  Everybody, or a lot of people think a technology component is gonna fix something. It doesn't. Or it's gonna get them a result.
• 15:32
  And, and your point to be like, "Hey, look, you could take the oldest sales method in the book, and if you follow it really, really well, guess what? It's gonna- I'm telling you... work."
• 15:41
  [laughs] It, it doesn't have to be the best selling process. As long as you own it and you do it correctly every day, you're gonna be okay. Very good.
• 15:49
  Yeah, you know, it's, it's interesting because, like, what I know about, uh, you know, and obviously you do, you know, coaching and training one-on-one with dealerships and dealer groups, but you also just provide, like, a lot of materials, uh, for people.
• 16:03
  Like, if they're on your email, which you should- Yeah... grab that, especially if you're in used car operations or on the sales side. Yeah.
• 16:09
  But you just, you provide a lot of these free things, and when you look at them, at first glance, just real talk, when you look at some of these documents or little like, you know, w- like, plays, right, that, that you say, like, "Here's the playbook," or, "Here's a playbook you can run," there's nothing really fancy about it.
• 16:28
  [laughs] It's not like, it's not some, like, mind-boggling, holy cow, how did we come up with this am- amazing, like, psychographic- Yeah... of analysis of a used car department. [laughs] Yeah. It's like- Yeah. It-...
• 16:39
  here's 10 boxes, and you should just- Yeah... work on them every day. And if you do that- Yeah... you might have some success [laughs] on the other end. You know, it, it's not, it's r- it's truly not rocket science.
• 16:50
  That's overused too, I guess. But the, one, one of the things we say do every day is attack your 10 most expensive units in stock, the 10 cars that you have the most money in.
• 17:00
  If you go after them every day, be aware, have you have them priced, make sure that they're ready to go, blah, blah, blah, whatever you can define, however you might wanna define attacking.
• 17:08
  If you have a great awareness of those 10 cars, you're gonna be so...
• 17:12
  That is about as simple as it can get in this business, is being aware of your 10 most expensive cars, which often are, oftentimes are your 10 oldest units. So get, get practical for a second. Let's go practical.
• 17:22
  So you say attack your 10 oldest cars. If- Yeah... you're giving advice and you're in a room to a dealer- Yeah. Yeah... how are you telling them to do that? What should they be doing- Okay... about those 10?
• 17:30
  Nu- number one, we, the used car manager prints a list out every day of those 10 cars and distributes it to the service department, the service manager, the recon manager, whoever's back there, the F&I manager, the BDC, every sales manager, desk manager, and I want everybody to be aware that these 10 cars need to be top priority and make them go away.
• 17:49
  Now, if it, if I'm a service manager and I get that list every morning and I'm looking at, at 10 most expensive cars, I'm gonna check that list to see are any of those cars in the service department.
• 17:58
  You said print- And if any of- You said print the list. Yeah, I said print it. Is there something behind printing it and phys- Yeah... does, does that elevate- Yeah... the level of importance to you?
• 18:05
  I, I, I, I really believe it does. Like, I love being to show things on the screen and whatever, but, you know, sometimes when you have something in hand and you walk around with it and you look at it, it has an impact.
• 18:15
  And so the, the, the agreement that we have as to the ser- with the service managers, "Mr. Service Manager, or Mrs. Service Manager, if any of these 10 cars is in your department right now, you gotta get them out."
• 18:25
  Why do they have to get them out? They're the cars that we have the greatest risk in.
• 18:28
  Then I say to the sales department, to sales management, "Look, if we get a chance to work a deal on any of these 10 cars-Let's make sure, unless it's something really special about these cars, let's make sure they go away quickly.
• 18:40
  Because the sooner they go away, the more money we're really making as far as return on investment. And I want that to be throughout the management team, F&I, BDC, and so on.
• 18:49
  So that's kinda how I suggest you manage those, those, uh, that list of 10 cars. Well, that, that immediately, what you were just talking about, about this barrier between some service and parts and sales- Mm-hmm...
• 19:00
  departments, and I think that by and large that is becoming less of an impact factor in automotive. We're seeing more- I agree Thankfully, thankfully...
• 19:07
  you know, we're seeing more general managers or operating directors or things like that breaking the boundaries of that, and we're starting to see- Agree...
• 19:13
  more like level 10 if you're into traction or just general meetings where all of these players are coming. So it- Yeah... it's becoming less and less. But if, if, it's, it's like if the focus is less on- Mm-hmm...
