Warranties and Extended Service Contracts
By: Lawrence S. Searcy, Jr.
I received an e-mail this week from the Better Business Bureau warning consumers about unsolicited calls from vehicle extended “warranty” companies. These “warranty” companies have attracted attention from congress because of the number of calls received on home and cell phones. Congress is now considering measures to stop calls from computer assisted dialers (“robo-callers”) to consumers hawking these after-market products. Telemarketers are using the automated dialers to pose as manufacturer representatives and contact consumers claiming that the consumer’s manufacturer warranty is about to expire. The call solicits the customer to purchased extended warranty coverage on the vehicle. While the context of these calls is deceptive, purchasing an extended service contract may sometimes be in the consumer’s best interest.
What is an Extended Service Contract?
A warranty and an extended service contract are not the same thing even though the terms are often used interchangeably. Warranties are offered on new products at the time of purchase. Warranties are protected by federal law under the Magnason-Moss Warranty Act. The act, passed in 1975, requires all manufacturers and sellers of new and unused consumer products to provide the consumer with detailed information about warranty coverage. In vehicle sales, every new vehicle sold in the United States has a limited time transferrable warranty that covers mechanical breakdown for a period of miles or years, whichever comes first. The warranty is published in the vehicle’s operating manual and specifically details the items covered and the length of coverage. Most people will be familiar with the standard 3-year / 36,000-mile warranty.
“Extended Service Contracts” are not warranties. They are supplemental coverage to the manufacturer’s factory warranty and can be purchased separately by the consumer. They provide mechanical repair protection for items not covered by the manufacturer’s warranty or for items that fail after the lapse of the manufacturer’s warranty. Extended service contracts are not called warranties because under the law, warranties cannot be sold. For people who will keep their vehicle beyond the coverage period of the new vehicle warranty, an extended service contract will allow the consumer to know their total out of pocket repair expenses through the life of the contract – for example 5 years /100,000 miles.
Who can Purchase an Extended Service Contract?
Extended service contracts can be purchased for new, used and manufacturer certified used vehicles. A consumer may want one for a new vehicle to cover items not normally covered by the manufacturer or to use when the original factory warranty expires. On a used or certified used vehicle, the same may apply. There may be some remaining factory warranty but the consumer wants to be protected for expensive repair costs when the original warranty expires. Extended service plans may even be purchased after you have owned the vehicle but before the expiration of the original warranty. For these types of contracts, the company usually requires that a certified service center inspect the vehicle before the contract can be written to cover the vehicle. The best place to inquire about one of these products is from your local selling dealer. When you purchase from the selling dealer you know that the dealer will honor the program when you bring you vehicle in for service. Further, the dealer is associated with the manufacturers and is the most knowledgeable about the coverage that would best fit your vehicle.
Today’s vehicles have more than 14,000 moving parts, on-board computers, entertainment centers and a host of other amenities. Because of the complex interaction of all of the mechanical and electrical parts, the odds are in favor of something going wrong with a vehicle during the ownership experience. Unfortunately, the average costs of repairs are expensive. For instance, engine repairs can cost as much as $6,000.00 while something as mundane as an air conditioning compressor can cost more than $1,500. Facing these repair costs, many people elect to purchase an extended service contract at the time they purchase their vehicle.
What is Covered?
When considering an extended service contract, it is important that the selling dealer notify you what will or will not be covered. The list of non-covered items should be limited to maintenance items (oil, filters, coolant, and scheduled service), wearable replacement items (battery, shocks, struts, break pads, rotors, etc.), and appearance items (exterior molding, ornamental items, metal, paint, etc.). The price for the contract will vary with the duration in years and mileage and there may be a deductible for each claim. Additionally, the price will increase for diesel engines, four-wheel-drive trucks or high-end foreign vehicles. Each selling dealer should be able to provide a list in advance of the items that will be covered and those that will not and the complete out-of-pocket cost for the contract.
Questions to Ask a Selling Dealer.
A selling dealer should be willing to disclose to you all of the information about the company that backs its extended service products. Ask the dealer how long the dealer has been doing business with the company. Be sure to ask the cost of the product in advance and how much it may increase your monthly payment on the vehicle. Be sure to understand any limitations on the contract and the duration of the coverage. Ask whether the contract is transferable or whether a refund will be issued to you in the event you sell the vehicle before the end of the protection period. If there is a deductible, ask the amount and whether it is a per-claim deductible.
In addition to coverage for repairs, many extended service contracts offer other benefits and features. A 24-hour towing and roadside assistance benefit may be included for a flat tire, dead battery or other emergency. Some products offer replacement car rental during repairs and nationwide acceptance at other dealers in the event you are away from your selling dealer during a mechanical breakdown.
Like most other products, a consumer should beware of unknown and unwanted solicitation by phone or e-mail. Instead, it is best to see your local dealer for extended service products and information. Your dealer can give you specific information about the products that are best suited for your type and age of vehicle and can also offer a range of financing options. In the long-term, extended service contracts can limit your out-of-pocket repair costs and increase the long term value of your vehicle.
Wednesday, May 20, 2009
Wednesday, March 25, 2009
Buy Local
Since the beginning of the recession, economic downturn or whatever you may want to call the current state of the economy, legislative leaders from local governments, statehouses and national politicians have begun touting “Buy Local” campaigns. Even before the economic downturn, cities like Las Vegas and Baltimore were experiencing shrinking tax revenue from on-line sales. In response, large “buy local” campaigns were started to urge local residents to keep tax dollars in the community.
In December 2008 and January 2009 Louisiana Governor Bobby Jindal and Baton Rouge Mayor Kip Holden hit the airwaves to launch buy local campaigns. These public service announcements were possible with free airtime provided by Cox media. Suddenlink Communications and local Alexandria stations teamed up to run ads touting the message that now is a great time to purchase a car. Noticeably absent, however, were any local elected officials leading a buy local movement. I do understand, however, that Alexandria is now launching some type of campaign called “Smartalex” under the direction of Mayor Roy’s community development team.
Why the sudden interest in buy local campaigns? With the downturn in the economy, cities are seeing tax revenue dry up from lost tax dollars generated from sales taxes. Car dealers are major contributors sales tax revenues nationwide simply by virtue of the dollar value of the items they sale. Simply put, car dealers generate millions in tax dollars every year for the state and local communities. In 2007 (the most recent year numbers are available), Louisiana car dealers put up some staggering numbers:
Average Dealership sales: $31.6 Million
Total Sales from New vehicle dealers: $10.6 Billion
Dealership sales as a percent of retail sales: 21%
Total number of new vehicle dealer employees: 18,210
Average number of employees per dealership: 54
Average annual earnings per employee: $43,342
Annual average payroll of dealerships: $2.33 Million
Slow car sales mean decreased tax revenue flowing to the city and local governments from sales tax revenue, corporate tax revenue, and payroll tax revenue.
Studies show that for every dollar spent locally the recirculation rate of that dollar in the community is many times higher than if the dollar is spent in another community. In other words, purchasing outside your community is supporting another’s tax base. Locally, automobile dealers employ several hundred people in sales, administrative jobs, as technicians, and managers. Average salaries at local dealerships are higher than the median wage in other industries. Moreover, local automobile dealers give generously to local charities. When local citizens go out of town to purchase automobiles, local tax revenue dries up, employment opportunities at dealerships shrink, wages go down and charitable contributions shrink.
Why is this important now? As you drive around the city look at the advertising license plates on the front and back of your friends and neighbors vehicles. Then look at your local politicians – police jurors, mayors, city council members, and school board members. Look also at your local business leaders – real estate agents, local shop owners, entrepreneurs, and corporate executives. What do you see? Are they are driving a car that they purchased out of town or from a local dealer? If from out of town, calculate the dollar impact this has on your community. How many direct and indirect jobs are affected by a single automobile purchase outside the community?
