I had a most extraordinary and inspiring experience last week when I returned to Indiana University (IU) for the first time in nearly 35 years.

This visit was part of my responsibilities as this year’s Poling Chair at IU’s Kelley School of Business to shIU Group 300x168 A Return To Campus Spurs Memories And Inspirationare my entrepreneurial experiences and insights with students. I felt a mix of excitement and nervousness as I prepared to share my “4 P’s Of Entrepreneurial Success” with graduate and undergraduate students.

As soon as I arrived on campus and checked in, I was awash in memories.

I recalled the table in the student union where a girlfriend broke my heart. I stopped by the popular off-campus bar, Nick’s, where a stainless steel pint pail with my name once hung on a hook. I poked my head in my old room at the fraternity house, not so surprised that it essentially looked and smelled about the same.

IDaleIUphoto 212x300 A Return To Campus Spurs Memories And Inspiration hadn’t returned to IU since my graduation in 1980 and I was surprised at how much the campus and community, for all the new buildings and other improvements, still seemed familiar and friendly.

But the real highlights of my visit came in my interactions with students. They asked insightful, penetrating questions as we discussed their current academic pursuits and their prospects in business.

An undergraduate exchange student from China asked, “Isn’t it better for us to know ourselves before we worry about networking?” As I tried my best to answer her question, I couldn’t help but think that I wasn’t nearly as introspective and mature when I was in college.

Several students asked if they would be better off seeking first-job opportunities in start-ups versus more established companies. This question wasn’t even relevant when I went to business school at IU—start-ups as we know them today didn’t exist, and you either went to work in the family business or sought jobs from a big-name company.

I also fielded several questions that all amounted to the same query—“How can I be sure if I’ll be happy in my career?” To me, the frequency of this question belies both the pressure today’s students feel to make the right choices, and an ingrained fear that a wrong choice now will yield dire consequences in the future.

I urged students to remember that college offers a rare opportunity to experiment and try new things. Their goal, as students, should be to understand what makes them tick as individuals, and to recognize the reality that life serves up a series of twists and turns that can render a good decision today irrelevant for tomorrow. I also shared a page from my life—that sometimes it can take years to recognize the signs that suggest your career path may not be as fulfilling as another might be.

As I left IU, I also couldn’t help but think that we’ll all be in good hands when these students become business and civic leaders in communities across America. Collectively, they showed a level of ambition, focus, gratitude and wisdom that I recall being rare among my college contemporaries.

I’m inspired to help these students, and I can’t wait to return to IU next spring.

 

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As the fall season is firmly upon us, I see three potentially problematic trends for dealers in used vehicles.

First, inventory levels are climbing. For many dealers, the increases are due to a rise in the number of off-lease and trade-in vehicles that flow from new vehicle sales. Some dealers have also chosen to increase inventory levels due to favorable purchase prices and a belief that consumer demand will not abate.

Second, wholesale values continue to slide south. In early October, analysts noted declines in most vehicle segments (an $84 drop for cars, and a $20 drop for trucks, according to Black bug a tee 300x114 3 Ways To Minimize A Seasonal Slump In Your Used Vehicle DepartmentBook analyst Ricky Beggs), with higher-end premium vehicles suffering the most. Most predict the trend to continue, which will put pressure on dealer margins for the inventory they currently own.

Third, it’s taking longer for dealers to retail their current inventory. I’ve heard from several dealers who report the average days in inventory is increasing, while their inventory turn rates are decreasing—a two-headed symptom that appears to owe to higher inventory levels and, in some segments, a potential softening in buyer demand.

To be sure, these dynamics are typical in used vehicles at this time of the year. Even so, they pose potential profitability and return on investment (ROI) risks for dealers who do not proactively address them as they manage their used vehicle inventories. In my recent conversations with dealers, I offer the following three best practices to minimize the chances that a seasonal slowdown becomes a seasonal slump:

  • Pay close attention to your pricing. A Midwest dealer recently noted that he’s making $300 to $400 weekly price adjustments to individual cars to keep his current inventory in line with the market and meet his inventory turn and profit objectives. As he says, “It’s painful, but we have no choice. The cars are still here and we need to move on.”
  • Stick to a 45-day retail window. In the current environment, some dealers choose to hold on to vehicles longer than they should because they “can’t replace the car for what I’ve got in it.” Such decisions typically only make a bad situation worse, particularly when there are few signs that wholesale values will increase in the near future. I encourage dealers to maintain at least 50 percent of their used vehicle inventory under 30 days of age, and to give each vehicle a maximum 45 days as a retail unit. If a car doesn’t sell in the 45-day timeframe, dealers and managers should examine the hows/whys behind their inability to retail the unit in a timely fashion.
  • Mind your average used vehicle investment. I’m seeing the average used vehicle investment increase for many dealers. The rise appears to be due to two factors: First, dealers are paying up to acquire certified pre-owned (CPO) vehicles, which has proven to be a profitable, fast-turning segment for much of the year. Second, some dealers are buying more large SUVs and other higher-dollar inventory because declining wholesale values make them more attractive. Neither approach is necessarily wrong, but I caution dealers that increasing their average used vehicle investment also means a commiserate increase in the amount of risk inherent in each vehicle.

