BILL FOX. The Staggering Cost of Poor Performance Dave Anderson pg 04. Make Your New Year a Great Year Chuck Barker pg 13

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1 Vol No. No Vol. JANUARY JANUARY The Staggering Cost of Poor Performance Dave Anderson pg 04 BILL FOX 2015 NADA Chairman Owner of Fox Dealerships pg 36 Make Your New Year a Great Year Chuck Barker pg 13 Marketing Success Points Jim Boldebook pg 18 Stop Making Noise Online Mat Koenig pg 30 Aluminum: Maybe an Answer to the Outrageous Labor Rates Ed Kovalchick pg 62

2 COMING SOON TO PROVISION AT NADA 2015 SUBPRIME BOOKING inventory at auction Determine every appraisal s subprime potential Verify multiple lenders criteria at once Match the right customers to the right cars over 2 - Subprime - vauto_ad_subprime Campaign Ad_Dealer Communica tions_8.25x10.75_14-mw-0848 AD IT S TIME TO WIN WITH SUBPRIME TODAY IS WON. LET S TAKE ON TOMORROW. Subprime Booking will be available at NADA Schedule your demo today. Booth #1718S vauto.com/subprime

3 SALES Three Ways To Minimize Discounts and Improve Front-End Margins DALE POLLAK If dealers compare their current front-end gross pro t averages in new and used vehicles to similar data ve years ago, you d likely notice a troubling trend. I ve conducted this exercise with dealers recently as part of conversations about margin compression in automotive retail. In most cases, the analysis shows that front-end gross pro ts are pretty much what they used to be, if not even a little less, depending on a dealer s franchise. Likewise, the analysis often shows that front-end gross pro t averages haven t grown in tandem with rising transaction prices, which continue to climb in new and used vehicles as the best-selling cars often carry more equipment and special features than their less-popular peers. The best dealers have come to terms with margin compression on two fronts in their new and used vehicle departments their strategies for inventory management emphasize selling more units in less time to increase total dealership pro tability through volume, and their processes for selling new and used vehicles aim to close common pro t leaks that typically make the problem of margin compression only worse. For this article, I d like to focus on the second front. The following are three ways that dealers are changing their sales processes to eliminate lost pro ts that occur when their managers and sales associates discount asking prices, and frequently give away more gross pro t than they need to or should with customers. 1. Market-transparent pricing. This is the starting point for building con dence and credibility with today s buyers. Thanks to their online research, customers know if your new or used vehicle price is decent and fair for the market. Dealers who align their pricing strategies to this higher level of customer price awareness nd that their cars get more attention online, and retail in less time than dealers who have yet to fully embrace a transparency-minded pricing strategy. 2. A transparency-minded sales process. A growing number of dealers now start their instore conversations with customers by explaining how and why they price their new and used vehicles to the market. This documentation as negotiation approach bucks traditional sales methods that steer price discussions to the nal steps of the sale. Herein lies a common disconnect: Dealers sometimes offer market-based pricing, but their in-store sales processes effectively pretend that the prices customers saw online don t exist. Rather than diffuse a customer s concerns about getting a fair price, this traditional approach often steels customers to negotiate and sets up the fear among managers and sales associates that they ll lose the customer unless they knock another $300 to $500 off the price. Of course, a successful, transparency-minded sales process needs careful oversight. This oversight should include measuring the discounts managers and sales associates offer on every new and used vehicle deal, and training them to avoid unnecessary giveaways of front-end margin. A benchmark: Dealers say they expect to see 70 percent to 80 percent of their new and used vehicle deals close at the asking price. In addition, more dealers are now arming their managers with a bottom price for every new and used vehicle. That is, the managers know exactly how low they can go if necessary to complete a deal. As a northeast Toyota dealer puts it, My managers are really telling the truth now when Continued on Page Dealer January 2015 Dealer-magazine.com

4 SALES Pollak, continued from Page 46 they say to a customer, this is it. The managers love it, and over time, they ve gotten better at sticking close to our asking prices. In fact, I m now planning to raise my bottom price to help us increase our front-end averages even more. 3. A pay plan that promotes transparency. There are two hallmarks of the compensation plans dealers are now using as they work to minimize discounts and maximize front-end gross pro ts in new and used vehicles. First, dealers pay their teams on a per-unit, volume basis. Typically, the real money kicks in for sales associates after they sell fteen units, as the pay plans generally provide more per unit as sales associates sell more cars. Second, the pay plans include bonuses that reward managers and sales associates when they close more deals at the asking price an incentive to stand behind the market-based pricing that attracted customers to a new or used vehicle in the rst place. Taken together, these efforts have helped dealers increase their average front-end margins in new and used vehicles by as much as $500 per car. In addition, these dealers see another bene t: their customers like the experience, and they tell their friends. Dale Pollak, vauto s Founder, has 13 years of Dealer Leadership Experience and is a highly sought after bestselling author and recognized speaker on maximizing dealership pro ts from preowned vehicle operations. Pollak received his B.S. in Business Administration from Indiana niversity and is a graduate of the General Motors Institute of Automotive Development. He also holds a law degree from DePaul niversity s College of Law, and is a four-time winner of the American Jurisprudence Award. dpollak@dealer-communications.com SCAN TO COMMENT on this article Or visit For more articles, blogs & daily news visit us at Dealer-magazine.com View FREE on-demand webinars 24/7 ////////////////////////////////////////////////////////////////////////////////////// Topics Such As: Reputation Management Loyalty Programs Service Absorption Customer Engagement Digital Marketing Fixed Operations Website Conversion Digital Dealer Webinars deliver high-quality training and education directly to the dealership. DDWebinars.com 48 Dealer January 2015 Dealer-magazine.com

5 The used car business used to be a gamble. But I m not a betting man. I m not a psychic. make the move I know will work. When we Like the guy who knows what my shoppers get here. The guy who always comes out ahead, and leaves the guessing and gut-checking to the guy down the street. Visit vauto at NADA booth #1718S NOW, I NEVER GAMBLE. I JUST WIN. TODAY IS WON. LET S TAKE ON TOMORROW. Schedule a demo today. vauto.com/justwin

6 I like having all the facts. And I like making money. The problem was, before Conquest, our new car department was short on both. We thought some SUVs and we thought we knew which ones. limited editions in black, two in silver and four sport packages in white. We even know that one sport package needs a sunroof. These facts are up. Floor plan expense is nonexistent. And, making money in the new car department. Visit vauto at NADA booth #1718S MAKING MONEY ON NEW CARS. NOW THAT S WINNING. TODAY IS WON. LET S TAKE ON TOMORROW. Schedule a demo today. vauto.com/new