According to Donna Andries at the Rapides Parish Sales Tax office, tax revenues in 2007 from motor vehicles sales totaled $10,122,639. That number decreased 10% in 2008 to $9,051,975. Automobile sales in the Alexandria area year to date 2009 from 2008 are down 31.5% for domestic cars, 28.6% for import cars and 32.6% for trucks. Of course, a decrease in sales in 2009 is expected. However, the impact locally can be drastically reduced if those people who are going to buy this year do so locally instead of out of town.
On Tuesday, March 24, 2009 the Alexandria City Council debated a measure to use surplus funds to balance the budget for this fiscal year. Councilman Chuck Fowler noted that the reason for the buildup in the surplus was because of the increased tax revenue over the last several years. Councilman Fowler then specifically noted that usually sales taxes would increase, but this year an increase is unlikely specifically due to the decline in new car sales. This may mean decreased funding from the city for Mardi Gras, Downtown Rocks, the Alexandria Zoo, Art Walk and other discretionary programs that make our community unique.
Alexandria needs a buy local campaign and it needs it now. All of our public officials need to get behind the movement and support all of our local retailers regardless of size. Simply put, support you local business, their employees, and the charities that they support. Support those people and politicians in your community who buy local and keep tax dollars in the community to pay for the services we need and enjoy.
In December 2008 and January 2009 Louisiana Governor Bobby Jindal and Baton Rouge Mayor Kip Holden hit the airwaves to launch buy local campaigns. These public service announcements were possible with free airtime provided by Cox media. Suddenlink Communications and local Alexandria stations teamed up to run ads touting the message that now is a great time to purchase a car. Noticeably absent, however, were any local elected officials leading a buy local movement. I do understand, however, that Alexandria is now launching some type of campaign called “Smartalex” under the direction of Mayor Roy’s community development team.
Why the sudden interest in buy local campaigns? With the downturn in the economy, cities are seeing tax revenue dry up from lost tax dollars generated from sales taxes. Car dealers are major contributors sales tax revenues nationwide simply by virtue of the dollar value of the items they sale. Simply put, car dealers generate millions in tax dollars every year for the state and local communities. In 2007 (the most recent year numbers are available), Louisiana car dealers put up some staggering numbers:
Average Dealership sales: $31.6 Million
Total Sales from New vehicle dealers: $10.6 Billion
Dealership sales as a percent of retail sales: 21%
Total number of new vehicle dealer employees: 18,210
Average number of employees per dealership: 54
Average annual earnings per employee: $43,342
Annual average payroll of dealerships: $2.33 Million
Slow car sales mean decreased tax revenue flowing to the city and local governments from sales tax revenue, corporate tax revenue, and payroll tax revenue.
Studies show that for every dollar spent locally the recirculation rate of that dollar in the community is many times higher than if the dollar is spent in another community. In other words, purchasing outside your community is supporting another’s tax base. Locally, automobile dealers employ several hundred people in sales, administrative jobs, as technicians, and managers. Average salaries at local dealerships are higher than the median wage in other industries. Moreover, local automobile dealers give generously to local charities. When local citizens go out of town to purchase automobiles, local tax revenue dries up, employment opportunities at dealerships shrink, wages go down and charitable contributions shrink.
Why is this important now? As you drive around the city look at the advertising license plates on the front and back of your friends and neighbors vehicles. Then look at your local politicians – police jurors, mayors, city council members, and school board members. Look also at your local business leaders – real estate agents, local shop owners, entrepreneurs, and corporate executives. What do you see? Are they are driving a car that they purchased out of town or from a local dealer? If from out of town, calculate the dollar impact this has on your community. How many direct and indirect jobs are affected by a single automobile purchase outside the community?
According to Donna Andries at the Rapides Parish Sales Tax office, tax revenues in 2007 from motor vehicles sales totaled $10,122,639. That number decreased 10% in 2008 to $9,051,975. Automobile sales in the Alexandria area year to date 2009 from 2008 are down 31.5% for domestic cars, 28.6% for import cars and 32.6% for trucks. Of course, a decrease in sales in 2009 is expected. However, the impact locally can be drastically reduced if those people who are going to buy this year do so locally instead of out of town.
On Tuesday, March 24, 2009 the Alexandria City Council debated a measure to use surplus funds to balance the budget for this fiscal year. Councilman Chuck Fowler noted that the reason for the buildup in the surplus was because of the increased tax revenue over the last several years. Councilman Fowler then specifically noted that usually sales taxes would increase, but this year an increase is unlikely specifically due to the decline in new car sales. This may mean decreased funding from the city for Mardi Gras, Downtown Rocks, the Alexandria Zoo, Art Walk and other discretionary programs that make our community unique.
Alexandria needs a buy local campaign and it needs it now. All of our public officials need to get behind the movement and support all of our local retailers regardless of size. Simply put, support you local business, their employees, and the charities that they support. Support those people and politicians in your community who buy local and keep tax dollars in the community to pay for the services we need and enjoy.
Wednesday, March 18, 2009
Walker is 90 - Happy Birthday
WALKER AUTOMOTIVE CELEBRATES 90 YEARS
IN CENTRAL LOUISIANA
By: Lawrence S. Searcy, Jr.
March 2009 represents a milestone for Walker Automotive as the local car dealership celebrates its 90th birthday. Walker was founded in 1919 as Alexandria Auto Company, Inc. by Foster Walker Sr. After returning from World War I, Foster Walker Sr. began selling Durant, Reo and Star automobiles from a gas station in Downtown Alexandria. That business eventually became Walker Oldsmobile Company and is now run by Foster Walker III. Ninety years after its inception the dealership has expanded from its meager origins to three locations, 8 manufacturers, three service departments and a collision center. Over the last 9 decades, Walker has won numerous national and factory awards for all aspects of its business and offers new and pre-owned vehicles ranging from quality entry level models to German luxury vehicles.
“We are committed to honesty and integrity in every facet of our business and it is this philosophy that has earned our company an outstanding reputation and longevity,” said Foster Walker III, President of Walker Automotive. Mr. Walker emphasized that as a fourth generation family company, Walker Automotive always tries to do what is in the best interest of its customers. “Our customers make it possible for us to be and stay in business and we realize that customer loyalty is the key to generations of success. We believe that we are rewarded for our efforts by the vast majority of our customers who are repeat and lifetime buyers.”
While the physical locations have changed the Walker business model has remained the same. “We celebrate this month with our 90th birthday and thank all of our customers, employees and friends who have made it possible for our company to be so successful,” Walker said. Various events celebrating the birthday are scheduled throughout the month of March.
IN CENTRAL LOUISIANA
By: Lawrence S. Searcy, Jr.
March 2009 represents a milestone for Walker Automotive as the local car dealership celebrates its 90th birthday. Walker was founded in 1919 as Alexandria Auto Company, Inc. by Foster Walker Sr. After returning from World War I, Foster Walker Sr. began selling Durant, Reo and Star automobiles from a gas station in Downtown Alexandria. That business eventually became Walker Oldsmobile Company and is now run by Foster Walker III. Ninety years after its inception the dealership has expanded from its meager origins to three locations, 8 manufacturers, three service departments and a collision center. Over the last 9 decades, Walker has won numerous national and factory awards for all aspects of its business and offers new and pre-owned vehicles ranging from quality entry level models to German luxury vehicles.
“We are committed to honesty and integrity in every facet of our business and it is this philosophy that has earned our company an outstanding reputation and longevity,” said Foster Walker III, President of Walker Automotive. Mr. Walker emphasized that as a fourth generation family company, Walker Automotive always tries to do what is in the best interest of its customers. “Our customers make it possible for us to be and stay in business and we realize that customer loyalty is the key to generations of success. We believe that we are rewarded for our efforts by the vast majority of our customers who are repeat and lifetime buyers.”
While the physical locations have changed the Walker business model has remained the same. “We celebrate this month with our 90th birthday and thank all of our customers, employees and friends who have made it possible for our company to be so successful,” Walker said. Various events celebrating the birthday are scheduled throughout the month of March.
