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Strategies & Market Trends : ajtj's Post-Lobotomy Market Charts and Thoughts -- Ignore unavailable to you. Want to Upgrade?

To: ajtj99 who wrote (44791)	11/25/2021 11:16:19 AM
From: robert b furman	3 Recommendations Recommended By ajtj99 longz Lou Weed Read Replies (1) \| Respond to of 97527

Happy Thanksgiving AJ, GM has allowed the Ford F150 to have bragging rights as to the best selling truck in Texas and the US. The dirty little secret is if they added Chevrolet Silverado trucks and the GMC Sierra trucks, they outsell Ford more often than not. It goes back to the 1973 oil embargo. At that time GMC franchises were both Medium Duty and Heavy Duty. There were some light duty trucks made by GMC, but it was very minimal. Once the embargo had created shortages and the cost of gas tripled, GMC franchises were given a light duty Sierra in volume. Truth be told the Chevy dealers could not handle all of the allocation at that time. So Ford never shared their F150 with Lincoln. They did however share similar models of all SUV sizes. In Texas, the Arlington plant builds the full size SUV's for Chevrolet, GMC and Cadillac. Toyota builds the Tundra in San Antonio. Nissan builds the Titan in Canton Missouri. Ford has historically sold more Super Duty 3/4 and 1 ton trucks. It was back in 1992 that Chevrolet wanted to get more market share with the initial program called Commercial Specialty Vehicles. that and the GMC version was morphed into "Business Central". Since my Chevrolet dealership had GMC also, it was an excellent way to earn more allocation on newer models. We would often stock more commercial rigs and then dealer trade them to dealers who had a customer, but did not stock that specialized type of truck. It worked out very well for us to trade a work truck for whatever was hot and in limited allocation. Part of the science turning one's inventory faster. One of my last special assignments while working for Chevrolet, was to study the dealers that turned their inventory faster than others. In doing so I found the Dealer that had the fastest turning inventory had an exceptionally bright inventory manager (who ordered and traded "his" inventory. He told me that at times he would stock 50 % of the inventory that was there for simply dealer trading. He had the one ofs, and would extract highly sought after models for the trade. Those hard to get from the factory models subsequently turned the inventory faster. In the GM invoicing model the base model price includes a floor plan assistance credit which funds the flooring of the vehicle for a certain number of days - the number of days changes with the interest rate. If a dealer turns his inventory faster, he in effect turns the floor plan credit (built into the base model price) into an additional revenue stream for the dealership. That revenue stream goes straight to the bottom line with out paying any commission on it. Once I learned how profitable it was and that almost no one looked at it that way, I was ready to run/'buy into a dealership. My senior partner had no children and had become a goof duck hunting friend of mine for 6 years. He had a CPA degree and understood what I had learned. GM accounting called for the floor plan credit to be earned at the time of invoicing. So you could have a very profitable month and yet not had good sales. We changed the recording of the floor plan credit based on when the vehicle sold vs when invoiced. It blew the minds of my fellow dealers in our NADA 20 group. Some stayed simple and some thought it to be enlightening. I had become disillusioned at how the factory intentionally overloaded the dealer body's inventory levels. They incorrectly accounted for the floor plan credits to make getting a lot of shipments to boost profitability, and their wholesale floor plan rates were 1.5 to 2.o full points higher than independent banks that were into floor planning inventory. I then bargained our floorplan rates with Bank One which then it turned into JPM Chase. At that point I was part owner of four dealerships and saved each dealership more than my salary at the store I ran, at each of the other three. I had been given a great opportunity to advance the profitability of 4 stores. It started with the first store which was a debt free dealership. Due to fast growth and excellent profitability, we were sought after by OEM's to buy more dealerships, when a sale became available in our market of responsibility. I had the pleasure of training younger sales people those techniques, as they subsequently became dealers and built good businesses which included my original partner, and then my partial ownership. That was a 25 year effort of growth for me. It was the dream of a lifetime for me. My senior partner, before me had done similar growth of the Mack Truck franchises, which grew to include Volvo and Kenworth. He and another partner put together Performance Trucks. They rougly have those franchises for most of the southern half of Texas. The Chevy Buick store that I originally bought into turned into all franchises excepting Cadillac. When I took it over it was not profitable, and my partners HD truck business was extremely profitable due to logging and the oil patch which was booming. That's a bit of history on my dream come true opportunity. Ramble over <smile> Bob