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Tag Archive: Tony Albertson

Tony Albertson

The Resilience Checklist

Car salesman

Recently, I was invited to moderate a session at a DrivingSales Conference in Miami, Fla. The topic at hand was dealer resilience. The meeting asked dealers in the room, “How would you handle a 20 percent decline in volume or a 50 to 100 basis point rise in interest rates and what about a labor shortage?” Think it can’t happen?

Increasing interest rates

The last few years, we have seen the government prop up the nation with prolonged stimulus and loose monetary policy while impairing sustainable growth. In December 2015, the Federal Reserve raised rates by 25 basis points; this was the first increase since 2006. The Fed has recently increased it another 25 basis points, and the projection is for 2 to 3 more increases next year. How will this affect your profitability, your property values, rent factor, or your ability to acquire new stores?

Changing marketplace

What of other external threats to our business, such as negligence from the manufacturers, disruptive markets, or the state of consumer finance? Internally, dealers may suffer from a poor reputation in customer experience, labor inefficiencies, and a stagnant business model that can ruin net worth. A 2015 Customer Experience Research report by DrivingSales stated that only 26 out of 4,000 consumers prefer the current car buying process. As they explain—and I agree—the Apples and Amazons of the world have trained modern shoppers to seek out a different buying experience.

Experian has reported that auto loans reached an all-time high in Q1 of 2016. The debt totaled over $1 trillion, up 10 percent from Q1 2015, and they are watching delinquencies closely. According to the Federal Reserve Bank, the average length of a new car loan is 64.6 months.

A 2015 Cox survey had some good news for dealers despite the abundance of those disruptive market sites capitalizing on direct-to-consumer transactions: 81 percent still prefer to buy in-person versus online. The customer still doesn’t like the process, but they want to deal with a real person and be able to touch and feel the vehicle.

Rising labor costs

Operationally, the automotive industry’s biggest expense is labor. According to NADA’s Chief Economist, dealers often pay 15 percent more than US averages for labor and have been increasing wages at twice the rate of comparable sectors all while experiencing turnover rates up to 3 times the US average. On the topic of expenses, David Spisak, President of ReverseRisk and one of the speakers at the conference, stated that “many dealers fail to quantify their true costs when manufacturers redistribute margin on their financial statements.” So what happens when the OEM pulls the program?

The Resilience Checklist

Despite the brilliance of the speakers at the conference, none have “THE ANSWER” to all of the questions we face in today’s car business … I don’t believe anyone truly does have all the answers. However, I think this short resilience checklist is a useful tool for your dealership:

  1. Stress test your profit and loss (P&L) and balance sheet for a 30% SAAR drop and/or interest rate increase of 3-5%.
  2. Secure long-term financing while rates are low, if possible.
  3. Develop and track a “true” P&L independent of OEM incentives and financial manipulation. Wean yourself off dependency on manufacturer programs. Operationally, modernize your labor practices. Build and implement an attractive employment ‘brand’. Culture, compensation plans, internal policies, and positive impacts of the organization externally should be optimized to attract and retain a more diverse, more cost-effective talent pool that can deliver a superior customer experience.
  4. Re-engineer inefficient departments and processes. Streamline organizational structure to provide a seamless customer experience to remove hand-offs and overhead. Used cars and fixed operations are huge areas of opportunity to recover lost margin in new cars and execute a customer retention strategy.
  5. Future proof your business by exploring how to position your dealership to benefit from changes in how consumers purchase mobility.

So many questions in so many areas. The truly great news is that—almost to a man (or woman)—car dealers can adapt and overcome challenges. Well, some faster than others. Make sure you’re one of the fast ones!

Learn more about Tony Albertson and how he and his NCM colleagues can help your dealership through 20 Groups and in-dealership consulting.

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Tony Albertson

Are Your Managers Being Followed or Just Tolerated?

business team in meeting on dark background

So there I was, the third newly-hired General Manager in two and a half years in a struggling automotive dealership and faced with the task of evaluating the competence of the existing department managers. These were the managers that would be required to support the renewed vision of the dealer and institute the processes that would hopefully get the store on its feet.  I needed leaders. Were they worth keeping? Should I just blow them all out and start fresh? How do you know?  I of course wanted to give them the opportunity to be successful, but do temporary results lead to long term progress?  At one time or another in my career I have read and studied every management book I could get my hands on but the question remained. Where to start?  It is often funny where our answers come from…

As a young man I had this old guy that lived next door.  I would see him from time to time out walking his fuzzy little dog and didn’t think much of him.  What I didn’t know at the time was that he was a highly decorated retired naval captain and, typical of many combat vets, he lived in total anonymity being mostly taken for granted by the casual observer. At seventeen years old I was just as self-obsessed as anyone my age, but one day this “old guy” got my attention. Initially it was a result of his slightly dark, self-deprecating sense of humor.  I noticed this first as it was being directed at me and my frustrated attempts to get a stubborn lawnmower started.  I thought to myself, “Wait a minute…the old dude that lives next door, that I don’t even know, is making fun of me.”  When I looked up to proffer an indignant teenager scowl and snappy retort, I was greeted by the ornery smile of a mischievous schoolboy pasted to the face of, well, an old guy. I liked him instantly.

Over time, the old captain shared many sea stories and descriptions of combat that would keep me enthralled for hours at a time. He shared both the horror and the glory with a deep sense of humility and grace. Fast forward many years to my current situation in taking over a new dealership, and one particular conversation stood out.