Tuesday, March 17, 2009
Employee Free Choice Act - Really?
The Employee Free Choice Act – What Is It?
Again this year, the United States Congress is considering legislation to make it easier for union organization. The Employee Free Choice Act, (“EFCA”) amends the National Labor Relations Act “to establish an efficient system to enable employees to form, join, or assist labor organizations, to provide for mandatory injunctions for unfair labor practices during organizing efforts, and for other purposes.”(H.R. 1409) Any small business owner (or manager), regardless of the number of employees, needs to educate themselves on the potential impact of this legislation.
Again this year, the United States Congress is considering legislation to make it easier for union organization. The Employee Free Choice Act, (“EFCA”) amends the National Labor Relations Act “to establish an efficient system to enable employees to form, join, or assist labor organizations, to provide for mandatory injunctions for unfair labor practices during organizing efforts, and for other purposes.”(H.R. 1409) Any small business owner (or manager), regardless of the number of employees, needs to educate themselves on the potential impact of this legislation.
Over the last 50 years the impact of labor unions has been decreasing. In the 1950’s union membership hovered around 35%. That number has decreased to around 7.5% today. The membership decline is attributable, in part, to the number of federal laws that have been passed to protect workers from the abusive practices that once existed in the workplace. There are hundreds of federal and state laws that protect consumers, employees, and part-time workers. In the automobile sector there are no less than eighty-six federal regulations that apply to retail automobile franchises and repair shops.
In an effort to bolster union membership, organized labor is fighting very hard for the EFCA. In a nutshell, the EFCA changes the current law in three ways: (1) Recognition, (2) Negotiations, and (3) Penalties.
Recognition: The current law requires that employees sign union cards indicating their support for an organized union and then petition with the National Labor Relations Board to form a union. Both the employer and the union organizers then campaign for a period of 30 days either for or against the union. After 30 days, the NLRB supervises a secret ballot election and, if the union passes, then the company must recognize the union as the bargaining entity for the employees. The EFCA would essentially cancel the right of companies to campaign against the union. Instead, once the union has 50% of the cards signed, the company would have to recognize the union. No secret ballot. The fear is that employees would be pressured by the union to sign the card and any secret vote against a union would be lost.
Negotiations: Current law allows the parties to bargain for contracts in “good faith” and until a contract is reached the parties continue to work under the status quo. A contract is reached only when both parties agree to the terms. The amendment to the law would change this procedure. Instead, if a contract is not reached in 90 days the contract is sent to mediation (non-binding arm twisting). If after 30 days of mediation a contract is not reached then the matter goes to binding arbitration. The arbitrator will set the terms of the contract which will be in effect for two years. Here, the fear is that the terms may be so onerous that the company would be unable to meet the contract terms without serious alterations to the work environment.
Penalties: Under the new law the penalties are only enhanced for company violations not for union violations. Back pay awards are increased three times and fines could reach up to $20,000 per employer violation. Shouldn’t any change in penalties be reciprocal?
The law can be easily researched on the internet or by going to the Library of Congress’ web site http://thomas.loc.gov/.
Thursday, February 19, 2009
Surviival
Surviving a Recession
A recession, depression or any other down turn in business requires a leader to look introspectively at their business and determine the best way to move forward. Sometimes, a business simply cannot make it through tough times. Most, however, can survive. And with hard work and a well thought-out strategy, most will emerge stronger.
First, restructure immediately to meet the demands that exist today – not under your old business model. Take a good hard look at everything in your business and shed the items that are not completely necessary. In household budgets, families talk in terms of food, water and shelter to survive. Take care of those items first and lose everything else. The same is true in business. Don’t wait to see what happens tomorrow because tomorrow is too late. Start making changes and restructure your business model now. Scour your financial data and determine what vendors you can cut and which ones might offer you a discount to keep your business. A full day examination at your financials will reveal expenses that you had long forgotten about and may not be necessary anymore.
Second, bring all of you leaders together and develop a single action plan for all departments. The plan must set achievable goals and a realistic timeline for completion. Force all of your people to acknowledge hurdles and develop a plan to overcome all of the hurdles. Every department should find expenses that can be cut. Trimming expenses is the easiest way to increase your net profit or shrink your loss.
Third, own all of your processes. As a leader you have to be the single person in charge and delegate to your people. Keep your managers accountable and ensure that they stay on target with the timeline of progress. Hold daily or weekly updates to measure accomplishments. Don’t let anyone off the hook. The other managers are watching how everyone is kept on task. A single forgiving moment can allow chaos in the process.
Identify the key players. Every organization has key employees of every pay grade. Every organization also has a host of unproductive employees that take but don’t give back. Shed the employees who don’t help you or who hurt morale with negativity. Watch your key employees because every competitor is coming after your most productive employees.
Consistently communicate with employees. Employees smell fear and market conditions make all personnel afraid of losing their job. As a leader it is your responsibility to remind employee that while times are tough their jobs are secure. Ask them for input on cost saving measures and they, in turn, will own the process of a turn-around with you. Don’t lie to the employees. Be honest and they will respect you for that and help you emerge as a stronger company.
Communicate with customers. Customer service and customer retention become primary goals. Get out and meet with your customers and assure them that you can still provide the same high quality product and service. Remain enthusiastic and optimistic in front of all of your customers. Be honest but positive. Don’t give your customers a reason to buy elsewhere. Poor quality and bad customer service is the only excuse a customer needs to move their business to the guy down the street.
Don’t lose sight of the original vision that the company had when it started. Continue to set sales goals and mandate that your employees meet them. Goals may have to be scaled back but they should still be met.
Work every day. Entrepreneurs have no days off.
A recession, depression or any other down turn in business requires a leader to look introspectively at their business and determine the best way to move forward. Sometimes, a business simply cannot make it through tough times. Most, however, can survive. And with hard work and a well thought-out strategy, most will emerge stronger.
First, restructure immediately to meet the demands that exist today – not under your old business model. Take a good hard look at everything in your business and shed the items that are not completely necessary. In household budgets, families talk in terms of food, water and shelter to survive. Take care of those items first and lose everything else. The same is true in business. Don’t wait to see what happens tomorrow because tomorrow is too late. Start making changes and restructure your business model now. Scour your financial data and determine what vendors you can cut and which ones might offer you a discount to keep your business. A full day examination at your financials will reveal expenses that you had long forgotten about and may not be necessary anymore.
Second, bring all of you leaders together and develop a single action plan for all departments. The plan must set achievable goals and a realistic timeline for completion. Force all of your people to acknowledge hurdles and develop a plan to overcome all of the hurdles. Every department should find expenses that can be cut. Trimming expenses is the easiest way to increase your net profit or shrink your loss.
Third, own all of your processes. As a leader you have to be the single person in charge and delegate to your people. Keep your managers accountable and ensure that they stay on target with the timeline of progress. Hold daily or weekly updates to measure accomplishments. Don’t let anyone off the hook. The other managers are watching how everyone is kept on task. A single forgiving moment can allow chaos in the process.
Identify the key players. Every organization has key employees of every pay grade. Every organization also has a host of unproductive employees that take but don’t give back. Shed the employees who don’t help you or who hurt morale with negativity. Watch your key employees because every competitor is coming after your most productive employees.
Consistently communicate with employees. Employees smell fear and market conditions make all personnel afraid of losing their job. As a leader it is your responsibility to remind employee that while times are tough their jobs are secure. Ask them for input on cost saving measures and they, in turn, will own the process of a turn-around with you. Don’t lie to the employees. Be honest and they will respect you for that and help you emerge as a stronger company.
Communicate with customers. Customer service and customer retention become primary goals. Get out and meet with your customers and assure them that you can still provide the same high quality product and service. Remain enthusiastic and optimistic in front of all of your customers. Be honest but positive. Don’t give your customers a reason to buy elsewhere. Poor quality and bad customer service is the only excuse a customer needs to move their business to the guy down the street.
