Volume or Gross?

After a decade in the automotive business, I've heard mixed emotions about which is more important. Now obviously, they both are. What am I talking about? VOLUME or GROSS!

It comes down to 3 philosophies:

Hold as much gross as possible, even if sacrificing volume
Be largest volume dealer, even if sacrificing gross
Do both (which is what we all want)

But, each dealer's philosophy leans towards one side more than the other because it's just not possible to be a mater of both. Or is it?

What are the benefits to each way of doing business, and some of the negatives to watch out for?

How does one dealer change their ways if they're stuck in one of the two ruts?

Which is better at meeting the bottom line at the end of the month?

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Comment by Doug Wilson on February 28, 2011 at 4:41pm: I am a private pilot and there's an old story about the FAA examiner who took the newly minted pilot for his checkride....got in the airplane and told the new pilot...."give me straight and level". To which the pilot responded, "great...which one you want first?"

I think the things you do to increase gross (better demo drives, better product walkarounds, t.o. to mgr, service walk, etc) are the same things you do to increase volume. Like the new pilot...you gotta do BOTH!

Comment by Jodi Cook on February 28, 2011 at 4:11pm: it seems to me that if you do all the steps to the sale, even in today's market, you can still hold gross. If you skip a step, like not going on test drives or a good walk around the car to show the customer all the benefits and value, in my experience it will be much harder to close them and hold gross.

Comment by gene diehm on February 28, 2011 at 4:00pm: Man thats like Ginger or Mary Anne ? if you cant get both, then either one will work!

Comment by David Simpson on February 28, 2011 at 3:56pm: Work for gross, work for gross, work for gross...SELL THE FREAKIN' CAR!

We can get more cars, we can't get more customers! Earn it, ask for it, defend it, ask for it again but don't miss the opportunity to deliver the car. We don't make "car deals" we make "customers".

Comment by NANCY SIMMONS on February 28, 2011 at 3:55pm: While thinking of these two word... volume and gross, two other very important words come to mind...Supply and Demand!

If you are talking about a carline that is selling like hotcakes and you can always get an many as you need to replace the sold unit...then the market will dictate your decision in this...and it will be volume!

If you are talking about a pre-owned unit that you just took in trade..pristene condition, low mileage, one owner...the car is an 11 on a scale of 1-10, then it is gross, and again market will dictate!

So, I tend to lean with Bobby Compton's comment and approach each deal individually as it holds unique conditions only true to that transaction! This is the reason we still require people to move metal and don't have kiosk at every sales station or robotic computers!

Comment by Tom Wadler on February 28, 2011 at 3:42pm: Bottom line is.....get all the money you can...but..."DON'T MISS A DEAL!!!!"

Comment by Abe Hopper on February 28, 2011 at 3:37pm: James Ziegler programs his Sales Management students with the following mantra: "All the money ... All the time ! "

Comment by Sue Brief on February 28, 2011 at 3:36pm: I agree with Bobby's comment, each deal is different. If a dealer locks themselves in to one way of doing business they are shorting themselves in one way or another. Every customer is different and each factory step program is different. Come to rely on those step programs too much and we forget how to negotiate a real deal. Maybe I am dating myself but I was taught to sell, build value and believe that my time, effort, level of service and professionalism was worth something. I honestly do not understand why a dealer has to choose. Advertise as you will, but look at each opportunity that comes through the door as just that, an opportunity to move a unit and make a few bucks. When we start being afraid to ask for a fair price for the product we sell, we are as responsible as the client for the lack of profit.

Comment by Ben Misra on February 28, 2011 at 3:33pm: It is always gross...volume without gross is a path to destruction.

Very few dealers can pay for the overhead based on volume...no money no store.

Plus with the cost of used cars these days if you buy a $10,000 car its not likely you will get another similiar car to replace it at the same price. Why sell the car short.

Gross profit is temporary NET profit is forever.

Comment by Keith Shetterly on February 28, 2011 at 3:27pm: There's a VW dealer in town that gets the facility money and steps, and so they lose money on a lot of deals to keep the volume. They've been taking business this way for over a year now.

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