• 19:24
  a department and more on a unit, the, the, it's, the goal is, the goal is everyone's attacking that instead of attacking each other. Yeah. So you're just redirecting- [laughs]... attention and focus. Yes.
• 19:35
  So you immediately- Yeah... break down those barriers- That's a great-... with one simple task a day. Yeah. Yeah, that's, that's a pretty good analogy. I like that a lot. [laughs] There you go. I'm gonna use that.
• 19:43
  Every once in a while. Every once in a while. Yeah, that's a good one. He comes up with a- [laughs] Yeah, that's good. Even a blind dog finds a bone every now and then. Yeah, yeah. Yeah.
• 19:50
  Um, th- there's a phrase or a statement at the bottom of your email, um, this is the second time I've read through an email that you've sent, um, and it says, "The pain of discipline or the pain of regret." Yeah.
• 20:00
  Is that on every email or is that just this month's? I think it's on every email. I think it's on every email. It's, I mean, it's kind of self-explanatory but- I, I really, I really believe in that, yeah.
• 20:10
  So w- well, the pain- Well, the pain- Unpack that for a second...
• 20:12
  well, the pain of discipline, and now in the, the way I present this in, in the used car aspect of it, the pain, the pain of discipline is making sure that we are on top of inventory, that we don't let stuff age on us, that we identify our problematic cars on day one, such as maybe it's a high mileage car we overpaid, uh, whatever it may be.
• 20:30
  Uh, that, that becomes a problem. Identifying those problematic cars on day one. We have the discipline to do those little things. If we do that- And it hurts, right? It costs something. Yeah. Oh, yeah.
• 20:39
  A- and that for, therefore, we don't have the pain of regret. The pain of regret is you wake up one day, "Oh my God, I got 30 units out there that are over 60 days old and the market has shifted." Oh, that is- Oh...
• 20:48
  there's your pain of regret. [laughs] So that's, that's, that's a context in what I, uh, reference that.
• 20:52
  Given, given what everybody is predicting about the used car market over the next, you know, the, the balance of the year and what the, what the prediction of what the trend in pricing and stuff is going to be, that alone should be enough to snap people to, right?
• 21:06
  'Cause 30, 60 days- Oh-... from now, if you're sitting on inventory, I don't think there are many people, you know, ticking the little vote saying like, "I think it's gonna go up." Yeah. What...
• 21:15
  I, I'll tell you what bothers me is the pandemic allowed the dealers to get rid of inventory that they had aged out on them, and it was a, it was a blessing in that sense because inventory became scarce.
• 21:27
  They were able to sell cars they'd have for 90 days and make money on them, right? Mm-hmm.
• 21:31
  But a- as I alluded to earlier, what I'm seeing in some of the numbers that I look at is the dealers are getting sloppy again and they're going, "Yeah, w- well..."
• 21:39
  They're, they're thinking that because they made money on a car, uh, a year or so ago that they kept for 90 days, they can keep other cars for 90 days, and, and that's gonna come back and bite them in the butt.
• 21:50
  That's gonna be the pain of regret right there. Mm. Whoo. So if you could... [laughs] He's like- It's gonna get real.
• 21:58
  [laughs] So if you could give us the prescription, um, you know, like the bullet points in how to fundamentally approach the whole used car department. You gave us kind of like- Mm-hmm...
• 22:09
  the, the one, the 10 highest prices. If you could give us a few bullet points on, you know, like five things that used car managers specifically, but, you know, we'll just say dealers and group everybody in.
• 22:20
  If you could give them some advice on just here's some quick hits, if you focus on these fundamentals, your busin- your used car business will improve.
• 22:27
  Yeah, I don't know if I can give you five and I'd off the top of my head. However many you want. But, but, but, but, but I wanna... Here, here, here's number one.
• 22:33
  This is number one, and th- this, this proves true every time. If a dealer or general manager owns the used car department, you will see tremendous success. Now, what do I mean by that?
• 22:47
  I, I, I say to dealers, they'll hire a used car manager. They'll hire someone from the outside or they'll promote someone from within. And I'll say, "Look, don't turn it over to them.
• 22:55
  I know you hired them and you're paying them big money, but no. You need to be aware of everything that's going on in that used car department. Don't just depend on the used car manager to know that." I'm, I'm...
• 23:05
  If I'm the dealer GM, I'm gonna be integrally involved in the used car department because it drives the entire dealership.
