Skip to content

The Essence of Effort and Return in the Modern Auto Industry

In today's rapidly evolving automotive landscape, professionals often grapple with a fundamental question: How does effort correlate with reward? How can automotive teams navigate through challenges to achieve substantial rewards, especially when incorporating new processes, platforms, or software?

The Principle of Return on Time
"Effort always equals results, if not immediately, then eventually." - David Long.

Effort and its relationship to outcomes are pivotal. David Long shares the concept of Return on Time (ROT) as a metric to evaluate the efficiency of our endeavors. The type of effort matters as much as the amount of effort. Just running hard doesn't guarantee reaching the destination. This philosophy is evident in the rise and fall of many businesses that appear promising initially but falter due to a lack of implementation or understanding of the nuances.

The Shift to Private Party Acquisition
The auto industry has seen significant changes in the past few years. One of the most impactful transitions has been the shift from traditional auctions to private party acquisitions. The latter presents a clearer, more streamlined approach, allowing businesses to operate in a less cluttered space.

"I've stopped swimming in the murky auction waters. The other lanes – private party acquisition ones – are clearer and less cluttered." - David Long.

However, a challenge arises when dealerships, particularly those accustomed to traditional practices, resist the change, clinging to the comfort of auctions. This resistance often stems from a misplaced loyalty to strategies tailored for a bygone market era.

The Power of Specialized Business Units
One of the insights offered by David is the idea of perceiving different acquisition methods as separate business units under one umbrella. For instance, street purchases, service lanes, auctions, rentals, loaner fleets, and more can all be seen as distinct entities. Each unit should stand on its merit, with metrics such as days to sale, cost of market, price to market, potential gross, turnover speed, trade percentage, and so on.

"Your business needs to be run in fragments, with each unit making good sense." - David Long.

Initially, it might appear like an added layer of complexity, but by breaking down these units, businesses can quickly identify and address weak points.

Navigating the Hard Stuff
Switching to a private party acquisition might appear daunting, but the benefits are evident. Newcomers to this strategy have seen impressive results in a short time. Instead of starting afresh, use existing best practices as a guide.

"You don't need to start from scratch. The matches are already invented; all you need to do is strike them." - David Long.

Success isn't just about hard work. It's about adapting to new methods and learning from pioneers in the field.
The automotive industry will always face its set of hurdles. But, as David highlights, combining dedicated effort with innovative strategies can yield impressive outcomes, especially in areas like private party acquisition.
About Our Subject Matter Expert:
David Long is the Executive General Manager of the Hansel Automotive Group and the Host of “All Things Used Cars”.