Complacency can be one of our biggest threats and challenges. Keeping ourselves and members of our teams sharp and on the offensive should be on each of out daily must-do lists.
In his best-selling book, Who Moved My Cheese, Spencer Johnson created four characters, each faced with unexpected changes in their food supply, cheese. In this parable, the storyline is a study of how the characters deal physically and emotionally with the loss of their cheese, and what they do or don't do about it.
One character, Haw, searches for another cheese supply. He's fearful for his friend Hem, who has remained behind waiting hopefully for the old cheese to reappear. Haw stops as he searches for new cheese and writes messages (directions) on the walls, “The Handwriting On The Wall,” in hope that Hem will use this as a trail to the new cheese.
Among the messages Haw writes are: Change Happens, Anticipate Change, Monitor Change, Adapt To Change Quickly, and Be Ready To Change Quickly And Enjoy It Again & Again.
My analogy here is true in many businesses, but especially true in today's auto industry. Embarking on this new year, we must constantly remember that the “cheese” keeps moving.
Today, the new vehicle industry is still relatively strong, but we must anticipate changes. If dealer or customer incentives are reduced, subvented interest rates raised from today's level, or consumer fuel prices increase dramatically, are we in a position to monitor and anticipate these changes?
Are we prepared to move to the next cheese station should the need arise? One area I would encourage you to monitor is your new-vehicle inventory level. We are beginning to see inventory levels increase more quickly than the sales rates. Hopefully this is a seasonal adjustment and not a market adjustment.
As discussed here many times, it is important we not lose sight of the other profit centers in our dealerships.
We can't just walk away from the used vehicle business; we have to adjust our inventories to be more appealing to the buying public. Sure, we want to have a representative sampling of certified used cars and other later models, but we can't ignore the sub-prime market and the lesser expensive used vehicles.
I realize lesser expensive vehicles are nearing impossible to buy on the open market, but with a new vehicle franchise, we have the opportunity to trade for those vehicles. In the risk/reward consideration, what is our potential loss on these vehicles compared to our exposure on program vehicles? The obvious additional benefits include increased new vehicle volume and F & I income.
Another area to examine is your service business. Are you capitalizing on this huge market? Are your hours of operation consistent with customer needs? Are you really open on Saturday?
Many dealers tell me they are open for business on Saturday, but when questioned about the hours, respond “8 a.m. to noon.” If you don't think customers have their vehicles serviced on Saturday afternoons, drive by any local Wal-Mart or Jiffy Lube. Remember, Saturdays represent more than 14% of the days in a year. Most service business has associated parts potential as well.
Be on guard to ensure that business trends are what we think they are. If we see a trend developing that could cause lost sales or gross profit, we must be prepared to adjust our business model on a relative short notice.
We can't afford to become complacent. Insist that proper asset management standards and levels are in place and being met. Watch expenses. We must strive to increase employee productivity and overall operational efficiency. If we constantly monitor the status of our “cheese stations” and make the necessary adjustments, we should always have plenty of cheese.
Tony Noland ([email protected]) is the president and CEO of NCM Associates, Inc.
