ProfitTime GPS in Practice: From Skeptical to Sold

When Mike Cirona, general manager of Scott Robinson Honda in Torrance, CA, initially heard about ProfitTime GPS, he didn’t think his store’s used vehicle department would benefit from it.

“I wasn’t crazy about it when it first came out,” Cirona says. “I didn’t think it was ready for prime time. Maybe it was me and my mindset, but I passed on it.”

But earlier this year, Cirona’s vAuto Performance Manager, Kevin Stearns, brought ProfitTime GPS back into the conversation. Stearns thought the solution’s recent improvements warranted a second look.

“I’ve known Kevin for a while. I call him one of our team members. I trust him,” Cirona says. “Kevin told me the system is a lot better and it would help. So when he said ‘Trust me, this will work,’ I did. I signed up. I didn’t even look at the changes that had been made to the system. It was a leap of faith.”

Today, Cirona’s glad he made the leap. Since launching ProfitTime GPS in May of 2022, his average front-end gross profit has increased $587, and it’s up more than $1,000 year-over-year. His sales volume remains consistent, averaging between 80 and 90 units a month. Meanwhile, his net profit has also “improved greatly.”

“July 2022 was our highest gross profit month for pre-owned cars since I joined the company in August of 2014,” Cirona says. “The numbers tell the story.”

Like other dealers who have increased their success by switching to ProfitTime GPS, Cirona would be the first one to tell you the transition wasn’t as easy as flipping the switch. The system pushes dealers away from the believe that every vehicle must be priced to sold quickly, a tenet of the Velocity Method of Management. Instead, ProfitTime GPS identifies the investment value of a vehicle at the time of appraisal, recommends an appraisal amount and a recommended retail price range to optimize the vehicle’s return on investment (ROI) for the used vehicle department and dealership.

“ProfitTime has become our culture,” Cirona says. “It’s not an easy task to get a team of sales managers to forget how they used to appraise units and to retrain me on how to price units.”

I asked Cirona to share how he managed his team through the transition, aiming for pointers that might help other dealers see the value in a different way of managing their used vehicle investments. He kindly obliged.

A View of Investment Value-Based Appraisals

Like other dealers, Cirona’s used vehicle department has had to diversify how it sources inventory. Prior to the pandemic, his Honda store saw the bulk of its inventory come from new vehicle trade-ins and lease returns—channels that slowed to a trickle over the past two years. Meanwhile, Cirona, like other dealers, also now regards auction-purchased vehicles as a last resort.

“It’s not the old days of 20 to 30 people standing in the lane and fighting for it. Now there’s 200-plus buyers online, so are you really the smartest guy if you’re the last one with your hand in the air?” Cirona asks. “Probably not. By the time you get it home, through the shop and get it on the lot quickly and price it right, you might break even or only lose $500 on the front. There’s nothing left but F&I income. I’m trying to avoid that at all costs.”

Cirona’s solution has been to purchase a greater share of vehicles directly from customers, through a Kelley Blue Book Buy Center and his service lane. Those two channels now produce about 80 units a month. The change also means his sales managers, who appraise vehicles, are evaluating vehicles and circumstances that are less familiar. Cirona says the Global Acquisition System in ProfitTime GPS helps his appraisers get a clearer, quicker view of each vehicle’s retail potential in his market.

“The system feeds you what the car’s worth in your market. How much can you sell that car for? Forget about the book, how much can you sell the car for? That’s what ProfitTime GPS tells us,” Cirona says. “It’s made us better at appraising cars. Our appraisals are more relevant to what the market is as opposed to what the book is. The numbers are smarter.”

But what about getting appraisers to believe in system’s recommendations? As Cirona affirms, that’s where he’s spent time to get the buy-in that drives improvement.

“The hardest thing with my sales managers was teaching them to trust the data,” Cirona says. “They’re convinced that no computer is smarter them. I told them, ‘You have to trust the data. Close your eyes. Follow the numbers. Follow the data. If you do that, I won’t get upset with you.”

These days, Cirona uses ProfitTime GPS to inquire about vehicles his sales managers decided not to purchase or purchased for an amount different than the system recommended.

“I’ll typically look at a missed car,” Cirona says. “I’ll say, ‘The data was here and says this, and your number was different. Tell me a bedtime story.’ I’ll want to know why the manager didn’t trust the data. Sometimes I’ll get a valid story to go with it. There were valid things wrong with the car that the data doesn’t see. OK. I’m good with that. The other one’s fall where a guy says, ‘I just didn’t like the car.’ I couldn’t get any specific reasons. That’s when I go back to say, ‘trust the data.’”

Cirona adds that his efforts to build confidence and trust in the data has been helped by a tailwind—more cars acquired right leads to better gross profits and paychecks for his team. “That’s always the way to a salesperson’s heart,” he says.

A View of Investment Value-Based Pricing

Cirona’s transition to ProfitTime GPS also spurred a personal teaching moment. He needed to re-think how and why he priced his used vehicle inventory—a task made a bit more difficult given his long-standing commitment to pricing every vehicle to sell quickly.

“As I got into ProfitTime, it taught me that, ‘Hey, you’re going to make money on this car and don’t worry if the bucket changes in 10 days. It’s going to take this many days to sell it and this is what you can expect your gross to be. It’s pretty spot-on,” Cirona says.

He attributes the additional lift in front-end gross and net profit to the results he’s seeing from vehicles the ProfitTime GPS system classifies as Platinum and Gold investments, which represent vehicles the dealership bought right, and possess low Market Days Supply and solid retail sales volumes.

“I was discounting cars in the past that didn’t need to be discounted,” Cirona says. “I was discounting cars further, hoping to get more visibility. I didn’t need to. I hurt myself by doing that. ProfitTime GPS has taught me, hang on, there’s another way.”

Meanwhile, The system’s recommendations for Bronze and Silver vehicles, the higher risk investments, fit with Cirona’s instinct to get out of distressed, risky vehicles as quickly as possible.

On a day- to-day basis, Cirona uses the ProfitTime GPS pricing alignment tool to monitor how closely his prices tie to the system’s recommendations. “The alignment can change a lot as the market changes,” he says. His goal: 85 percent alignment, a benchmark that ensures he’s accounting for vehicles with extra equipment or special circumstances that require “the car guy to come out.”

I asked Cirona what he might say to other dealers who, like him, were skeptical about ProfitTime GPS, or maybe hadn’t seen the system. I thought his response served as a nice close:

“I would question them as to why do you think doing things the same you’ve done them for five, seven or 10 years, or whatever the number is, is going to improve your gross?,” Cirona says. “You have to be willing to change. The data we have today is different than the data we had two years ago, five years ago or 10 years ago. Some guys still fight the technology instead of letting technology be an asset and partner to the business. That’s been my approach and it’s helped me.”

The post ProfitTime GPS in Practice: From Skeptical to Sold appeared first on Dale Pollak.


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