As the new year approaches, automotive dealerships face fresh challenges and opportunities. In the latest episode of the LotTalk podcast, Jason Rice of LotPop and Tommy Gibbs of Tommy Gibbs Consulting—two legends in the industry—shared their expertise on bucket management and strategies to grow dealerships heading into the new year. Here’s a closer look at their advice, tips, and strategies that every dealer can benefit from.
What is Bucket Management?
Bucket management revolves around the concept of segmenting inventory based on vehicle age and managing each “bucket” effectively. Both Gibbs and Rice emphasized that bucket management begins on day one—from the moment a car enters inventory. The goal is to prevent vehicles from sitting in inventory too long, as every car has a unique lifecycle. Mismanagement, especially early on, often leads to reduced profitability.
According to Gibbs, “The fallacy in the business is that we treat all used cars the same, but they aren’t the same.” Rice added that age buckets must be tailored, advising dealers to use 15-day increments to monitor inventory more closely. By managing inventory at 15, 30, and 45 days, dealers can better control the flow and avoid aging problems.
The Key to Recon Efficiency
One of the most common hurdles in bucket management is reconditioning efficiency. Many dealers make the mistake of waiting until a car is fully reconned before marketing it. Gibbs strongly advises against this, advocating for posting photos and pricing vehicles as soon as possible.
“Day one is when the meter starts ticking,” Gibbs noted. “The sooner you can get exposure, the better off you’ll be.” Rice echoed this by emphasizing that the goal of reducing recon times is to sell cars faster. “If you shave five days off recon but don’t adjust your sales strategy, you’ve gained nothing,” he said. The entire recon process, therefore, must tie into the dealership’s broader inventory and pricing strategy.
The Role of Aggressive Pricing
One of the toughest lessons for dealers is understanding the impact of early and aggressive pricing. Gibbs explained that dealers often hold onto problematic cars for too long, hoping for a miracle that rarely comes. He noted, “If you can sell a car at 75 days for $500 in gross profit, chances are you could’ve sold it at 25 days for the same $500. Which is better for ROI?”
Rice added that trying to “control gross by managing gross” ends up costing dealerships more in the long run. He stressed the importance of addressing tough decisions early—whether it’s adjusting pricing or accepting a smaller loss on a 30-day-old car instead of letting it age out further. The focus should be on turning inventory faster while maintaining profitability.
Team Integration: The Secret Sauce
Effective bucket management is not just about having the right strategy; it’s about ensuring that the entire dealership team is on the same page. Gibbs emphasized the importance of including all managers, from BDC to service, in training and decision-making. He believes this alignment is essential for creating a seamless operation.
Rice took it a step further by advocating for daily meetings that align sales, service, and BDC teams around the inventory strategy. “Every morning, the team should be asking: where do we need to focus today? Whether it’s on aging trucks or pricing adjustments, giving the team a clear purpose is critical,” he explained.
Leveraging Technology for Success
Another critical component of modern bucket management is utilizing data and technology effectively. Rice highlighted the importance of using metrics such as lead conversion rates and market trends to inform pricing and inventory decisions. He also encouraged dealers to use video to showcase inventory transparently. Whether the vehicle is fresh off a trade or fully reconned, video marketing helps build trust and attract potential buyers.
Takeaways for the New Year
As dealers prepare for 2024, here are the top tips from Gibbs and Rice to implement in your dealership:
1. Start with Strategy on Day One: Develop a tailored plan for each vehicle based on its lifecycle.
2. Speed Up Recon Times: Post photos and pricing immediately to gain exposure and reduce wasted days.
3. Be Aggressive with Pricing: Don’t hold out for miracles—adjust early and sell faster to maximize ROI.
4. Align Your Team: Integrate all departments, including BDC and service, into your inventory management strategy.
5. Use Technology Wisely: Monitor key metrics and adopt tools like video marketing to stand out in the digital dealership space.
By focusing on these principles, dealerships can improve gross profit, reduce aged inventory, and set the stage for sustainable growth in the new year. As Tommy Gibbs reminded listeners, “The most money is made on cars sold in the first 30 days. After that, it’s downhill.” Let’s make 2024 a year of smarter decisions and stronger performance.
For more insights on bucket management and dealership growth strategies, listen to the full LotTalk podcast episode featuring Jason Rice and Tommy Gibbs.
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