I’ll be taking home a new term that I learned in the first of my two workshops here at NADA—“learning journey.”
It came from a dealer during the workshop Q&A as the dealer asked for guidance on how he might lead his team on their learning journey to adopt our new strategy for managing used vehicle inventories, Variable Management. I like the term for two reasons.
First, it acknowledges that, just like the early days of Velocity, there’s a learning curve with Variable Management. Its strategic principles call into question what have long been regarded as best practices for used vehicle management, such as giving every fresh car “a chance to make gross” or applying the same age policy to every car. Second, the term touches the reality of today’s more variable market, where change is constant and finding success is, in fact, a journey. It’s a journey that will offer plenty of valuable lessons for those willing to learn them, which is what life, and good business, is all about.
On the show floor, it was an exceptionally busy first day. I sensed that dealers were perhaps a bit more eager and hungry to gain new perspective, and investigate new solutions, than they were at last year’s NADA convention in Las Vegas. I suspect the keen interest reflects concerns about where the market’s headed in 2023, and the way the final quarter of 2022 played out, particularly for dealers who had too much inventory as used vehicle depreciation gained steam.
“We got kicked in the teeth,” the operations director for a seven-store group in the Southeast told me.
I heard a fair amount of optimism from dealers, too, including the General Manager of a Honda dealership in California: “New car inventory is coming back. Our profitability is still strong. Our used inventory’s clean and lean. I’m optimistic. Besides, if you’re all gloom and doom, isn’t that what you get?”
Here are a few other nuggets from the NADA exhibit floor that seemed worthy to share:
Discipline: Several dealers shared that they’re dusting off their inventory age policies, re-instituting the 45- or 60-day age limits they followed before the pandemic-influenced market conditions rendered inventory age largely irrelevant as used vehicle values appreciated. I shared that I respect each dealer’s rediscovered discipline, and noted that while I still believe there’s an age limit for used vehicles I no longer believe it’s the same for every car. I encouraged dealers to take a page from Variable Management, and advance a variable turn policy, wherein they should manage the days to sell for each vehicle based on its unique investment value.
Limits of software solutions: I asked a dealer who’d just purchased several new solutions for stores his group had recently acquired how the solutions might help his business. I liked his response, which showed a key understanding that software, in and of itself, can’t fix a problem. The dealer’s take: “The tools don’t fix the problem but they gives us the ability to fix a problem and manage smarter so the same problems don’t keep happening.”
Team development: I was especially encouraged by the number of dealers who told me they plan to send key members of their management teams, not just their family members, to NADA Academy to gain a deeper, more holistic understanding of the car business and dealership operations. As one dealer shared, “If I’d done this 20 years ago, I’d have the organizational bench strength I need today to continue to grow.”
That’s a wrap from Day 1 at NADA. My dogs are tired, and I’m excited to see what Day 2 will bring.
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