Incoming wake up call

October 20, 2009

Last Friday morning I received an unexpected wake up call at 6:30am from dealer Keith Kocourek of the Kocourek Auto Group in Central Wisconsin. Keith was all sorts of excited to inform me that the last quarter’s state registration had just come out, and all four of his dealerships achieved significant additional market penetration, while his formidable traditional competitors had declined. So why was this news so exciting that Kocourek had to call me at that early hour?

Well, it was about three months ago that Kocourek received his last quarterly state registration report and his performance displayed only slight improvement relative to his competitors. Over the previous several months, Kocourek had gone all out to restructure his dealerships according to the velocity principles of management. To be sure, the changes that he implemented were not easy for him and his staff. As is the case with all dealerships that move from a traditional to a velocity method of management, a lot of faith is required. Ownership and management must believe that the way to achieve more total gross is to stop trying to make a big hit on every vehicle in favor of knowing which vehicles are likely to bring big profit and which ones are not. Avoid owning the latter group when possible in favor of stocking vehicles that are more likely to be fast movers and better profit generators.

After receiving his first report reflecting only slight improvement, Kocourek called me and questioned the efficacy of his new business model which he had adopted based on trust. If the purpose of the plan was to generate more volume and total gross, albeit at a slightly lower PVR, it didn’t seem to be working.

If I told you that I didn’t share Kocourek’s concern after his first call, I would be less than honest. After discussing the matter for a while, Kocourek and I agreed that he was still relatively early in his velocity journey. We agreed that the performance of his dealerships over the following quarter, relative to his competitors as reflected in the next state registration report, would be more determinative for the success of his efforts. When Kocourek got his hands on the most recent report and saw that his dealerships had gained significant market share at the expense of his competitors, including a formidable traditionally managed large dealership group in the central Wisconsin valley, he was ecstatic, and so was I.

Like few other dealers, these guys set out to reinvent their business model with a vengeance. Congratulations to Kocourek and his hard working team.

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