• 23:12
  And you show me a general manager or j- or, or, or owner that is involved in the used car department, I'm gonna show you a really successful operation.
• 23:20
  A used car manager should want them to be involved because the, the dealer principle or the GM can remove the obstacles. They have the power to fix whatever issues are going on.
• 23:30
  But oftentimes a dealer or general manager might say, "Well, you know, I never was a used car manager. I don't know much about it, so I'm just gonna hire someone to do it." That's a really bad idea. I don't care- Mm...
• 23:41
  how, how you wanna slice and dice it.
• 23:42
  So my number one thing is if a dealer, if, if someone wants to improve the used car operation as a dealer principle or a general manager, get more involved in the used car department and own it.
• 23:52
  And the other couple of little things I would share with you is always be aware of what your average cost per unit is in stock. So it doesn't matter what it is today, it's obviously gone way up.
• 24:02
  It might even be on average maybe 28 or $30,000 today. Uh, it's gonna depend on the, the brand that you have.
• 24:09
  If you're a Mercedes dealer, your average cost per used car in stock's gonna be a lot higher than maybe a Hyundai dealer, if that kinda makes sense. Mm-hmm. Right. Mm-hmm.
• 24:16
  But I think that one of the things that we, we suggest is, just like with the 10 most expensive, is that you need to be aware of what your average cost is and seek to press it down.
• 24:27
  In other words, um, if we can, if we can stay focused on that number and make sure we're turning the more expensive stuff faster, that brings the average down.
• 24:34
  If we focus on making sure we're retailing some of the cheaper stuff that maybe we have in the past wholesale. And that's really changed a lot for dealers today.
• 24:42
  So many dealers today are keeping much, much higher mileage cars. Right. Yeah. They're keeping those cars in the inventory, which is really smart in my opinion.
• 24:49
  I've always thought that at the very least you should have a budget center on premise.To make sure you keep some of those cars, and if you're in a state where you can sell them as is.
• 24:57
  Whatever it may be, you need to be making the money on those cars, not, not wholesaling them.
• 25:01
  And then the other thing I would say is, and this will probably be my final one to, to throw in here, is understand that every car doesn't deserve the same life cycle.
• 25:10
  In other words, if I buy a car at the auction, I'm not gonna treat it like a normal used car. It's not the same as a trade-in. Mm-hmm. It's not the same as a car purchased from a customer.
• 25:20
  It's a, it's a much higher risk car. Yeah. And so I'm gonna shorten the shelf life on that car. I may only let that car have a 35, 30-day window, maybe 45-day window before I price it right to make it g- get gone.
• 25:33
  I always wanna think about retailing cars. I don't wanna think about wholesaling cars at the end of their life cycle, at the end of their life cycle. I wanna think about, how can I retail those cars?
• 25:42
  I'm not talking about a piece that comes into your inventory, it's a junker, and you're gonna wholesale it. Yeah. That, that's a different piece. But that car that- There's a strategy for that going in, right?
• 25:50
  Yeah, yeah. Correct. That car that I thought well enough to put it on my lot as a retail piece- Mm-hmm... as it starts to get to a certain number, I'm gonna think about retailing it out.
• 25:59
  So if it's a nice trade-in, I might keep that car 60 days. I might. But, but more often than not, I might not even keep a car 60 days. But the point is that if it's a problematic car, it's a bad color.
• 26:11
  What day is a car a bad color on? It's a bad color on day one. I see, I'll, I'll have dealers, I'll say, "Tell me about your, your oldest used car in stock."
• 26:19
  And th- and they'll say, "Well, I've got this car and I've had it 70 days." "Well, why do you s- why have you had it 70 days?" "Well, it's a bad color." It's neon green. [laughs] Okay.
• 26:26
  Um, um, w- was it a different- Didn't you know that 70 days ago and you could have priced it right- Ex- exactly... so that it would bye-bye? [laughs] You, you could teach the workshop. That's it right there.
• 26:36
  I mean- [laughs] That's it... so, so, so- Look, I know. I know...
• 26:39
  so, so if they, if they don't even ha- I have a system and software that, that helps dealers with that, but even if they didn't use my stuff, if they didn't do anything but identify problematic cars on day one, have a different strategy for that car, and have a plan for that car, they'd be so much better off.
• 26:55
  They'd be winning, winning, winning. You know, I don't know- So-...
