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“Hey
corporate automobile guy or gal, yes you”
 Having
been in this industry since the mid-60s starting
out as a porter, I feel that I have been in it
long enough to qualify this conversation. For
there is absolutely no seat in this industry that
I have not had, from porter, to manager, to dealer,
to designer, to manufacturing the Nissan Pathfinder
for Nissan, to 15 manufacturer contracts in 28
countries, writing seven certified programs, and
having had the privilege of training over 40,000
dealers and managers. I've been exposed to most
situations, including conflicts between dealers
and their manufacturers and have been asked on
occasion to arbitrate problems experienced between
the two. But in these times I have to go back
to a period of time when I was a dealer and times
were hard. That would be ’79, ’80,
’81, & ’82.
In 1980 when prime hit 22 1/2 percent, I had $1
million worth of dodges on the ground in Auburn,
Alabama, I was 32 years old, and had been a dealer
for four years. I had no family money and no friends
with any. My wife and I had saved everything we
had to buy the dealership in Auburn. My rep from
Chrysler came in, who was a pretty decent fellow
yet in my opinion shallow to the real world of
what we faced everyday when we open the door,
and to prove me right, sat in my office with an
open order book and an Atlanta paper looking at
the help wanted ads and as serious as anyone I
had ever heard said “man, you better figure
out what you’re going to do, because I'm
looking for a job, I don’t think were going
to make it.” Well his perceptive was one
with no investment. Mine was a perceptive everything
my family and I had were on the line right there
in that little dealership and the one I was getting
ready to open in nearby Columbus, Georgia.
It was my understanding, not long ago that this
same individual had moved up the ladder to be
in charge of some division of Chrysler and I often
wonder how or why, you can put your head in the
sand when it's bad and get patted on the back
corporately when it's good and that person really
has never done a damn thing but just ride in the
boat.
When all is said and done it’s the workers
on the line that build the cars and the salesmen
on the blacktop that greet the customer and sell
them that make our industry successful. Everything
in between is all rear echelon individuals and
support staff. I look at all the problems, not
only domestic but import manufacturers are having
today and I have to ask myself a question. Every
time we go into a dealership, why don't we ever
see corporate people in there doing any training.
The only thing that we ever hear from the dealer
or the sales managers is some contest they’re
putting on, that virtually just loads them up
in inventory they don't need, or corporate wants
them to go to some analytical meeting to try and
figure it all out. Well I'm a firm believer that
there are two types of situations. One where a
corporation has great market share and great cash
flow, and they can analyze things. The other is
the group that wants to take it away from them
and they're the ones that have to respond and
act. They don't have the ability to say; well
I think we’ll visit that in Q3 of ’08.
The first time that I heard that phrase, I think
we’ll revisit that in Q3 of 07 was one year
ago, in January of ‘07 when I was meeting
with a high line manufacturer that wanted to do
a used car program. And I looked at that individual
and I said you're telling me the problem is now.
And you want to visit it in Q3. I'm assuming that
means the third quarter of this year, so my perception
there would be that you want to make sure that
you’ve got a job for six more months that
if you kick it up now and were done by that time,
you may not have anything to do. Well needless
to say I didn’t get that contract, and I
think he's been promoted once or twice in some
parts or service division. Unfortunately down
where we live in the dealer world we are the ones
on the line driven to perform.
Let me give you a little flash from the past of
how those of us in ’79, ’80, ’81,
‘82 during the Carter era when prime rose
to 20 to 24% and in spite of all the bad times;
made it. First, regardless of what anybody tells
you, you've got to balance your inventory based
on your current rate of sale. Start planning for
it not to get any better than it is today. Now
when you do that, what you're doing is structuring
an expense that you can live with. Believe me,
you can pick up the phone and order a new one
any time you want to, or dealer transfer if needed.
That being the case the key to making this whole
thing float is a well-balanced service and parts
department. Sales managers and General manager
and/or Dealer need to make a point of going to
the service writer desk and thanking the customers
for coming in. Secondly, you must do a weekly
review of pre-owned inventory and its aging problem.
That money is going to be your lifeblood in making
new car deals in a tough market. If you are loaded
up in used car inventory, you’re going to
be too conservative in your appraising techniques.
 You
have got to maintain a balance. Remember the first
hit is the lowest. It doesn't matter if you drop
$2500 after that cars been there 45 days. What
most managers forget is the cost to hold that
unit. It cost’s you an average of $32 a
day to hold that piece of inventory. You've already
spent almost that much in trying to sell it. Why
do you want to continue that process, get out.
Just like a stock, just like buying a commodity.
You put it back in something that will return
you an investment. The more you turn and invest
your money, the bigger it grows. Take the personality
out and put the money in the metal to make a profit.
I’m going to be running a series of articles
this year on recession proof stores, because I've
been there. Now those of you who have been in
this business about as long or more than I have
and went through the era of ’79, ’80,
’81, ’82, please drop me an e-mail
with some of the tips that helped you get through
it. I will print those, and together hopefully
we can walk our newer dealers through something
they've never experienced before. Guys, it isn’t
the end of the world. It just separates the men
from the boys and the money from toys. Where is
the factory to help you in these trying times,
I hope not looking for a job.
Until
next time,
Tim
Deese
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