Volume , Velocity, Variety, and a point of View, it must be  Vonday.  Everything else is a V, why not the day of the week.  And why counting other people’s money is not a good idea.

Before I start a rant I want to say that Texas Direct does a phenomenal job.   We sell them cars just about every week for the past few years.   So I would never make them take down the fallacious statement they make on their web site.  I hate to bust their bubble about their claim that they are the Nation’s largest volume independent dealer.  They’re not.   We are.  We have been for decades.  It doesn’t look like that statistical fact will change any time soon either.  We are on track to sell over 30,000 units this year and the average price is just under $20,000.  Do the math.  However, it doesn’t bother me that they make the claim even though it isn’t true.  They probably don’t even know it, but they aren’t telling the truth.   

That fact won’t buy  any of us the proverbial cup of coffee.  They stock more, but we sell more, it’s called Volume.   We don’t stock them, we sell them.  It’s called Velocity.  We sell everything form the cheapest car to the most expensive car, every week.  It’s called variety. 

By doing this 52 weeks a year we have a very unique perspective and  understand the direction of all segments of the market.  It’s called View.  By doing this 52 weeks a year over four decades, it’s called Validation.  It’s what we do. 

You could break down the definition of the “largest independent Dealer in the Nation” by using the subset retail or wholesale, but what is the point?    I always laugh to myself when I hear this.  It begs the question, what is wholesale?  What is retail?  Does the bank account know the difference?  How many different levels of wholesale are there?  Five?  Ten?  More?  Regardless of the label every unit is bought and every unit is sold.  So I think it is safe to say not only are we the largest volume and gross revenue but it happens at the highest  velocity.  Our average time in inventory is less than three days.  In those three days each unit is bought, paid for, shipped, reconditioned, and sold.  We have a model that has been working for us and they have a nice model working for them.    Can a new car store do what Texas Direct does, or what we do?  If they could they would, but they don’t because they can’t. 

Don’t get mad.  It’s what we do and have done for longer than most of the people reading this have been alive.  A “retail” dealer can’t do what I do.  How can this be true?  It is based on the simple reality of how we buy and sell, in the volume, to the world, with the speed, and with the variety, it levitates the market that can’t be created in a colloquial or local market, regardless of how much one advertises or tries to find the ultimate end user and no matter how big a fish they are in their local market.  The magic that volume, velocity, variety, veracity, view and  consistency, can’t be duplicated at a car dealership. It is what we do.

That brings us to the point of this article. 

I recently read an article that defined what I do for forty years, sell everything all the time regardless of what it is and never get stuck thinking that you have found a niche market that narrows the will or skill to buy everything that moves on wheels, from broken down farts to brand new Ferraris, and do as many as you can find, every day, all year long…no matter what, when or how (with the exception from whom, I have learned through the years  the hard way not to buy form bandits, it simply never ends good even though it can be tempting…it don’t work).  The article was directed toward new car dealers however.  By trying to sell cars that are not in your normal wheelhouse you may find that what has worked in the past might not work in the future or you may miss out on your market that may have evolved. 

 Possible, but I am not sure.  When I go shopping for a pair of shoes, I am going where they have a huge inventory and the style I like and I have found them there in the past.  I anticipate that they will have a bunch of stuff I will like.  When I go to buy a pair, it is totally possible I’ll buy ten pair, cause they had them, and I liked them.  The probability that I will stop at the grocery store on the way to see what they have in the line shoes is very low. 

The theory that a Lexus store that trades an Explorer  should keep it to sell it for the same price as they can liquidate it for instantly and stock what a buyer comes to a Lexus  store to buy is not convincing.  From my point of view it is the classic case of counting other people’s money.  For decades I have bought cars from the same customers, dealers,  in very high volume and in the process of doing so, made them many many millions of dollars in “profit”.  Wholesale?  Retail?  Or profit, the same day it’s traded, net, cash up front, paid with a laser check, in the bank, weeks before the payoff is made, tens of millions in their bank, up front, 100% sold, 100% of the time, no advertising, no fees, no post-sale prevention to contend with, just instant liquidation, done deal, money in bank, net profit, I finance their pay-off.  This is separate from the undeniable issue; what does speed or turn time mean in a

transaction?  If the profit is sure and instant, does that have added value?  If it keeps the inventory fresh, is that important?  When you keep a car that makes no sense, how often do you get hammered with it as opposed to making a quick profit and moving to the next case and concentrate on the merch that does work, higher gross, better customer experience, better shop retention and a brand loyal customer?