Don’t lose sight of the original vision that the company had when it started. Continue to set sales goals and mandate that your employees meet them. Goals may have to be scaled back but they should still be met.
Work every day. Entrepreneurs have no days off.
Thursday, February 5, 2009
Back to Basics
In a sales meeting the other day, the General Manager mentioned that “in good times people develop bad habits and in bad times people develop good habits.” Succinctly said, the key to success in today’s environment is nurturing good habits by going back to basics. I am fully aware that this is what every success coach is preaching right now. You cannot pick up a single article in any business magazine without getting bombarded with advice on how to get back to basics, or develop winning habits, or stay positive. The reason these messages are out there is because they are true.
If you don’t know already, these are some good habits to go back to.
Focus on Customer Service. Every customer is much more important now than they were a year ago. Selling was easy over the past few years. In 2006 thru 2008 customers were employed and flush with cash. Banks were giving money to anyone who was breathing and negative equity was not even a hiccup on the way to purchasing a new car. Now customers have to be cultivated and a salesman cannot let a customer walk without pulling out all of the stops.
Spend time with every customer and answer all of their questions. Listen – don’t talk. Talk after you are done listening and when the customer is done speaking. Be professional. Know your product better than anyone else that sells your product and know your competitor’s product better than they do. If you don’t, you can’t answer the customer’s comparison questions and objections.
Demonstrate the product. Train yourself to do the same demonstration every time. When sales are slow, do online training or train with other sales staff. Imagine if you were buying a car. What are the items you would like to see demonstrated? Now turn that around. What items would your spouse like to see demonstrated? What about your kids? Imagine all of that and then demonstrate them all.
Prospect. People are still buying and it is the sales staff’s job to find those people that want to buy. Call on cars for sale by owner on the side of the road or call on car ads out of the newspaper. If just one is tired of trying to sell their car by owner maybe you have a deal. Hand out your business card to everyone you meet. Wear your uniform and name tag everywhere. Customers will ask you about vehicles while waiting in line at the movies. Give them a card and set up an appointment right there. Tell everyone what you do for a living and ask if they know anyone looking for a car.
Maintain an healthy lifestyle. This means both physically and mentally. Physically, you should exercise a few times a week. Exercise is as simple as taking the stairs or walking to lunch down the block instead of driving. Mentally stay sharp by doing product training or reading. Every morning should start with reading the news on line or in a paper. Get away from negative people and surround yourself with positive people.
Advertise yourself and your business. There may not be a lot of money to advertise but there are many free ways to get the word out about what you do. Send e-mails and ask that they be forwarded. Call old friends. Connect on Facebook. Write a blog. Whatever you decide you have to get the word out about what you do every day.
Measure your results. How will you know where you are going if you do not know where you have been. How many people did you meet today? How many prospect calls did you make? Did you miss a sale? Why? If you measure all of these things and more your skills will improve as you become more proficient in the way you approach your job. Remember to hone your good habits.
I can guarantee you that others in your business are sitting at their desks all day every day saying “this sucks. There are no customers. I can’t make a living doing this.” How hard will it be for you to compete against those people if you are doing all of the things mentioned above? Your day will fly by, customers will flock to you and you will sell more cars.
If you don’t know already, these are some good habits to go back to.
Focus on Customer Service. Every customer is much more important now than they were a year ago. Selling was easy over the past few years. In 2006 thru 2008 customers were employed and flush with cash. Banks were giving money to anyone who was breathing and negative equity was not even a hiccup on the way to purchasing a new car. Now customers have to be cultivated and a salesman cannot let a customer walk without pulling out all of the stops.
Spend time with every customer and answer all of their questions. Listen – don’t talk. Talk after you are done listening and when the customer is done speaking. Be professional. Know your product better than anyone else that sells your product and know your competitor’s product better than they do. If you don’t, you can’t answer the customer’s comparison questions and objections.
Demonstrate the product. Train yourself to do the same demonstration every time. When sales are slow, do online training or train with other sales staff. Imagine if you were buying a car. What are the items you would like to see demonstrated? Now turn that around. What items would your spouse like to see demonstrated? What about your kids? Imagine all of that and then demonstrate them all.
Prospect. People are still buying and it is the sales staff’s job to find those people that want to buy. Call on cars for sale by owner on the side of the road or call on car ads out of the newspaper. If just one is tired of trying to sell their car by owner maybe you have a deal. Hand out your business card to everyone you meet. Wear your uniform and name tag everywhere. Customers will ask you about vehicles while waiting in line at the movies. Give them a card and set up an appointment right there. Tell everyone what you do for a living and ask if they know anyone looking for a car.
Maintain an healthy lifestyle. This means both physically and mentally. Physically, you should exercise a few times a week. Exercise is as simple as taking the stairs or walking to lunch down the block instead of driving. Mentally stay sharp by doing product training or reading. Every morning should start with reading the news on line or in a paper. Get away from negative people and surround yourself with positive people.
Advertise yourself and your business. There may not be a lot of money to advertise but there are many free ways to get the word out about what you do. Send e-mails and ask that they be forwarded. Call old friends. Connect on Facebook. Write a blog. Whatever you decide you have to get the word out about what you do every day.
Measure your results. How will you know where you are going if you do not know where you have been. How many people did you meet today? How many prospect calls did you make? Did you miss a sale? Why? If you measure all of these things and more your skills will improve as you become more proficient in the way you approach your job. Remember to hone your good habits.
I can guarantee you that others in your business are sitting at their desks all day every day saying “this sucks. There are no customers. I can’t make a living doing this.” How hard will it be for you to compete against those people if you are doing all of the things mentioned above? Your day will fly by, customers will flock to you and you will sell more cars.
Wednesday, February 4, 2009
Tax Break for Buying a Car - A Great Idea
On Tuesday, February 3, 2009 the United States Senate overwhelmingly approved a broader stimulus package which includes help for consumers who want to buy a vehicle. The passage of the amendment would make interest and sales taxes deductible on federal income tax returns for vehicle purchases made this year. The National Automobile Dealers Association says that a consumer will save approximately $1,500 for a $25,000 vehicle.
The measure is clearly intended to jumpstart automobile sales. Why is that important to the overall economy? One only needs to look at the impact of automobile sales and the revenue generated for states and local economies from sales taxes. In Rapides Parish alone, sales of new and used vehicles (i.e. anything with a title) generated more than $29 million in sales tax revenue to the parish over the last three years. While the sales taxes would be deductible, the measure would not affect the amount of taxes collected by the state or the community. Instead, additional sales generated by the incentive of having the interest and sales taxes deducted for the year would spur more sales. More sales, of course, mean more revenue for the parish.
Take the dollar amounts collected in Rapides Parish and multiply that over Louisiana’s 64 parishes and the total impact of automobile sales on the state’s economy is readily apparent. Multiply that number again by the total number of counties and states across the United States and the revenue collected is staggering.
Rapides Parish alone saw a 10% drop in sales tax revenue from 2007 to 2008. Sales tax revenue is expected to decline even farther in 2009 because total vehicle sales in the state are expected to decrease dramatically from 2008 and even more drastically from 2007. Experts expect that nationwide sales will be at their lowest since 1981. In 2007, sales nationwide were north of 15 million. In 2008 they dropped to below 12 million. Every manufacturer and retailers has seen sales decrease. More than 1,200 franchised dealerships closed their doors in 2008 and the estimate for 2009 is even more dealerships will vanish.
The fall in sales, dealerships and employment in the automobile sector has a direct and proportional impact on states, parishes (counties) and local governments. Without automobile sales’ tax revenue governments are forced to cut services. Stimulating automobile sales directly places sales tax revenue into local government coffers which, in turn, allows them to hire employees and continue servicing its constituents.
