May Recap from Steve

In addition to my overall thoughts in the opening video, I wanted to provide some perspective on our most recent month close.

All in all, May was a good month. Some stores and Divisions posted significant used car gains and fixed ops gross proft. We had a tremendous final holiday weekend and last day close, and in the end, put up numbers that BLY.

In the old days we knew if we beat last year (BLY) in variable ops that was a good indicator of profitability....but in today's world with disappearing new car gross profit (GP) and quarter ending OEM bonus and incentive payouts, that is no longer the case. Our focus must be one of BLY on the total gross profit line. BLY year over year on New Car GP line looks impossible given the pressure we are under from OEM's; as such, we need to concentrate on fixed, pre-owned and F&I to take up the slack....I understand that this is no great revelation to you but it needs laser focus to get there.

BLY on new unit sales still has relevancy especially as it relates to market share, and while GP (and expense control) correlates to NET, new unit volume correlates to our relationship with the OEM....they seem to put up with a lot if you can move the iron. I am very proud of our market leadership and don't want to ever give it up but I want to find a balance. Finding this balance is a full team effort and I believe it will come as we continue our search for that which defines us.

Why do our customers want to do business with us? It can’t be just price and location (which is largely what it is today). Long term sustainability and our quest in finding the balance between GP and market leadership must lead us to a value proposition that we can both articulate and live by....as such a true full team effort.

What is that clearly articulated value proposition that we can live by, that we can deliver every day and that ultimately will define us? Stay tuned, its coming!!

Thanks for all of the hard work and long hours.

Steve