DealerExec Magazine transcript

DEALER-TO-DEALER

#StartAtStart; Burn the Ships; Build a Fortress Dealership

#DealerToDealer — As of early Q3 2016, our current sales SAAR ( seasonally adjusted annual rate ) reflects Growth of +1M units over the same period in 2006. Further, our first-half 2016 results reflect our strongest rate of sales since 2011 – we’re selling more units, we’re making more money, these are the best of times….all together now = “WINNING!”
Winning comes with a responsibility, Winning is a challenge, Winning requires effort – courage – discipline, yet, Winning in successive order ( left unchecked ), “Winning Will Make You Soft!”

If we didn’t learn our lessons from the hemorrhage of 2008 and 2009, to “never again” find ourselves subjective to market conditions, to be ill-prepared, weakened or crippled by a lack of discipline – OUR TIME IS NOW!

FIND THE COURAGE

Our responsibility as Leaders ( regardless of your specific role ) is to recognize we are the investor and we are 100% responsible for our operations, our associates, their families and the communities we serve.

Honor of this responsibility requires that we ‘check our ego’, find the courage to embrace ‘we do not have all the answers…we don’t know, what we don’t know’ and that as a result, we must be dedicated to finding the answers by any means necessary – we must #StartAtStart.

BLINK SPEED
Developmentally, in both the automotive industry as a whole as well as high-transaction retail; consumer product development continues to evolve at a pace now identified as ‘Blink Speed.’

Innovative, well-funded and highly capable teams of designers and engineers are working and will continue to work; well through-the-night to develop expanded connectivity and functionality of products, services and forms of transportation – each of which, are, can and will alter the manner in which we serve our active consumers, for example:

OnDemand Transportation: Uber, Lyft, Hail, Shuddle…the list grows daily…
Ride Share Transportation: active OEM pilot programs throughout the United States and Europe.
Methods of Transportation: Semi-Autonomous, Fully-Autonomous, Vehicles, Pods, Buses, Cargo Transport, etc.
…at this very moment, teams around the world are fast at work on technologies which will further integrate the connected-consumer into an entirely new mobility ecosystem.

WE ARE UNDER ATTACK
Closer examination of our operations reveal a number of areas which require our active leadership and involvement:

• Our Gross is slipping….we’re selling more units, yet our transaction gross is eroding, new “and” preOwned
• Student debt is continuing to increase which in-turn is reducing the available financial resources of our younger new-to-market consumers
• Our current retail model is being challenged from every angle
• Manufacturers are now delivering select-model vehicles ‘consumer-direct’ in Europe
• In the US, Tesla is now merchandising automobiles in high-end retail department stores

Consider this, Blink-Speed is not just representative of technology and product development – Blink Speed may very well be a near-future norm.

BURN THE SHIPS
The speed by which we now must operate, the continued complexity of our industry and the challenges we face, will cull-the-heard of strong and successful v. weak and vulnerable in short-order. Success, ( long-term success ) will require courage, focused leadership and an unrelenting commitment to align our operations in a manner which will produce the highest level of efficiency and profitability.

Famed explorer Hernando Cortes landed on the shores of Veracruz, Mexico in 1519. Cortes wanted his armies to conquer the land for Spain. Faced with an aggressive enemy, brutal disease and scarce resources. As they marched inland for battle, Cortes ordered one of his commanders back to the beach with a single directive: ‘BURN THE SHIPS’

Our only direction is forward…’Onward & Upward to Victory’ – There is no turning back – we are advancing every single day, one foot, one yard, one mile at a time – there will be no retreat.

So we now must recognize, in our industry, within our responsibilities; we must produce profitable returns on our investments in which to fortify our operations, serve our associates, their families and our communities – we must begin our march forward now.

IF ONLY WE HAD KNOWN

Looking back, 2008-2009, many of us agree, “If only we’d been more disciplined, if only we’d fixed ___, strengthened ____, cut ____, grown ___ or been more efficient at ____, we could have survived, we could have thrived, we could have actually expanded our operating reach in a depressed market. We could have acquired stores instead of closing them, we could have expanded instead of reducing our ranks, we could have….we should have….if only we’d known…”.

Well, now we know! – and for those of us who were blessed to survive this period, we will not get a second chance the next time…..and the next time is coming!

Are we making too much money?, Have we become our former selves as we were in 2006 and 2007? Have we ( again ) became ‘Rich & Good Looking?”