In 2007 (the most recent year data was available) Louisiana automobile dealerships employed more than 18,000 workers with an annual payroll of $785 million. The average dealership employee earned $43,342 per year among the 337 new vehicle dealers. These numbers do not include non-franchised dealers, boat dealers, ATV dealers or non-franchised repair facilities. However, the tax incentive currently attached to the Senate bill will stimulate sales, increase tax revenue, allow employees currently employed by dealerships to keep their positions and drive the economy. Contact your local legislator and express your support of the Senate Bill so that it may be carried back into the House version when it is amended.
The measure is clearly intended to jumpstart automobile sales. Why is that important to the overall economy? One only needs to look at the impact of automobile sales and the revenue generated for states and local economies from sales taxes. In Rapides Parish alone, sales of new and used vehicles (i.e. anything with a title) generated more than $29 million in sales tax revenue to the parish over the last three years. While the sales taxes would be deductible, the measure would not affect the amount of taxes collected by the state or the community. Instead, additional sales generated by the incentive of having the interest and sales taxes deducted for the year would spur more sales. More sales, of course, mean more revenue for the parish.
Take the dollar amounts collected in Rapides Parish and multiply that over Louisiana’s 64 parishes and the total impact of automobile sales on the state’s economy is readily apparent. Multiply that number again by the total number of counties and states across the United States and the revenue collected is staggering.
Rapides Parish alone saw a 10% drop in sales tax revenue from 2007 to 2008. Sales tax revenue is expected to decline even farther in 2009 because total vehicle sales in the state are expected to decrease dramatically from 2008 and even more drastically from 2007. Experts expect that nationwide sales will be at their lowest since 1981. In 2007, sales nationwide were north of 15 million. In 2008 they dropped to below 12 million. Every manufacturer and retailers has seen sales decrease. More than 1,200 franchised dealerships closed their doors in 2008 and the estimate for 2009 is even more dealerships will vanish.
The fall in sales, dealerships and employment in the automobile sector has a direct and proportional impact on states, parishes (counties) and local governments. Without automobile sales’ tax revenue governments are forced to cut services. Stimulating automobile sales directly places sales tax revenue into local government coffers which, in turn, allows them to hire employees and continue servicing its constituents.
In 2007 (the most recent year data was available) Louisiana automobile dealerships employed more than 18,000 workers with an annual payroll of $785 million. The average dealership employee earned $43,342 per year among the 337 new vehicle dealers. These numbers do not include non-franchised dealers, boat dealers, ATV dealers or non-franchised repair facilities. However, the tax incentive currently attached to the Senate bill will stimulate sales, increase tax revenue, allow employees currently employed by dealerships to keep their positions and drive the economy. Contact your local legislator and express your support of the Senate Bill so that it may be carried back into the House version when it is amended.
Monday, February 2, 2009
Secret Ballot
Many Americans would be surprised to know that the right to cast a secret ballot in a national election is not found in the Constitution. Instead it was a method adopted from the Australian system. All states now have provisions in their Constitutions allowing for secret ballots and as such it has become an important way for Americans to choose their federal, state and local leaders. If you ask any American, you are sure to get the refrain that a secret ballot “is the American way.” The purpose was initially adopted to ensure the voter casts a sincere choice by forestalling attempts to influence the voter by intimidation or bribery. Such has been the case since Grover Cleveland was the first American President to be elected by secret ballot in 1892.
Since that date the confidential ballot has been used in everything from voting for grade school student council members to organizing labor unions. The right has always been available to go behind a curtain and cast a vote without threats or intimidation. Fast forward a 100 years and small business community is faced with federal provisions that would allow unions to organize without the benefit of secret elections.
How is this possible? Look at the misnamed Employee Free Choice Act. The bill would amend the National Labor Relations Act to allow employees who work for small businesses (whose gross sales exceed $500,000) to organize a labor union without a secret election. Here is how it works. Currently, a union can be organized if 30% of the employees sign a statement requesting a union. Then a secret vote is held and it must pass by a 50% majority. The EFCA, originally co-sponsored by President Obama, would only require 50% of the employees to sign cards (“card check”) expressing an intent to be unionized and there is no need for a vote or a secret ballot. A retail business only needs to sell $500,000 in gross sales per year and there is no employee minimum number of employees to be affected. With these requirements, almost every car dealer in the nation would be subjected to these rules. A unionized shop would increase costs, restrain productivity, and imperil competitive advantages over non-union shops.
What makes this so important is that the same measure almost passed in 2007. The house passed the Card Check provision but it died in the Senate. With the senate majority solidly in favor of the democrats this issue is sure to rear its head again. Organized labor has seen their ranks decline steadily over the years and they see Card Check as a way to get businesses to organize that might not do so under a secret ballot. In fact, in speeches to labor groups President Obama has promised to push the card check measure.
The intent of the secret ballot in the 1890’s was to prevent intimidation and bribery and a secret ballot for union elections does just that. Imagine a scenario where a union organizer can present a worker with a card to form a union and the worker has no secret alternative to vote against it.
Historically, there was a time for the unions and there is no doubt that organized labor led a great revolution for workers rights. The problem in the automotive industry, especially the American Auto industry, is that the unions have essentially bankrupted the industry. Even as the big three were receiving bailout money before Christmas 2008, they paid hundreds of millions of dollars to retirees as year end bonuses (not current employees, but retirees). At the same time, they were all paying workers at their “job banks” where union members are paid not to work. Moreover, workers continue to receive full benefits with no deductible insurance, antiquated work hours, and pay plans that cannot be supported in today’s economy. Why not let the free market prevail? Instead of unions the competitive advantage should be decided by the laws of Charles Darwin. Good employees who work hard will earn a top wage because they generate that much revenue for the company. Those employees who do not produce will fall to the bottom and be asked to seek employment elsewhere. There should be no requirement that employers keep unproductive employees. If however, a group of employees wants to unionize then put the matter to a vote in the same manner we have been handling elections since the election of Grover Cleveland – the secret ballot.
Call you congressman and senator and urge them to vote AGAINST “card Check.”
Since that date the confidential ballot has been used in everything from voting for grade school student council members to organizing labor unions. The right has always been available to go behind a curtain and cast a vote without threats or intimidation. Fast forward a 100 years and small business community is faced with federal provisions that would allow unions to organize without the benefit of secret elections.
How is this possible? Look at the misnamed Employee Free Choice Act. The bill would amend the National Labor Relations Act to allow employees who work for small businesses (whose gross sales exceed $500,000) to organize a labor union without a secret election. Here is how it works. Currently, a union can be organized if 30% of the employees sign a statement requesting a union. Then a secret vote is held and it must pass by a 50% majority. The EFCA, originally co-sponsored by President Obama, would only require 50% of the employees to sign cards (“card check”) expressing an intent to be unionized and there is no need for a vote or a secret ballot. A retail business only needs to sell $500,000 in gross sales per year and there is no employee minimum number of employees to be affected. With these requirements, almost every car dealer in the nation would be subjected to these rules. A unionized shop would increase costs, restrain productivity, and imperil competitive advantages over non-union shops.
What makes this so important is that the same measure almost passed in 2007. The house passed the Card Check provision but it died in the Senate. With the senate majority solidly in favor of the democrats this issue is sure to rear its head again. Organized labor has seen their ranks decline steadily over the years and they see Card Check as a way to get businesses to organize that might not do so under a secret ballot. In fact, in speeches to labor groups President Obama has promised to push the card check measure.
The intent of the secret ballot in the 1890’s was to prevent intimidation and bribery and a secret ballot for union elections does just that. Imagine a scenario where a union organizer can present a worker with a card to form a union and the worker has no secret alternative to vote against it.
