Focus on Results More Than Expectations

On September 14, 2008, after completing a 20-Group meeting near the New York City headquarters of Lehman Brothers, I purchased a coffee, sat on a ledge outside its main entrance and started thinking about what might be happening inside. 

At that point, little did I know the effect the decisions made there that day (and announced the next morning) would have on me, so many dealer friends, our industry and just about everyone else.

Lehman’s collapse triggered a far-reaching financial meltdown. There is no need to relive the series of events. But I’m still amazed at the devastation we lived through, and managed to survive. 

Now, as I watch the continuing recovery of our business, I wonder how many of the survival disciplines we were forced to adopt immediately are still in effect.

Auto retailing certainly is different today than it was five years ago. Five years from now, it will be even more different.

On the variable side, cars and trucks are still sold one unit at a time by a salesperson, but many of the processes have changed. So have margins. There is certainly pressure on those.

As we continue to see our fixed coverage or absorption rates decline, there is more pressure on the variable operations to generate higher gross while limiting expenses. 

The volumes of pricing information available to consumers today have created a transparency that many people would argue has limited front-end grosses. So, where are opportunities? 

During a recent meeting, a dealer said, “There are few home runs left; we just have to hit singles.”

Staying with that analogy, we have to become proficient at batting in runs and then playing good defense. We must maximize each opportunity to generate sales and gross while creating a culture of efficiency to handle associated expenses.

Bill McBean, a close friend who sold his successful dealership group to AutoNation, has written a book, The Facts of Business Life. One chapter is entitled “The Marketplace Is a War Zone.”

Bill, a former professional hockey player, applied much of what he lived and learned in the sports world to his automobile dealerships.

He writes: “By focusing on results versus expectations, both employees and their managers can see where the employees are strong and where they can improve.  “And since most employees want to improve, if you show them how to do it, they will repay you with becoming more competitive. You have to continually push your employees to improve because today’s market and customers demand competence.  The better your employees are, the better your bottom line will be.”

In the new year and beyond, focus on employee productivity and accountability as well as processes that help achieve net profit goals. Do so by department and for the entire dealership. 

Thank you for your continuing support. Have a happy and safe holiday season and a very successful 2014.

Good selling!

Tony Noland of Tony Noland & Associates is a veteran dealership consultant. He can be reached at tonynolandandassociates.com.