Book Review of Velocity Overdrive, by Dale Pollak
By David Ruggles on Jan 21, 2013
Velocity Overdrive, The Road to Reinvention – Book Review
By David Ruggles
Dale Pollak’s third book, “Velocity Overdrive,” is another winner and is must reading for Dealers and any student of the auto business. That includes auto manufacturer executives.
Dale’s ability to put into words the changes the industry has been experiencing has helped hundreds, if not thousands, of Auto Dealers, both new and used. He has rightfully pointed out that the delivery of information via the Internet has brought “efficient market” economic principles to the pre-owned business in particular, compressing available “spread.” New data driven management methods that are based on rapid inventory turn at lower, but real world gross profit for the specific market, actually produce considerably higher total gross profit through higher velocity, a concept difficult for some to grasp. But daily, market realities are making believers out of skeptics.
My favorite chapters include 8, “Dealership Department Silos,” and 14, “The Extra Mile in Reconditioning.” In these chapters Pollak dares to challenge long and stubbornly held beliefs that the pre-owned department exists to be pillaged by the fixed operations departments. After all, it was thought, sales people and managers sell from their cost, not based on any kind of rational retail market value. And gross profit booked by charging retail prices for internal reconditioning, or “retail recon,” is retained regardless of what happens to the used vehicle, they thought. There are Dealers who have followed this “retail recon” policy for another reason. They would rather pay management compensation based on fixed operations rates than sales manager rates. The Internet has changed all of that. Dealers still in denial on the issue especially need to read this book!!
In my mind, the idea that “you can’t manage what you can’t measure” has cost Dealers a lot of money. What one could have gotten, should have gotten, but didn’t get, is never quantified. In “econo speak” that means “opportunity costs,” or opportunities unrealized. Trade-ins under bid and/or units wholesaled instead of retailed because of “retail recon” cost money that can’t be totaled. And many Dealers remain oblivious of this fact. My own piece on the issue can be found at:
The pre-owned business has long been a combination of art and science. The science side has become more important than ever although some old dogs like me might think things have gone somewhat overboard in some cases. For example, I’m not thrilled about managers failing to walk around a vehicle and actually drive it before hanging a number on a trade in because they are relying on an appraisal tool. But then neither is Pollak. Some managers think all they need is their technology driven appraisal tools.
As far as science is concerned, Pollak has already conceived and implemented some of the most essential and highly used technology tools in use in the industry. His company, vAuto, now introduces a new technology tool called Provision®, an inventory management tool. It distills market data into management metrics that dealers and used vehicle managers use to easily and quickly understand the risk and rewards inherent in every vehicle.
Looking forward, Dale dedicates a chapter to trends that will result in further margin compression for dealers. Younger buyers are even more Internet enabled then older ones and they have different values than older generations. They don’t think in terms of the value a Dealer relationship offers them. They tend to be ruthless in their pursuit of the best price using the Internet to obtain it. In the middle of this generational driven trend OEMs are putting increasing pressure on Dealers to build ever more expensive facilities in an era when consumers are less willing to pay for them. Pollak cites Glenn Mercer’s comprehensive study on the subject on behalf of the National Automobile Association.
This book is well worth the investment even if a Dealer only reads the chapter, “A Peek Inside Dale’s Crystal Ball.” Dealers who ignore Dale’s advice do so at their own peril. Increasingly, the “efficient market” that is the auto business will tend to leave only the leanest operations standing. For a Dealer in search of significant ROI, buy the book and read it.
Comments
Once again Dale has put out a comprehensive analysis and strategy for Dealers. I'm absolutely honored that he reached out to myself and Driving Sales Community editor Jim Bell and included our input in this Velocity guide. Great job Mr. Pollak.
January 21st
David, thanks for sharing this review. Dale's first two books were so helpful - this is a must have for everyone in the industry.
Congrats again Dale!
January 21st
Yes, excellent review David. Looking forward to getting my hands on a copy.
January 21st
Great review. The one thing that I love how he took so many different industry leaders and used their stories and successes. It's one thing to hear it from an author, it's another to hear it from dealer after dealer with specific examples.
January 21st
If you've been living under a rock the past four years and haven't had the opportunity to grasp the change that is the Velocity Metric, grab a hold and get ready to become part of the future, NOW!
Another very insightful look in to the ever evolving beast that we call the car business. Who needs Shades of Gray, if this book doesn't turn you on, nothing will!
January 22nd
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