Dave

Now, ask the same used car manager who’s responsible for the timeliness and quality of the used vehicle photographs and descriptions. Seldom does the used car manager raise his hand. If not you, or your used car manager, then I have to ask, “Who?” The answer is almost always somebody else, like a porter, third-party company or an internet manager. Now, I’m not saying that any of these people can’t do this job well, but what I am suggesting is that this creates a fundamental dysfunction in the dealership.

While I’m not expecting the used car manager to physically perform these tasks himself, I do believe that he needs to be the one accountable for ensuring that these tasks are getting done effectively and efficiently. Think about it- every used car manager understands the importance of getting the lot physically in shape because, traditionally, that’s what it took to bring traffic off the street. Well, in today’s environment, how your used vehicles are set up on your “virtual lot” has as much or more to do with bringing traffic in off the street than what your physical lot looks like. Nevertheless, very few used car managers take the same level of responsibility for their virtual lots as they do for their physical lots. How can this be?

I think the answer can be found by understanding the fact that most dealerships have separate internet and used car departments. And, I’m beginning to reach the conclusion that this is just plain wrong. I know for a fact that today, the used car business and the internet business is the used car business. So why do we have two separate departments? Or, if there are two different managers responsible for the most fundamental tasks of used car management, then who is the real used car manager? When it takes too long for cars to get photographed, attached to rich and compelling descriptions, and placed on all the proper internet sites, who suffers? I would argue that it is the used car manager’s department that gets penalized and, yet, the used car manager often doesn’t have responsibility or accountability for these critical tasks. This seems to be a pretty serious dysfunction.

I’ve met some used car managers that do it all, or at least take responsibility for everything that it takes, as I say, from “paint to pixels.” What I mean is that they have both the traditional used car skills, what I refer to as the “paint”, as well as the new virtual skills, what I call the “pixels.” In such cases, where a single manager is responsible for the overall operation of the used car department, the used car department really rocks. These dealerships often get their vehicles through the service department and onto the lot as well as high quality photos and descriptions onto the right internet sites within 72 hours. Too often I see both the “paint and pixels” take well over a week from the time the vehicle arrives at the dealership to the point that it is properly presented for sale on both the lot and internet. Today, with used vehicles depreciating at an unprecedented rate there is an extraordinary need for speed and efficiency, and accountability.

Any thoughts?

]]> http://www.dalepollak.com/2008/07/16/dealership-dysfunction/feed/ http://www.dalepollak.com/2008/07/14/velocity-hits-5/ http://www.dalepollak.com/2008/07/14/velocity-hits-5/#comments Mon, 14 Jul 2008 14:45:21 +0000 dpollak http://www.dalepollak.com/?p=140

Hey! I’d like to say thank you for everyone’s help in making Velocity a best seller.

On Friday, I was notified by the publisher that it hit the top 5 spot on Amazon.com, in its category.

If you haven’t read it, I encourage you to do so and let me know what you think.

Pssst…Mom, if we sell a few more copies, you could stop ordering them

Immediately, I got lots of great lies that I hadn’t thought of, but we’ve all heard a thousand times.

I thought that it would be fun to create this posting and add these new ones as they come.

Please feel free to click on the comment section and provide your best showroom lies.

Perhaps at some point in the future, I’ll set it up so we can all score them and determine which ones are the all-time greats.

Many are predicting that in 2009 we will witness an unprecedented number of dealership closings. I don’t think that this comes as a huge surprise to anyone, but what I don’t think most people realize is that decisions that are being made right now will largely determine those who die, those who survive and those who thrive.

Think about it, we are experiencing record high fuel prices, an economy that is spiraling downward and a presidential election in November, which is typically followed by interest rate hikes. It should come as no surprise to anyone that the next year is going to be very challenging. In any challenging economic period, cash often determines who will live and who will die. What is the primary source of cash for a dealership? You’ve got it, the used car inventory.

Now ask yourself what that means for you. Specifically not if, but when your dealership needs cash in the coming year how available will it be? Will you have the ability to draw down your used vehicle inventory if necessary? Or, will your cash be locked into assets that, if liquidated, will produce large financial loss? Now is the time to ask yourself this important question, not 6 months from now.

What I’m driving at is that during the next 6 months we will probably see inventory values decline at an increasing pace. I say this for a variety of reasons. First, we’re going into the summer, fall and early winter seasons when it always happens. Second, it is likely that fuel prices will continue to rise and the economy will continue to deteriorate. Moreover, interest rates are likely to rise after the election. All of these factors combined means that the cost of not turning your inventory quickly will likely result in your working capital becoming frozen in assets which will make it very difficult to liquidate.

The only way to survive is to stay very liquid. The only way to stay liquid is to turn inventory quickly. For this reason my best advice to everyone is to immediately institute a strict policy that says that no vehicle shall exceed 45 days in stock. Yes, this even includes your acquisition and reconditioning period. Desperate times place greater burdens on all of us and one such burden is to speed up all the processes necessary to turn inventory more quickly.

Specifically, I would recommend that dealers institute a strict policy of priority for used vehicle transportation and reconditioning. It is simply not acceptable to have a vehicle investment languish in either the transportation or reconditioning phases of their inventory life. Similarly, there should be a higher sense of urgency to get quality descriptions and photos on the internet. Most importantly, there should be a hard and fast rule that allows no vehicle to exceed 45 days in inventory, even if it means taking a loss. The old 60 day rule will get you in a lot of trouble over the next 6 months. Nobody can tell me that 60 days is acceptable under the conditions that we’re experiencing where vehicles depreciate at an unprecedented pace. If you do not pay attention to the consequences of accelerated depreciation you will likely not have the ability to reach for cash when you need it the most. Simply stated, how you manage your inventory today and in the coming weeks and months, may make the difference between surviving and thriving.

]]> http://www.dalepollak.com/2008/07/11/45-to-thrive/feed/ http://www.dalepollak.com/2008/07/10/126/ http://www.dalepollak.com/2008/07/10/126/#comments Thu, 10 Jul 2008 17:58:10 +0000 Guest Columnist http://www.dalepollak.com/?p=126 Dale,

vAuto.com subscriber here with an out of the box concept that only you could tackle  If this idea has merit, I thought you’d want to pass this around to your most trusted advisors, so I put this on my site for easy distribution.

I was a self employed stock trader for nearly a decade. I’ve been in the Car business for last 5 years as Used Car Manager now as Marketing Director of a very large and fast growing Used Car retailer.

While working as Used Car Manager & Marketing Director of a small Chevrolet store a few years ago, I’ve noticed a nearly perfect correlation between the Manheim’s Used Vehicle Index and the S&P500. I produced charts of both indexes with identical 11 year periods and made annotations.

The correlations of direction of the trend and the dates of trend changes are just plain scary.

Notice the correlation of the direction of trends AND the dates the trends break (up and down).

Assuming the correlation is valid, this brings me to 2 issues.

#1). Used Vehicle Inventory management techniques can now be triggered by a “proprietary” outside indicator.

#2). Used Vehicle Inventory can be hedged against “market conditions” that are out the control of management.

First, the charts that I produced for management back in 2006, then onto my thoughts.

Joe Pistell

Marketing Director

Sun Auto Group

UsedCarKing.com

315-396-1114

]]>