 And I have to announce the fact that there isn’t one dealer that falls into the category of a decade long customer that has ever had a less than profitable relationship and they are all still in business, making profit off our transactions.    For the dealer I buy from, it is zero time in inventory, less than zero cost of inventory, and net profit that sits directly on the bottom line that never is subject to a policy adjustment that comes into play with customer complaints.  So it seems more like a question of definition, who did you sell to and what account the profit was deposited in to.  I wish I would have documented the tens of thousands of times I bought a car from a new car dealer paying them the “retail” asking price right off their front line.  They got paid with a laser beam, made profit and paid no commission.  They use that liquidity to buy what makes more logical sense to stock, be it for demographic, warranty, brand or whatever.  So the most resent philosophy is that a dealer will find the end user in every case by using the internet and should price it to get the traffic that insures quick “retail” sale.  I hate to break the news but we have been doing that for more than 40 years.  The only difference is semantics.

 Have the theorists stood in the service area about 4PM with an irate customer that bought a Land Rover from the Toyota dealer screaming about the fact that they didn’t fix it again?   Very uncomfortable situation and you definitely did not make your normal gross on that sucker when you took the customer out of the market by putting him in the Rover as opposed to the Land Cruiser.

The fact that someone else can levitate a unit because of a market or a skill set that isn’t omnipresent, does that mean you should keep inventory to sell it later for less and create meshugas?  We all have different skills, wills, and sets of circumstances.  New Car  Dealers do best selling by brand.  This is nothing new.  In 1960 Chevrolet branded and sold “A#1 Used Cars”.  This was the pre-runner of CPO programs today.  They make the most profit and cause the least aggravation.  They make business, big business in the shop and parts department.  When I watch dealers change their process to be sure they sell for less to anybody so they don’t call a transaction “wholesale” it is almost surrealistic.  An analogy would be having a leak in your roof and taking off work to fix it yourself so you don’t have to pay a roofer that will do it faster, better and for less money when it’s all said and done, so you “save money”.  Or cutting your own hair because the barber costs $17, you can do it for less (and when you are done, look like a total retard), but you did save $17…or did you?. 

I am 100% sold on “ velocity”, real velocity, not one a one legged variety, it’s what we have been doing  is the purest definition of the word for decades.  Nobody knows volume more than me.  Variety is the key to survival (just ask Charles Darwin) but Chucky D would also tell you that you have to have enough of the variety to insure reproduction, otherwise the species with not survive.  So it is very unlikely that the  Chevy dealer selling the one lone BMW will produce results that would want them to do it again is very low.  And the fact that they want to prove that they can bites them on the back end almost every time (if they told the truth for once and didn’t want anybody to know they, like all of their counterparts, wind up finding out why it doesn’t work).

My theory is simple, it has to be because I am simple.  I have to leave complex things to smart people, so here it goes.  Regardless of the need for classification, turn to earn is king  “wholesale or retail”.  Earn what you can on units that don’t make sense and earn what you should on core product.  When a  dealer that trades a car they can make $1,500  the same second it is traded it…or… puts it through the shop, waits two weeks to get it done, sells it for the same price it could have been sold instantly for, three weeks later, pays a commission and has a comeback that turns the service department into  a WWF match, the pain ain’t close to the gain, when there is no net gain…if you are really paying attention, not just hoping for magic.

So here we are facing the facts.  Texas Direct does a spectacular job, retail (even though they are the second largest independent dealer in North America).  New Car dealers do what they do best, sell their brand and some used cars.  Some even sell a couple hundred used cars per month.    We sell a few thousand.  There are realities that we all have to deal with even if you would like them to be different.  We all have limitations, some of us try to push a bit more than others.  But counting other people’s money and doing silly things to try to be sure the next guy can’t make anything on you is a formula for disaster.  I sure don’t get mad when a dealer makes money off me, it is my insurance that he’ll be back trying to do I again when the guy that wants to be sure he crushed his buyer to the point there isn’t any juice left, who is he going to sell to tomorrow?  Pigheaded silliness.  I say more customers that make a smidge off me,  better the shot I’ll have to sell them all, 700 times  per week (wholesale or retail, whatever you’d like to call it), every time, regardless of circumstances, 52 weeks a year, and everybody is happy.  It’s what makes the world rotate.  I don’t get mad when you make a profit and I certainly don’t begrudge what you make, so I stay out of what you do, retail (besides, I’d move to the Amazon forest and live with the Yamamo tribe first).  We do very different things.  You would never ask your doctor to fix your oven, or ask your plumber to represent you in court. 

Sell Well, It’s Vonday