Ultimately, dealers who maintain a consistent, steady course of market-based inventory management decisions during the fall will be better positioned to meet the challenges of fewer customers and slower sales as the winter months arrive.

 

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I had a rough, and pretty scary weekend.

This past Friday night, my son Alex called from the emergency room at Emory University Hospital. He was suffering from severe abdominal pain. I did my best to comfort him over the phone, and we exchanged messages through the night as the medical team conducted multiple tests to determine the cause of the problem.

By Saturday morning, Alex was still in the emergency room, and we still didn’t know the reasons for his pain. I headed to the airport, full of worry that something serious was happening with my otherwise healthy and hearty 23-year-old son.

When I arrived at the hospital, Alex seemed fine. The pain was gone and he was ready to go home. Both of us thought the pain must have been caused by a fast-acting virus or something similar.

But the resident doctor thought otherwise. While still uncertain about an exact cause, the emergency room medical team recommended surgery. An MRI had shown an abnormal bulge on Alex’s small intestine, and there was concern that an infection could cause other problems like gangrene.

I was freaked out, to say the least. All of Alex’s cell counts and vitals were normal. Surgery seemed too invasive and potentially unnecessary. I also wasn’t satisfied that the medical team had done everything possible to make sure that surgery was, in fact, the best option. I needed better information and more answers, rather than what-ifs.

I started making phone calls. I rang my brother, a doctor, who shared my concern that surgery might not be necessary. Later that evening, I called my boss, Cox Automotive president Sandy Schwartz, thinking he might know someone at Emory who could help my situation.

The sequence of events that followed blew me away.

alex hospital pic 225x300 When Family’s On The Line, Cox Really ShinesBy early Sunday morning, with Sandy’s help, a team of senior specialists at Emory evaluated our situation. Joe Luppino, Cox Automotive’s senior vice president and chief corporate development officer, showed up and stayed through the day to make sure I was OK and provide counsel and support. I also received dozens of e-mails and calls from other Cox executives and employees offering their best wishes, prayers and thoughts.

By noon, we had the answers we needed. The medical team determined Alex had a rupture in his small intestine, much like appendicitis, and surgery proved to be the best course of action.

The surgery occurred at 3 p.m., and I’m happy to share that everything went well. As of this moment, Alex is recovering at home, after his discharge from the hospital yesterday—an exit that proved a bit challenging given all the balloons and flowers we received from Cox employees across the country.

As I reflect on a challenging weekend, I can’t help but feel an immense amount of gratitude, love and respect for my Cox colleagues and the team at Emory. It’s apparent to me that Cox and its employees really live up to the values its founders put in place decades ago—when family’s on the line, it’s time to shine.

 

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A Look At The Perils Of Positive Thinking And Selling Cars

10.28.2014

  I was fascinated by a column in the New York Times that suggests that too much positive thinking can be a bad thing. The author, psychology professor Gabriele Oettingen, has studied the effects of positive thinking and concludes that it “fools our minds into perceiving that we’ve already attained our goal, slackening our readiness [...]

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3 Reasons A “Turn And Earn” Strategy Eludes Some Dealers

10.24.2014

For the past several years, I’ve been a vocal advocate of the Velocity Method of Management—a market-based inventory management strategy that pushes dealers to turn their used vehicle inventories to maximize return on investment and minimize risk. My advocacy flows from a firm belief that today’s market penalizes dealers who do not make a concerted [...]

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Drilling Down Into Overlooked Used Vehicle Opportunities

10.21.2014

  A quick test: What percentage of your used vehicle inventory do you retail in the first 10 days or less? OK. Time’s up. Do you know the correct answer for your inventory? Relax. I wouldn’t necessarily expect that you’d be able to ace the test. In fact, only a few dealers actually monitor their [...]

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Access: Velocity Wrap-Up: Dealer Take-Aways For The Not-So-Distant Future

10.16.2014

We’re still getting feedback from last week’s Access: Velocity conference here in Chicago. So far, the vast majority of dealer attendees consider the two days spent here as well worth the effort and expense. We also gained insights to make the next Access: Velocity event even better—with a particular emphasis on the real-life dealer-led workshops [...]

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Access: Velocity Day 1: Integration, Insights and Inspiration

10.10.2014

I spoke to a couple dealers as yesterday’s Access: Velocity sessions ran down. A key sentiment: They, like me, felt a touch of information overload from today’s agenda. The following are some of the high-level take-aways I gleaned from today’s sessions with Cox Automotive executives and our dealer speakers, as well as in-the-hall conversations: A [...]

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Access: Velocity Kicks Off Tonight!

10.08.2014

I’ve just spent the past two hours with the vAuto team at the Peninsula Hotel in Chicago, working out final details for tonight’s kick-off of the second Access: Velocity event. I’m extremely excited. Two years ago, we hosted our first Access: Velocity, and this year’s gathering is bigger and better. We’ve brought together nearly 175 [...]

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Two Used Car Lessons From The Secret Service Snafu

10.07.2014

I wouldn’t think that I’d ever find commonality between used vehicles and the U.S. Secret Service. But last Thursday’s news of the White House security breach brought used vehicles to mind. To be sure, losing one’s focus on used vehicle management processes produces less dire potential consequences than lapses among the elite corps of men and [...]

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