Historically, there was a time for the unions and there is no doubt that organized labor led a great revolution for workers rights. The problem in the automotive industry, especially the American Auto industry, is that the unions have essentially bankrupted the industry. Even as the big three were receiving bailout money before Christmas 2008, they paid hundreds of millions of dollars to retirees as year end bonuses (not current employees, but retirees). At the same time, they were all paying workers at their “job banks” where union members are paid not to work. Moreover, workers continue to receive full benefits with no deductible insurance, antiquated work hours, and pay plans that cannot be supported in today’s economy. Why not let the free market prevail? Instead of unions the competitive advantage should be decided by the laws of Charles Darwin. Good employees who work hard will earn a top wage because they generate that much revenue for the company. Those employees who do not produce will fall to the bottom and be asked to seek employment elsewhere. There should be no requirement that employers keep unproductive employees. If however, a group of employees wants to unionize then put the matter to a vote in the same manner we have been handling elections since the election of Grover Cleveland – the secret ballot.
Call you congressman and senator and urge them to vote AGAINST “card Check.”
Thursday, January 29, 2009
NADA in New Orleans
I just returned from New Orleans and the National Automobile Dealers Association’s national convention. Like most of the attendees the first thing that stuck out was the lack of people. This is usually a convention with tens of thousands of participants, vendors, and guests. Like all businesses, car dealers have been hit hard by the recession and conventions are simply not in the budget for most.
All, however, was not lost. Those who did attend were able to look through the vendor’s booths with ease and attend workshops that we all hope will help increase our business. I know that Walker Automotive sent four managers with great expense simply to give each manager an opportunity to bring one nugget of information back to the dealership that would increase the bottom line. The expense was justified if each of us attending was able to bring back a single idea that improved our business.
From my perspective, that one nugget was some perspective on advertising. Anyone who watches the car business knows that we spend considerable amounts of money on advertising. Imagine the cost of T.V., Radio, billboards and newspaper ads every week. Add on top of that the amounts we spend on yearbooks, youth basketball and soccer, stadium billboards at little league and you begin to get the picture. The traditional media has always been the way we advertised – until recently.
Sure, you still see Walker Automotive in those traditional places but you also see Walkerautomotive.com prominently displayed along with the traditional ads. And what was surprising about this year’s NADA convention was that not one single traditional media company was there vying for our business. With all of the billions of dollars car dealers, manufacturers and suppliers have paid over the years, the biggest traditional media outlets like Cox, Lamar, Gannett, Clear Channel Communications were all absent. NADA in New Orleans was the one place where they had the opportunity to re-engage the car dealers and sell us on the benefits of traditional advertising. So what did they do? As an industry they decided to boycott. Amazing and stupid all at the same time.
What it proves to me is that our decision to shift advertising dollars to the internet was the correct decision. Like most businesses, we started with a simple toe in the water approach and a basic web site. Over the years our approach is getting more sophisticated and we buy leads, optimization, and use search engine marketing. I, for one, have touted the cost benefits of online advertising over traditional media for a while. The cost is less, it is measurable, and it allows you to instantly contact the prospect. So what did NADA prove to me? That just as I have given up on traditional media, they too, have given up on me.
All, however, was not lost. Those who did attend were able to look through the vendor’s booths with ease and attend workshops that we all hope will help increase our business. I know that Walker Automotive sent four managers with great expense simply to give each manager an opportunity to bring one nugget of information back to the dealership that would increase the bottom line. The expense was justified if each of us attending was able to bring back a single idea that improved our business.
From my perspective, that one nugget was some perspective on advertising. Anyone who watches the car business knows that we spend considerable amounts of money on advertising. Imagine the cost of T.V., Radio, billboards and newspaper ads every week. Add on top of that the amounts we spend on yearbooks, youth basketball and soccer, stadium billboards at little league and you begin to get the picture. The traditional media has always been the way we advertised – until recently.
Sure, you still see Walker Automotive in those traditional places but you also see Walkerautomotive.com prominently displayed along with the traditional ads. And what was surprising about this year’s NADA convention was that not one single traditional media company was there vying for our business. With all of the billions of dollars car dealers, manufacturers and suppliers have paid over the years, the biggest traditional media outlets like Cox, Lamar, Gannett, Clear Channel Communications were all absent. NADA in New Orleans was the one place where they had the opportunity to re-engage the car dealers and sell us on the benefits of traditional advertising. So what did they do? As an industry they decided to boycott. Amazing and stupid all at the same time.
What it proves to me is that our decision to shift advertising dollars to the internet was the correct decision. Like most businesses, we started with a simple toe in the water approach and a basic web site. Over the years our approach is getting more sophisticated and we buy leads, optimization, and use search engine marketing. I, for one, have touted the cost benefits of online advertising over traditional media for a while. The cost is less, it is measurable, and it allows you to instantly contact the prospect. So what did NADA prove to me? That just as I have given up on traditional media, they too, have given up on me.
Thursday, January 15, 2009
As one of the biggest manufacturing and retailing sectors in the U.S. economy, the automobile industry is clearly a top choice for stimulus plans aimed at reviving the economy. Two of the proposals being considered:
1. Tax breaks for consumers who buy new vehicles and/or fuel-efficient hybrids. The desired incentives would be a combination of new incentives and extensions of credits already in the tax code. One proposal supported by Democratic Sen. Barbara Mikulski of Maryland and Republican Sen. Kit Bond of Missouri would permit new car buyers to deduct auto loan interest and sales tax on their personal income taxes.
2. “Cash for Clunkers”. This initiative encourages consumers to upgrade their older cars to cleaner, more fuel-efficient models. Drivers would get up to $4,500 in vouchers when they turn in an old fuel-innefficient vehicle for a vehicle that gets good gas mileage.
1. Tax breaks for consumers who buy new vehicles and/or fuel-efficient hybrids. The desired incentives would be a combination of new incentives and extensions of credits already in the tax code. One proposal supported by Democratic Sen. Barbara Mikulski of Maryland and Republican Sen. Kit Bond of Missouri would permit new car buyers to deduct auto loan interest and sales tax on their personal income taxes.
2. “Cash for Clunkers”. This initiative encourages consumers to upgrade their older cars to cleaner, more fuel-efficient models. Drivers would get up to $4,500 in vouchers when they turn in an old fuel-innefficient vehicle for a vehicle that gets good gas mileage.
THE REAL COST OF ELECTRIC CARS
As the world watches oil prices rise and fall like a tidal surge and environmental groups continue to push for more green cars, the real cost of alternative fuel vehicles has to be examined. Obviously, the role of electric and hybrid vehicles will play an enormous role in reducing greenhouse gasses around the world. But industry and government has to ask how much will the conversion cost and is it worth it?
According to a study conducted by Boston Consulting Group, a management consulting firm, the fuel savings will not be enough incentive for consumers to switch to electric cars without some other incentive from the world’s governments. According to Boston Consulting, electric vehicles could conceivably make up a significant amount of the world’s fleet but not nearly a majority. According to Boston Consulting the costs of creating an automotive market dominated by electric cars are prohibitively high.
So what will cause a major shift? The most likely scenario is when oil prices rise over $150 per barrel and world governments mandate stricter standards. Experts estimate that about 3 million electric vehicles and 11 million hybrid vehicles will be sold globally in 2020. If that number is accurate, the alternative fuel vehicles would only make up about 28% of vehicles sold.
To support a market for that many electric vehicles, governments would be required to spend about $140 billion for industry support while reaping a relatively small $12 billion savings by switching to electric vehicles in Europe and the United States. Most of the industry support would be required to offset the high consumer cost of alternative vehicles. The fear is that the technology will be extremely expensive and without corresponding consumer support. Currently, the cost of a hybrid vehicle is about $7,000 more than its non-hybrid counterpart. While that amount is expected to decrease by 2020 it is still a hard sell for both dealers and consumers for the small amount of fuel savings. This hard sell is compounded by today’s relatively low fuel prices.
As the world watches oil prices rise and fall like a tidal surge and environmental groups continue to push for more green cars, the real cost of alternative fuel vehicles has to be examined. Obviously, the role of electric and hybrid vehicles will play an enormous role in reducing greenhouse gasses around the world. But industry and government has to ask how much will the conversion cost and is it worth it?