Ask yourself, if the market shifts tomorrow, is my operation equipped and structured to survive? to thrive? to expand? – do you have the measure to answer this question? – in the event you don’t, do you have the courage to admit it to yourself and assemble your best and brightest to #StartAtStart today?

BUILD A FORTRESS DEALERSHIP

To survive, to thrive, to expand…to truly succeed – we must embrace a philosophical challenge: Are we ‘standing a point on the hope plan?’ OR are we creating a retail ecoSystem wherein each of our departments, are working in alignment to serve and support each other – are we building an army, a well-trained army, who in-turn produce the needed ROI for creation of a Fortress Balance Sheet?

To achieve the goals we have never achieved before…we must start doing things we have never done before.
In the evaluation of; creation of; a Fortress Dealership, we must examine and hold ourselves accountable for:

Store/Brand Loyalty ( New and PreOwned Sales )

• What is our current % of
  • Repeat Sales? including PreOwned
  • Repeat Service, 1st, 2nd, 5th visit? including PreOwned

Sales Operations

• Do we have an expectation of ‘activities-to-be-completed’ by each sales associates, each working day? ( created appointments, outbound calls-emails-text, etc )
• Do our Sales Managers ‘voice-to-voice’ confirm our created appointments?
• What is our current average units sold, per sales associate, per month?
• Do we have an inStore ( at time of sale ) referral process?
  • Earned and Deserved, all we need to do is #JustAsk
    • If so, do we build for increased units sold, month over month, per associate as a result?
• Do we have a hard-stop days-in-inventory inventory on PreOwned vehicles?
• Do we have an up-front exit-strategy on your trades, thus producing a wholesale profit?

Finance Operations

• Do we have a CIT policy for maximum days from contract-to-funding?
• Do we have an established process for finance product sales including minimums?

Service Operations

• Do we have a process for service introduction at the time of sale, including all PreOwned sales?
• Do we have a first-service appointment creation process at the time of sale?
• Do we monitor your current fixed absorption rate each month?
  • Do we have a plan to achieve +100%?

Marketing Operations

• Do we invest our resources to target Leads? or inMarket Buyers?
  • Do we know the difference? ( and there is a massive difference )
• Do we integrate all elements of our active marketing channels with a singular focus to drive one-touch, one-click direct actions immediately into our CRM? ( Phone, Form, Text, Chat )
• Does our CRM provide us the needed data from which to gauge ROI performance, per source?
• Is our website constructed to convert visits into direct actions?
• Do we source and track every phone call, form fill, text and chat?
  • Do we source by each individual investment type? ( SEM, Social, 3rd Party, etc )
• Do we evaluate our direct actions in our CRM to the investment, by source?
• Do we monitor our current quantity of days ‘initial contact to sold’?
  • Indication of the effectiveness of active marketing combined with the speed and efficiency of our inStore process.

The above examples represent a few of the areas we must evaluate in order to construct and enhance a Fortress Dealership. Alignment of our inStore processes, unification of our departments and fact-based investment of our capital; when combined with disciplined leadership will produce a Fortress Balance Sheet as measured by the percentage of Net to Gross, each month.

100% RESPONSIBLE
Let there be no empty chair, excuse or deviation from our role in service to our team(s), store(s) – leadership requires we are 100% responsible – acceptance of this responsibility enables us to accomplish outstanding results and transform ordinary into Extraordinary.

#StartAtStart. Embrace the courage needed to be uncomfortable as you enhance and refine your operation. Growth and success are fueled by the courage it takes to say ‘We don’t know what we don’t know’, yet having the tenacity and desire to Burn the Ships and build a Fortress Dealership.

Onward and Upward to Victory, always!
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Erich K. Gail

Chief Operating Officer

CARDINALE GROUP of COMPANIES | www.Cardinale-Group.com

Mr. Gail is a Chief Executive of the Cardinale Automotive Group; Chief Executive Officer of Cardinale AG Vehicle Supply Group North America and Chief Executive Officer of ZMOT Auto.

Mr. Gail is a 27-year veteran of the global automotive industry having served in a variety of executive and senior leadership roles within a vast array of management and investment groups.

Mr. Gail has extensive experience developing new business operations as well as enhancing the performance of mature organizations throughout the United States, Canada, Europe, China, Korea and Japan.