I had asked him what was more difficult, following orders or as his career progressed, assigning the people to carry out the orders? He thought about this for a moment and shared a about time he was required to pick two young lieutenants to lead men into harm’s way. The mission was important, dangerous and had to be accomplished, but who were the right officers to lead it? He had many young lieutenants under his command to choose from.  Some were all spit and polish, some were by the book and cautious, most were equally trained, and all wanted the opportunity to prove their worth as officers.  Every officer under his command understood the importance of planning, logistics and execution of a plan, and all, in theory, should be able to lead the mission.  But the question came down to this; if, in theory they can all lead…who would be followed?

We have all seen this at one time or another; an intelligent manager with all the knowledge given the responsibility of leading a group to an expected result and falling short. Ultimately because he or she was not being “followed” by their subordinates—they were just being “tolerated.”

These same managers have read all the books, attended the seminars and in the end were pronounced a “qualified leader.”  If you happen to work for one of these qualified leaders they frequently feel the need to remind you who the boss is because you are obviously not smart enough to remember.  If they happen to work for you they are the first to sing their own praises, point out the deficiency in others, and the validity of their own ideas. It is not unusual to see people roll their eyes as they pass and the so-called leader remains oblivious.  Would you follow this guy?

At the end of the day, what is a leader?

Simply put, a leader is someone that is being followed, not just tolerated.  Take a look at your managers.  Are they just being tolerated because your employees care enough about you and the store not to leave?  The net results of this situation are mediocre at best.  Or are they following the person that you appointed to carry out the company’s mission to its highest result?

A manager can have all the knowledge, bright ideas and understanding of your vision, but it is the ability to build conviction in others that makes the leader.

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Tony Albertson

How Many Detail People Do I Need?

cleanThis question came up recently in one of my 20 group conversations. The dealer wanted to know if there is a set standard for the number of detail/cleanup people the dealership should have based on volume.  At first glance this seems like a pretty mundane question and did not create much conversation, but the more I thought about it, I think it deserves more attention than just saying, “You need as few as possible.”

There are a couple of scenarios that come to mind when looking into this question. For example, you are in a small market selling less than 60 cars a month. Would it not be better to farm out all the full details to an outside vendor, thus avoiding things like overtime, uniform expense and benefits? That is a good thing, but now how many people do you need to do delivery washes and touch ups? Are these people also responsible for lot clean up, driving the customer shuttle or going to get lunch for the GM? Another scenario is a volume dealer with full wet bay and dry bay operations employing specific detail personnel. What are your standards for production and do you pay them hourly or by the job (flag time)? How long does it take to complete a full detail, quick wash for a customer, or re-wash of a demo for delivery, and what are your specific standards for the work?

Herein lies the crux of the problem:

Most of us do not have standards or specific enough expectations that would allow us to back into the right number of people we really need. Think about it, how long should a detail take to complete and what should be done in the process?

This is just an opinion and open for debate, but here are the standards that I have based my staffing needs on. This includes the job description, hours it should take and the minimum expectations:

Used Car Full Detail: (3.5 hours)

  • Buff and wax exterior
  • Vacuum and shampoo interior
  • Clean under seats
  • Clean or replace ashtray if needed
  • Degrease engine
  • Clean door jams, windows, trunk
  • Dress tires and moldings

Sold Demo: (1.0 hours)

  • Wash
  • Wax
  • Vacuum
  • Clean windows

New Car Cleanup with Environmental Package: (1.5 hours)

  • Wash
  • Apply paint sealant
  • Remove interior coverings
  • Vacuum and apply fabric protector
  • Partial buff as needed
  • Clean windows
  • Dress tires and moldings
  • Install plate frames and dealer stickers

New Vehicle Re-Clean: (.75 hours)

  • Wash
  • Vacuum
  • Clean windows
  • Dress tires

Wash and Windows: (.5 hours)

  • Wash
  • Clean windows
  • Dress tires

Full Vehicle Buff: (1.0 hours)

Shampoo Interior: (.5 hours)

These examples assume you have the tools, chemicals and space on hand to get the job done. In lieu of anything else, look at these standards, determine what type of work you are doing, then back into the number of people you need to do the job.

Once you have the people in place you can use these standards or develop your own to gauge your efficiencies and drive production.


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Tony Albertson

Better Processes Improve Technician Productivity and Gross Profits

Calculator red pencilDid you ever perform this calculation for your dealership Service Department? Whenever we do this exercise, either in the field with one of the NCM Retail Operations clients or in the NCM Institute classroom, the result always knocks the socks off the dealership management team. Click here to be immediately taken to an interactive Excel spreadsheet to perform this calculation for your dealership.

If your dealership’s technician productivity is below the Best Practice Guideline for your franchise, what do you need to do to increase technician flat rate hour production by one hour per technician per day? If you’re scratching your head, don’t feel like you’re alone! It’s a lot easier to identify the need for improvement than it is to determine WHAT you need to do and HOW you need to do it!

Effective processes drive productivity! In the Principles of Service Management classes conducted at the NCM Institute Center for Automotive Retail Excellence, attendees are taught how to develop, implement and flawlessly execute the following:

  • The interactive Walk-Around Process
  • The Menu Sales Process
  • The Additional Service Request (ASR) Process

How have you improved technician productivity in your store?  What are your greatest challenges to improvement?

Click here to learn about all our service management training options, including NCMi classroom, regional and on-site training opportunities.


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