According to a study conducted by Boston Consulting Group, a management consulting firm, the fuel savings will not be enough incentive for consumers to switch to electric cars without some other incentive from the world’s governments. According to Boston Consulting, electric vehicles could conceivably make up a significant amount of the world’s fleet but not nearly a majority. According to Boston Consulting the costs of creating an automotive market dominated by electric cars are prohibitively high.
So what will cause a major shift? The most likely scenario is when oil prices rise over $150 per barrel and world governments mandate stricter standards. Experts estimate that about 3 million electric vehicles and 11 million hybrid vehicles will be sold globally in 2020. If that number is accurate, the alternative fuel vehicles would only make up about 28% of vehicles sold.
To support a market for that many electric vehicles, governments would be required to spend about $140 billion for industry support while reaping a relatively small $12 billion savings by switching to electric vehicles in Europe and the United States. Most of the industry support would be required to offset the high consumer cost of alternative vehicles. The fear is that the technology will be extremely expensive and without corresponding consumer support. Currently, the cost of a hybrid vehicle is about $7,000 more than its non-hybrid counterpart. While that amount is expected to decrease by 2020 it is still a hard sell for both dealers and consumers for the small amount of fuel savings. This hard sell is compounded by today’s relatively low fuel prices.
Tuesday, January 13, 2009
An article by USA Today on January 12, 2008 exposed the United States Army’s inability to control inventory. Like many business owners across the country that have an inventory, the Army has fallen into the trap of ordering too much, ordering things they don’t need or holding onto items that they cannot otherwise sell. According to the article, the Army has more than $3.6 billion in excess spare parts. Of that amount, the Army will never need some $900 million of the equipment that it has in storage. According to USA Today, the Army has “too little of the parts it needs and too much of others it doesn’t largely because it doesn’t set cost efficiency goals and has problems with the computer models it uses to forecast demand…”
The good news is that the business owner can learn from the mistakes of the Army. Any business that has an inventory also carries a debt load on that inventory. While the widgets sit on the shelf they are costing money. There is a price to purchase the item and a holding cost to have the item in inventory. As the item gets older, there is a risk of the part becoming obsolete. At that point, it is essentially worth zero because there is not market for it. The cost of a single obsolete part may not be significant, but the cumulative effect can be crippling.
Any business that carries an inventory needs to be accountable for proper inventory control. This means upholding a level of service that allows customers to purchase out of stock, avoids obsolescence, and generates a profit. To accomplish this, inventory managers need to be experts in inventory control, merchandising, pricing and profit. The good news is that a host of computer programs are available for every size business to automatically analyze inventory and alert the inventory manager when parts should be reordered to allow for a “just in time delivery.” This task is made even easier with the availability of overnight shipping.
Most inventory managers struggle in 5 crucial areas.:
1. Obsolete parts: Managers want to retain obsolete parts that cannot be sold in hopes of the sucker who walks in one day for that exact part. Don’t wait. It is a hard pill to swallow, but if the part is obsolete take the loss and sell it on e-bay, at a garage sale, to a junk shop or simply throw it in the trash and take the tax write-off. Continuing to hold the part only takes up space and costs more money;
2. Wrong Product Mix: Know your customers and what they are ordering. Have the correct product mix in your inventory for ultimate profitability;
3. Excess Stock: Don’t order too much just because you think you will sell more. Look at the selling history or “demand” for that part and order according to the demand history;
4. Poor marketing and merchandising: Every retailer has to market their product. Do so by whatever means possible. In the age of the internet, e-mail and blogs, guerilla marketing is a snap;
5. Poor use of compute information. Trust your technology. If you have a compute inventory manager and the parameters are correct then trust the information it is giving you.
Proper inventory control is crucial because obsolescence is one of those items that can creep up on the uninformed. Letting inventory get out of hand is a sure way to financial ruin. To avoid a listing in the bankruptcy filings, watch your inventory and your manager. This is the only way to insure that you do not fall into the same trap as the Army.
The good news is that the business owner can learn from the mistakes of the Army. Any business that has an inventory also carries a debt load on that inventory. While the widgets sit on the shelf they are costing money. There is a price to purchase the item and a holding cost to have the item in inventory. As the item gets older, there is a risk of the part becoming obsolete. At that point, it is essentially worth zero because there is not market for it. The cost of a single obsolete part may not be significant, but the cumulative effect can be crippling.
Any business that carries an inventory needs to be accountable for proper inventory control. This means upholding a level of service that allows customers to purchase out of stock, avoids obsolescence, and generates a profit. To accomplish this, inventory managers need to be experts in inventory control, merchandising, pricing and profit. The good news is that a host of computer programs are available for every size business to automatically analyze inventory and alert the inventory manager when parts should be reordered to allow for a “just in time delivery.” This task is made even easier with the availability of overnight shipping.
Most inventory managers struggle in 5 crucial areas.:
1. Obsolete parts: Managers want to retain obsolete parts that cannot be sold in hopes of the sucker who walks in one day for that exact part. Don’t wait. It is a hard pill to swallow, but if the part is obsolete take the loss and sell it on e-bay, at a garage sale, to a junk shop or simply throw it in the trash and take the tax write-off. Continuing to hold the part only takes up space and costs more money;
2. Wrong Product Mix: Know your customers and what they are ordering. Have the correct product mix in your inventory for ultimate profitability;
3. Excess Stock: Don’t order too much just because you think you will sell more. Look at the selling history or “demand” for that part and order according to the demand history;
4. Poor marketing and merchandising: Every retailer has to market their product. Do so by whatever means possible. In the age of the internet, e-mail and blogs, guerilla marketing is a snap;
5. Poor use of compute information. Trust your technology. If you have a compute inventory manager and the parameters are correct then trust the information it is giving you.
Proper inventory control is crucial because obsolescence is one of those items that can creep up on the uninformed. Letting inventory get out of hand is a sure way to financial ruin. To avoid a listing in the bankruptcy filings, watch your inventory and your manager. This is the only way to insure that you do not fall into the same trap as the Army.
There is a new target for auto thieves and it can cost you thousands of dollars without your car even being stolen. What is the new hot item to steal? Catalytic Converters. A catalytic converter is used to reduce the toxicity emissions from your motor. Why are these hot items? First, they contain three precious metals: platinum, rhodium, and palladium. As of October 2008, platinum was selling for $1,019 per ounce. This is a nice payday for a thief who can crawl under a car undetected and steal the device in less than two minutes. The thieves then sell the converters to recyclers for $20 - $200 per converter depending on the type and amount of metal used.
Thieves are targeting victims by staking out large parking lots and working in teams. The thieves are able to slip under vehicles and cut out the converters with battery operated tools in a matter of minutes. Targeted vehicles are usually trucks or SUVs since they are easy to crawl under. The average insurance claim for this type of theft ranges between $2,500 - $3,500 per vehicle. Consumers can protect themselves from this type of theft by parking in well lit areas with a lot of pedestrian traffic.
Thieves are targeting victims by staking out large parking lots and working in teams. The thieves are able to slip under vehicles and cut out the converters with battery operated tools in a matter of minutes. Targeted vehicles are usually trucks or SUVs since they are easy to crawl under. The average insurance claim for this type of theft ranges between $2,500 - $3,500 per vehicle. Consumers can protect themselves from this type of theft by parking in well lit areas with a lot of pedestrian traffic.
Thursday, January 8, 2009
TIRE TIPS
Tire inflation is the single most important, and most often overlooked, part of automotive care. Operating a vehicle with just one tire underinflated by 20% (about 8psi) can reduce the tire’s life by 9,300 miles and can increase fuel consumption by 4%. Owners should check tire inflation at least one time per month and periodically review their vehicle’s computer based system for tire pressure readings.
