Broadening My Viewpoint

Of my 40 years in the U.S. auto industry, the last 20 have included valuable contact with the international auto industry community.

Prior to meeting international dealers and manufacturer's personnel, my automotive world revolved around what was happening in the U.S. (i.e. the most recent 30-day sales and profit results.)

Not trying to sound callous, but what was happening elsewhere wasn't impacting me or my business. Lesson No.1 for me should have been what is summed up by author Stephen Chbosky:

“Sometimes, I look outside, and, I think that a lot of other people have seen this snow before.”

In other words, I was concentrating so heavily on the ups and downs of my business, I didn't consider that I could learn from someone who had been there before.

During the past two years I have spoken to many international dealers who want to learn from the issues we as an industry have endured lately. Many of them, such as Brazilian auto dealers, were lucky enough to avoid some of those hard times.

When asked why they would be interested in what was happening in what is considered to be one of the worst times in the history of the auto industry, the response was:

“While business is good for us, we want to study a model where business is not so good. We want to study the mistakes dealers made leading up to this collapse and learn the steps they took not only to survive, but improve their businesses.”

A few years back, one of our best-practices moderators shared a winning idea from one of his dealer groups with me, an idea entitled “process evaporation.”

The 20-Group dealer who submitted it had listed about 100 processes which had been implemented over the years at his dealership. Each one on the list had a small check box to indicate if the process was still in place.

Obviously, as times change so does our need to add and delete certain processes, but the basic processes should remain in place. As most of us know though, having a process and following it are two totally different subjects.

So, for the BRIC Countries, (Brazil, Russia, India and China) where business is brisk and dealers are, for the most part enjoying good times, to invest their resources to study the U.S. market during the past two years, is a learning experience for me in a totally different vein.

Knowing what we now know, what would we have done differently in advance of the market collapse beginning in September of 2008? If this were July of 2008 and we knew that in two months our world would change as the financial crisis took root, what steps would we take.

First off, we would treat our cash sacredly and, we would educate our personnel on cash management and the sources of that cash.

No longer would we, as an organization, have a cavalier attitude as it relates to our new- and used-vehicle inventories, our receivables, our expense structure, etc. We now know that customers can and will change their buying habits without warning.

We now know that our “finance partners” with whom we have enjoyed such a great relationship during good times will retreat and take their willingness to work with us with them.

Number two on the list would be expense management and right sizing the organization to a point where it can be profitable on the amount of business being transacted. Speaking of expense management, we've now lived and learned the real definition of an essential expense.

So, what is my point? One, conserve and manage your cash. Two, ensure your operation is right-sized from an expense and inventory management standpoint.

Remember process evaporation? As our economy begins to improve, never forget/please always make it a part of your daily work plan to manage your cash, educate your personnel about cash and, ensure your organization is right sized from an expense and inventory standpoint. Good selling!

Tony Noland is a veteran auto dealership consultant. He is at tonynoland@tonynolandand associates.com.

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