• 26:57
  if this came from you or someone else, but the n- the phrase that I, that I heard over and over in my head and it just got pressed in was your first loss is your best loss.
• 27:06
  Oh, I- And, and so I don't know if you came up with that. And then the other phrase- No, I don't...
• 27:10
  is that, is that, uh, your, um, is that the exit is, is that you should know your exit plan, uh, during your purchase plan, uh- Yeah... because the, the, the vehicle- There it is...
• 27:22
  is not sold based on what you own it for, it's based on what you exit it for. Absolutely. Right? So- Absolutely. Yep. Yeah. If pe- Yeah.
• 27:28
  If, if dealers could get that, like we would stop having dealers complaining about 60 day old inventory, 'cause every, every car has an opportunity to have a seat for it. Yeah. So, yeah.
• 27:37
  But, but, but again, I think what happens is dealers and general managers don't stay involved enough in the used car department- Mm... to influence that sort of thinking. Right. Back to your point. Yeah. Yeah.
• 27:47
  Well, Tommy- So-... we cannot wait to hang out at ASOTU Con. Oh, I'm looking forward to it. We're gonna get all the smart people together- Oh... and, uh, we're gonna watch some magic happen live on stage. Yeah.
• 27:57
  It happens. I mean- Yeah... you're a part of the Clubhouse rooms.
• 27:59
  If you're listening to Auto Collabs right now, on Clubhouse, the audio app, every Friday we have an all things used cars room hosted or created by David Long. And Tommy is one of the- Yeah...
• 28:09
  OGs, and they're always in there with a, a hundred to 200 other dealers and industry partners sharing real time tips like this. Tommy, thank you so much for giving us- Hey...
• 28:17
  a few minutes today, and we'll see you, uh, before you know it, we'll be in Philly together. Thank you, guys. Thanks for having me on. Have a great day.
• 28:25
  [upbeat music] All right, speaking of fundamentals, I love how Tommy just kept bringing it back to the basics.
• 28:35
  Like, I know all this other crazy stuff is going, and there are all these new ideas and solutions and situations and OEMs and inflation and all that, but if you do these things and focus on these basics,
• 28:48
  you're gonna make infinite improvement in your store because he's like, "I can tell you already, you're not." Yeah.
• 28:53
  It's, it's wild to me, and we do this in so many parts of business, is we start moving to these- I do it in all of my life. [laughs] Yeah.
• 28:59
  We start moving to all of these, like, attractional new things, and we start to r- like, slip away from the basics. So you watch especially dealers and, and, and I was a part of this for so long.
• 29:12
  All of a sudden it's like, oh, we're running at this marketing campaign or thing, and, and we think it's gonna be the thing that works. And so we pour a lot of a- attention and energy over here.
• 29:21
  And then all of a sudden it's not working, and someone goes, "Hey, but, um, you know, we're trying to sell cars, so you might want to photo 'em." Yeah. [laughs] Right?
• 29:30
  I think about y- you know, as you're bringing up fundamentals and as he's talked about it, um, it's easy for us to understand the importance of fundamentals in, say, like, keeping our body alive. Like, you gotta breathe.
• 29:45
  Mm. How f- how much more foundational can you get than that? But then when you try and do something new, like, say, run track, the first thing your coach points out is that you're actually not breathing properly.
• 29:57
  Interesting. Mm. Right? And if you just started focusing on your breathing a little bit more... Or e- it could be anything, like yoga, meditation.
• 30:04
  They always bring it right back down, down to something as simple as how you breathe and how that can have an impact.
• 30:10
  And so basically, you know, what I'm taking from this is we all stopped breathing properly and then tried to do the more strenuous activities and wonder why we keep tripping up.
• 30:20
  So I think that's, uh, tremendous insights from, uh, our pal, Tommy Gibbs. On behalf of Kyle Mountsier- Paul Daly... and myself, Michael Cirillo, this is Auto Collabs. Thanks so much for joining us.
• 30:32
  Sign up for our free and fun to read daily email for a free shot of relevant news in automotive, retail, media, and pop culture. You can get it now at asotu.com. That's A-S-O-T-U.com.
• 30:45
  If you love this podcast, please leave us a review and share it with a friend. Thanks again for listening. We'll see you next time.
• 30:54
  [upbeat music] Welcome to Auto Collabs. Welcome to Auto Collabs. [laughs] Why are we recording? Are we rolling yet? Not yet.