The tire pressure monitoring system which is standard equipment on all 2008 or newer GM models, uses a direct measuring sensor in each wheel. A warning is displayed to the driver whenever pressure drops below 75% of the recommended pressure. Weather can affect the reading because of the temperature changes that occur in the tire when the temperature increases during the day.
In Louisiana, weather typically rises substantially during the day in winter. This can cause the tire pressure monitor to alert the driver. All that may be necessary is the addition of a minimal amount of air into the tire. Additionally, customers who have tires replaced or rotated at non-GM dealership facilities may experience problems with the monitor after the change or rotation. This is because non-GM repair facilities either do not have the equipment to reset the monitor or are unfamiliar with the monitor’s operation and repair. If the vehicle is brought to the dealer because another facility was unable to reset the tire monitor or the malfunction is cause by another repair facility there may be a small charge for the reset.
For best results, have all maintenance done by the factory trained technicians at the GM dealership. Important information to know is that when the tire pressure light remains solid to indicate low pressure then air needs to be added. If, however, the light blinks for about a minute and a service tire monitor message displays, then there is a malfunction in the sensing equipment. At that time, a review and possible repair by your GM trained technician might be necessary.
The tire pressure monitoring system which is standard equipment on all 2008 or newer GM models, uses a direct measuring sensor in each wheel. A warning is displayed to the driver whenever pressure drops below 75% of the recommended pressure. Weather can affect the reading because of the temperature changes that occur in the tire when the temperature increases during the day.
In Louisiana, weather typically rises substantially during the day in winter. This can cause the tire pressure monitor to alert the driver. All that may be necessary is the addition of a minimal amount of air into the tire. Additionally, customers who have tires replaced or rotated at non-GM dealership facilities may experience problems with the monitor after the change or rotation. This is because non-GM repair facilities either do not have the equipment to reset the monitor or are unfamiliar with the monitor’s operation and repair. If the vehicle is brought to the dealer because another facility was unable to reset the tire monitor or the malfunction is cause by another repair facility there may be a small charge for the reset.
For best results, have all maintenance done by the factory trained technicians at the GM dealership. Important information to know is that when the tire pressure light remains solid to indicate low pressure then air needs to be added. If, however, the light blinks for about a minute and a service tire monitor message displays, then there is a malfunction in the sensing equipment. At that time, a review and possible repair by your GM trained technician might be necessary.
Wednesday, January 7, 2009
2008 IN Review
What happened to the U.S. automotive industry this year? The “Big 3” does not build undesirable cars. They still outsell everyone else in the market with more than 8 million sales last year. Their customer loyalty is unparalleled and according to J.D. Power and Associates, the Big 3 builds some of the most dependable vehicles on the road – better than Toyota, Lexus, Infiniti and Volvo. Further, in an apples-to-apples comparison, American manufacturers match or beat their competitors in fuel economy on models with the same footprint and powertrain.
Every manufacturer is hurting in this economy. Sales in every car and light truck segment are down compared to last year. Country of origin had no influence. Vehicles from the U.S., Japan, Europe and North Korea all fell 32-38% in November. Both cars (-36.5%) and trucks (-36.8%) fell. The Honda Civic fell 66%, Toyota Carolla 59%, and the Ford Focus 74%. So what happened?
A combination of high oil prices, the banking/mortgage debacle, and a slowing economy worldwide all contributed to the cause. In late spring, oil prices rose to unprecedented levels. In June, prices per barrel were at $145 with speculation that prices could rise to $200 a barrel. Consumers shifted to small cars and values of trucks and SUV’s plummeted. Because of the falling values, auto lenders took a bath on leases when residual values fell on the vehicles they were taking on lease returns. For instance, an SUV may have had a residual value of $20,000 but when it was turned in the market price was only $12,000. The finance company had to absorb the $8,000 loss. This loss was absorbed along with all of the home mortgage losses in their portfolios. The result was that auto lenders quit leasing, essentially cutting off low payment options to millions of buyers.
In the beginning of the third quarter, banks tightened credit standards essentially denying credit to millions of consumers. Most car buyers need credit to purchase a vehicle. Without financing options available to the majority of buyers retail sales fell. When credit is available rates are unfavorable compared to the glory days of 0%. Add to this the negative press surrounding the economy and the Big 3 and consumer confidence started to fall. That lack of confidence translated directly into the showrooms of all manufacturers.
The Big 3 CEO’s, unions and the federal government all share the blame for the sector’s woes. Without giving any one of them a pass, it is hard to image that any companie's business model could have predicted this perfect storm. Where the industry ends up is now in the hands of the congress. However, one thing is for sure – the loss of any one of the American manufacturers will reverberate throughout the economy to suppliers, consumers, charities, municipalities and more in the form of lost jobs, revenues, charitable contributions and sales tax revenue.
Every manufacturer is hurting in this economy. Sales in every car and light truck segment are down compared to last year. Country of origin had no influence. Vehicles from the U.S., Japan, Europe and North Korea all fell 32-38% in November. Both cars (-36.5%) and trucks (-36.8%) fell. The Honda Civic fell 66%, Toyota Carolla 59%, and the Ford Focus 74%. So what happened?
A combination of high oil prices, the banking/mortgage debacle, and a slowing economy worldwide all contributed to the cause. In late spring, oil prices rose to unprecedented levels. In June, prices per barrel were at $145 with speculation that prices could rise to $200 a barrel. Consumers shifted to small cars and values of trucks and SUV’s plummeted. Because of the falling values, auto lenders took a bath on leases when residual values fell on the vehicles they were taking on lease returns. For instance, an SUV may have had a residual value of $20,000 but when it was turned in the market price was only $12,000. The finance company had to absorb the $8,000 loss. This loss was absorbed along with all of the home mortgage losses in their portfolios. The result was that auto lenders quit leasing, essentially cutting off low payment options to millions of buyers.
In the beginning of the third quarter, banks tightened credit standards essentially denying credit to millions of consumers. Most car buyers need credit to purchase a vehicle. Without financing options available to the majority of buyers retail sales fell. When credit is available rates are unfavorable compared to the glory days of 0%. Add to this the negative press surrounding the economy and the Big 3 and consumer confidence started to fall. That lack of confidence translated directly into the showrooms of all manufacturers.
The Big 3 CEO’s, unions and the federal government all share the blame for the sector’s woes. Without giving any one of them a pass, it is hard to image that any companie's business model could have predicted this perfect storm. Where the industry ends up is now in the hands of the congress. However, one thing is for sure – the loss of any one of the American manufacturers will reverberate throughout the economy to suppliers, consumers, charities, municipalities and more in the form of lost jobs, revenues, charitable contributions and sales tax revenue.
Do you ever wonder how your credit score is calculated? Your credit score or FICO is a three digit number designed to gauge your creditworthiness. Lenders use this number to determine if an individual is worthy or receiving credit and, if so, at what interest rate. The FICO score can affect your ability to borrow money for everything including home mortgages, credit cards and auto loans. The score ranges from 300 to 850 and is calculated by Fair Isaac Corporation. Fair Issac is a NYSE listed company that collects information from the three leading credit agencies, Equifax, Inc. Experian, PLC, and TransUnion, and analyzes the numbers to include in the credit score.
According to Fair Isaac, a credit score is made up of of five components:
- 35% reflects payment history, i.e. whether you pay your bills on time to one of the lenders that reports to the credit reporting agencies;
- 30% reflects amounts owed and how credit limits compare with balances owed. The more you carry, the lower the score;
- 15% reflects length of credit history: The longer the history, the better credit lenders can gauge your ability to pay them back;
- 10% reflects new credit – how many accounts you opened recently;
- 10% reflects credit mix – credit cards, student loans, medical etc.
You cannot get your credit score free but you can get a credit report for free one time a year from each of the reporting agencies. A free report can be obtained from annualcreditreport.com. Wall Street Journal, December 31, 2008
Subscribe to:
Posts (Atom)
