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Comment by Jae Chang on March 2, 2011 at 12:09am

Volume / Gross conversations seem to be like politics.  Gross pays the bills, no argument there.  Volume brings in non commissionable retro factory dollars, for a mid to large volume store, that's usually substantial.  Work every deal individually; doesn't always work as the consultant has their own agenda at the end of the month if there's a volume bogie out there. Efforts for 100% T-O.  Clean recent trades always break the bank but how many times has an offer been turned down for a decent margin then no one looks at the unit again for weeks.

I haven't read much about "other gross" than just front end:  the F & I office that usually is the most profitable in the dealership.  loyalty programs, maintenance programs, service contracts, etc.... 

I have seen where a high gross deal never comes back for service nor repeat purchase, conversely a low gross deal is loyal to the dealership.

Always ask for the money first but never lose a deal.  Add an efficient Business office using proper menus and disclosures it will be a Win Win.

It's definitely a Sales Circle, expanding it is the difference between staying open or being profitable.

Comment by Dugan Anderson on March 1, 2011 at 10:58am

Gross pays the bills, volume makes people happy. 

 

Having said that, there is a combination of gross and volume that make the dealership WORK.  Once that has been achieved a dealership can play with gross and volume to maximize their efforts.  However, I believe the following to be true:  GROSS and VOLUME are NOT DIRECTLY RELATED!  As an example, next month advertise all New Units at invoice or less and see how many additional units will be sold?  Probably just a few.

 

Lastly, let's say you need to borrow some money so you go down to your local lender.  You are #1 in your market for penetration in EVERY CATEGORY, so you bring your registration reports with you, how much will they lend you based on those REPORTS?  NONE is probably the answer. 

 

You need BOTH, gross to pay the bills and VOLUME to keep your manufacturer happy.

 

 

Comment by David Simpson on March 1, 2011 at 3:48am

To answer the "Negatives to Watch Out For"; the rut is the negative.  When your sales department has a volume mentality they can cut the guts out of every deal without attempting to build value and justify a fair margin.  That mentality devolves into a "path of least resistance".  "I know I can sell this for invoice so I might as well not put the customer through all the back and forth negotiations".  Managers and sales people actually start imagining that not having to pay for a car is a benefit!

Then your sales people are greeting customers on the lot and offering up price as a motivation, "You here for the $5000 off Maximas?" and your customers get shown a good deal on the wrong car and at the pencil they say, "That sounds good.  Can I get a copy of that?"  "Do you have a card?"  "How long are you here today?"   The sales person goes to the desk and tells the manager, "Mr. Smith has to run home real quick.  I'm just gonna shoot him a copy of this." and the manager thinks to himself, "I'm already below invoice on a loaded Maximam nm.  He'll be back." 

But it was only the 2nd pencil and Mr. Smith came in looking for a Titan anyway but thought, after that greeting, "If i could get a Maxima cheap enough, I'd buy it."  He might have said something about wanting to look at a Titan while he was there but that sales person was so nice and worked so hard to get him a good price on the Maxima from that hard-nosed sales manager he didn't want to hurt his feelings.  So he goes and buys the Titan at the dealer across town.

You have turnover on your sales floor because there is not much commission to be made on every sale being a "mini", your F&I department has turnover because that "path of least resistance" tends to cut them out of the sales process; you don't want anyone "blowing out" of F&I, and your management has turnover because eventually a dealer is going to get sick of

Comment by Dave Pedotto on February 28, 2011 at 10:12pm

Agreeing with most everyone, we need both, so let's give everyone what they want. Train our people to put the customer first, present the product, and dealership properly, use the tools available (managers, service dept. etc.), and deliver the car. If we do our job, we may have to take a short deal today, but a happy customer's friends will pay a little more and he'll gladly pay a lot more next time. If a salesperson does his or her job, they deserve the deal. Sell the car, improve everyone's attitude, make a little in service, and keep them coming back.

Comment by Craig Lockerd on February 28, 2011 at 9:11pm

"Full Price,Fair Price" Ziegler....Want to double Volume,talk to twice as many people

Comment by John Glanville on February 28, 2011 at 8:25pm

I think Grant Cardone says it best with words like "If you are going to take a short Deal then do it quick". We all want volume AND gross but that isn't always reality. What we are dealing with is vastly different clients and vastly different Sales People, and we think they will fit our process perfectly. The real secret is knowing what will work best with each circumstance, as we have all these differnet ingredients yet we think they will always bake the same cake. Sometimes you will get it wrong, but if you can master reading it right and getting it right more often then you will be scuccessful. If not you will be working in a checkout at the local supermarket.

Comment by Todd Young on February 28, 2011 at 7:45pm

If you have the product at a competitve market price, the service infrastructure to back you and your treating people like people, you should not decrease the value of you, your dealership and certanly not your gross. We all must take every opportunity given to us and maximize it to the best of our ability. Some we'll win, some we'll lose.

Comment by Sam Quina on February 28, 2011 at 6:03pm

I have to agree with SueBrief.

Recently  I was promoted to Internet Director of a Second Brand here at our 5 make autoplex.  Stair Step Management Dealer Cash vs Rebates.  Amazing how quickly I began to drown myself in a sea of data as Hyundai (my core and background) and VW are entirely different animals.  Just as my frustration began to peak, I read this post and all of the comments.

 

I am successfuly balancing gross and volume and moving the needle ever upward on both with the increased net being in the background as we are controlling costs as we grow at Hyundai, and when I went blind into my new VW CRM and began assisting my VW internet managers in the setup for last weekend, I noticed a profound difference in how easy it was to get in a VW customer and how hard "I" have made it to get in a Hyundai customer. 

 

Conversely, when they got in the door they were paying more with less hesitation.

 

Telling isnt selling.  Do not over-complicate simple processes.  Its all conversation till they're over the curb.

Comment by Mike Myers on February 28, 2011 at 5:08pm

Great stuff everyone! Dale, great insight to used cars. But it brings up the point, do you approach used vehicles in the same way you approach a new vehicle? Example, you have a unique used car where there's just 2 in your region. VS say a new Toyota Corolla where everyone has them. @Doug, I'm glad to hear you like both! I'll fly with you anytime!

Comment by Dale Pollak on February 28, 2011 at 4:57pm

I agree with much of all that has been said.  There’s just one additional perspective that I’d like to add. As dealers, you are all feeling the pinch of margin compression.  The knee-jerk reaction for most dealers feeling the pinch is to raise their prices.  Assumedly this gives you more room to negotiate and profit to hold.  In reality however, I think that raising your prices is exactly the wrong thing to do, it’s like shutting off oxygen to a patient. 

 

Think about it, why would you want to take your after-tax profit dollars and give it to third-party sites to send a message to your market that you’re competitor’s cars are better priced than yours?  I think the correct response is to price the vehicle right, which doesn’t mean all high or low, but rather to evaluate the vehicles one by one as Nancy suggests. 

 

This approach will allow the internet to favor you with more than your fair share of shoppers at the expense of the dealers that jack up their prices in an attempt to earn more gross.  Now, once the people show up in your showroom, you should fight the good battle for gross profit using many of the legitimate skills and practices described by contributors below.  Doesn’t this approach make sense?

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