“Avoid having your ego so close to your position that when your position falls, your ego goes with it”.

So many dealers need to get their heads out of their ass. If the economic situation continues as it is, this will really change the landscape of our industry. Something that most would agree that it needs.

This is a great article Shaun. Thanks for sharing.

Thank you for the great article and th embedded video clip! I agree that all conditions point to a loss of a significant number of dealerships in 2009… continuing the trend started with over 700 franchises lost on 2008. My own personal experience has been less of seeing dealer principals and General Managers who are unwilling to change, and more of witnessing a lack of daily task execution on a consistent basis, for a wide varity of reasons… Sometimes, this ack o daily excution is driven by quality of human resoures, but more often origintes from the sheer drudgery of getting on people every day for the same issues… Almost seems lke a form of management fatigue in some stores. In other dealersips, certain employees are asked to do more than is reasonable to expect within any given day. This problem smming from a fear of head count. You know which ones I am talking about, where the Internet Sales Manager is expected to supervise 6 sales people, update site specials, photograph used cars, manage the invoices and billing, desk deals, appraise trades, etc., and of course I am exagerating but you get the idea.

At any rate, I believe the biggest challenge car dealers face in 2009 is related to EXECUTION… In the past, many dealerships were able to be profitable DESPITE a lack of daily business process execution, but in 2009 the wilingness and discipline to execute consistently will be a big part of which stores are around for the good times coming in 2010, and which ones end up as Recession Roadkill.

Dealers have been reluctant to change for too long now. Change is inevitable, and dealerships must rethink and reallocate resources. New direction and/or new initiatives must be directed from the top down. If the DP doesn’t “buy-in”, no manager (good or bad) will have any success.

Dealerships in the past made “enough” money to mask their inefficiencies. This economic shift we are experiencing has simply exposed what has been a myriad of poor decisions by management. I too see great things to come in 2009 – it will be bloody – but “change” will be good.

Again, great article and a fantastic forum.

The only FEAR most management has is CHANGE.

If you are not making a profit CHANGE your business model IMMEDIATELY!!

The only thing that surfaces during times like this is POOR management and a lack of decision making , or long range planning.
Then when we have a complete turn around you will reap hugh profit benefits. ie as long as you stay lean and mean. JMHO!

The problem is in the managers. Management does not become management without a keen ability to survive. Even when times are good survivability is the name of the promotion game in the car business. It is a dog eat dog business, and I bet the same pit bulls will be sitting in the same seats if this is a short storm.

Change does not happen over night – it comes on the back of lots of time and a majority of acceptance (forced or wanted). It also requires a drastic reason.

Management should currently be looking at a few things:

1. Are the dealership’s cash reserves enough to weather 2 years without profit?

a. If not, what are you cutting to get there?
b. If there isn’t enough to cut, when are you selling the dealership?

2. If you’ve already taken care of number 1, have you evaluated your inventory for positioning amongst a more rational buyer? Save the emotional options (smart keys, remote car starters, 20″ wheels) for orders. Carry cars that are most likely to have dealership service and warranties straight from the manufacturer a year from now. Make sure they’re affordable for over 80% of your market.

3. Design a plan of attack for marketing. Are you going to push the perception that you’re the cheapest guy in town? Are you going to be customer service oriented? Are you going for profit or volume? Figure it out and stick to it for 12 months – don’t waiver because you were off one month. We can no longer live month to month.

4. Once number 3 is figured out, put your people on a process that follows your marketing strategy. Don’t expect a volume-oriented sales force to immediately start making huge PVR’s if you decide to go for profit. Have patience and water your garden daily.

5. Do I really need to go any further? This is Business 101. So if you’re going to continue to be in the game, get back to basics – I bet it worked when you were selling cars too.

How in the h*ll can a sales rep get paid a flat for a $60,000 vehicle that takes 2-3 hours to deliver?

It was like musical chairs. The music stopped and all the ugly parts of our industry came right to the surface.

What we’re witnessing is the begining of the death of the Automobile business as we knew it. For those that survive, this is the birth of a far better career.

On the way to a better day, it’s gonna be messy and painful. We’ll witness the death of entire brands. Many stores can’t take another year of cash loss like 2008.

Darwin’s rules are in full force now. The strong will eat the weak. Ask yourself, is your management team going to eat your competitors, or, will your store be eaten?

LOOK AT YOUR MANAGEMENT TEAM.
Sure there is cost cutting going on, but, are they communicating a new attack plan for 2009?

We’re in the top of the 2nd inning, there’s a lot of drama to play out yet. If your management team is a bunch of slackers, I suggest you get your resume tweaked ASAP.

Are we having fun yet?
Joe