Director of Used Vehicle Operations Hendrick Automotive
· 70+ stores
· 45,000+ used units per year
· $1,500+ gross averaged across all lines
What is the primary responsibility of your used car managers?
To invest our company dollars in used vehicles to make a profit by both retail and wholesale. Each department is responsible for their own profit.
What are some of the keys to a successful used car department?
In this day and time, of course, the key is finding good people and turning inventory on a timely basis. The key is attracting good people, keeping good people, paying good people and telling them what you expect and monitoring what they do.
What do you look for in a used car manager?
We look for integrity, honesty and market savvy. There are no two alike and someone that works well for me may not work out well for the next General Manager.
What are some of the common characteristics of your most successful used car managers?
They love the business. They don't think of it as just a job. They love it.
What is the best way to develop used car managers?
Many of these people came up the hard way, someone who has done it their whole life certainly has more to offer than someone who just started in the used car department. There are many different philosophies; some think the only way to go is to hire a veteran who has been in it a long time. Others think that they can train the necessary people within their store. Recruiting good used car managers is very difficult, it is the most difficult position to fill and the most important, in my opinion.
Every market and every used car manager is different but what are some of the things that you want consistently from all your stores?
Consistent net profits. Consistency comes from learning how to manage the numbers. We make all the numbers available to each individual manager through what we call a "well report". Half of this report is filled out and sent to me by each manager each month and the other half comes directly off the financial statement. We make all the numbers available to each and every one of the managers and they learn from each other. My biggest job is not necessarily to manage any store one on one; it is to get this information on the table to where everyone can profit from it. We have a wealth of talent in this company.
What is your aging policy?
In relation to aging, the key is, sixty days. We have write down policies that take affect after sixty days and we set the limits on the inventory according to their sales for the past year. We give them guidelines and then we expect them to be within those guidelines. They report the numbers to me each week; the turn is sixty days with a maximum number of ninety days. At the end of ninety days we expect that car to be sold or charged off the books.
What is your reconditioning policy?
The most successful people in the business use the "no apology" theory. We are spending all the money necessary so there are no apologies to our customers. That is without a doubt the way to go. We spend $500 - $1,400 per unit.
What about your trade-in and appraisal policy?
In this business everybody has a different opinion. The objective is to trade for that car at the curb. Put enough money in that vehicle where we can generate a new car sale. When a new or used car deal is generated then that generates financing and service. Reconditioning runs anywhere from $500 - $1,400 per car. The dollars start churning the minute the used car manager puts that wheel in motion. It flows all the way into service and parts. We expect that used car manager to put a fair number on that vehicle, but if he does not retail it, we expect him to wholesale it or whatever he has to do without taking a loss for the company.
Tell me about the new award program you have for your used car managers.
We developed what we call the Heart of the Fist Program. This was designed to recognize the used car managers. The winners receive a statue shaped as a fist. Each one of the fingers on the statue represents a department, the thumb being the used car department, the other four fingers being the parts, service, finance, etc. The thumb is the heart of the program. Almost 85% of our deals revolve around a used car manager and their ability to put money in a trade, generate a new car sale or another used car sale. In most cases, he gets the ball rolling for all the other departments in the store. The president of Hendrick Automotive, Jim Perkins realizes the importance of the used car department. The contest that we came up with has three categories. We start this program over each quarter. Every quarter we have three areas that are up for grabs and they are: net to gross for their department, most improved unit sales over the same quota from the previous year, and the most improved per net profit to the bottom line. The statues are issued in bronze, silver, gold and the platinum. If they win four in the same category, there will be a real nice award for them in February. These people earn a good living but traditionally the General Managers or sales and F&I people were able to win trips, but what have we had for the used car managers? The only place he gets to go to is the auction! We cannot operate a dealership without a good used car department. We cannot have a good used car department without a good used car manager. If the used car department is not running correctly, the whole dealership is in trouble.
Blandon, what one piece of advice would you give to dealers who want to maximize their investment in their used car departments?
Find the best used car manager you can, pay him a fair wage and then give him an incentive to work hard. Many dealers look at the used car manager as an expense rather than the investment that he is. If you are prepared to pay him good you will reap great dividends.