CALL US AT 1.866.756.2620

Category Archive: Used Vehicles

NCM Institute

#AskNCM: How Long Should It Take to Recondition a Vehicle?

Reconditioning used vehicles is a major priority for any pre-owned dealer. If the car isn’t on the lot, it can’t be sold. Therefore, every minute the vehicle is in the shop is possible lost revenue.

Steve Hall, an instructor at the NCM Institute, shares his top tips for reconditioning vehicles faster and more efficiently. See what Steve’s years of industry experience can teach us on this segment of #AskNCM.

Have another question for Steve or the other #AskNCM experts? Leave a comment below!

Permanent link to this article: http://blog.ncm20.com/2017/07/askncm-how-long-should-it-take-to-recondition-a-vehicle/

Jerry Powers

Old School, Meet the New Buyer

Young couple buys a car

How do you get your salespeople to spend quality time with your customers? Customers are flocking to your dealership because they’ve found the exact vehicle they want, at a price they can afford, and to close the deal, the only thing your salespeople need to do is not mess it up.

These customers are usually in a hurry, and many are put off by the “usual sales process.” How do we spend enough time to keep them interested, but still avoid wasting their time? How do we move the salesperson from answering questions to actually asking them? How do we increase the level of comfort between our staff and our clients? Discover what some of our dealers are doing to slow the customer down, increase the customer’s confidence, and dramatically increase sales and dealership profit. It’s an old-school idea with a modern twist.

Early on in your sales process, after the “Meet and Greet,” ask your salespeople to say “Mr. or Ms. Smith, here at XYZ Motors, we have found a way to save our customers precious time during their purchase process. By looking at your vehicle now, my appraiser can perform the valuation while you and I are checking out the vehicles you are interested in. This can save you up to an hour of your valuable time. Where did you park?” “Perfect, show me your car.” The benefits to the customer? They see us saving them time, the most valuable of all resources. And, it allows the salesperson time with the customer to get to know them.

The salesperson, with the customer in tow, does a silent walk around appraisal, (form or smartphone in hand), making sure to ask about parking stickers, sports equipment, soccer balls, racks, etc., that are on or in the vehicle, to gain a level of comfort and find similar interests with the client. The salesperson touches any imperfections without a word and asks what the customer likes about this vehicle and what they are hoping to change with their new vehicle (What’s their pain point?), and then asks for the keys to take to management for the appraisal. After this, your normal sales process can proceed.

This is a great ice breaker and allows your newer sales staff more time to get comfortable with the customer and vice versa. However, the biggest and best advantage is that the desk now controls the keys and the process. They know who has a customer and that the salesperson must come back to the desk to get the keys before the customer leaves. This ensures a 100% trade orders of all customers with trade-ins. This has helped many of our clients’ dealerships dramatically increase used vehicle sales by acquiring more trades. Is there anything more important than the acquisition of quality trade-in vehicles in your store? I didn’t think so. This will not only improve your look-to-book percentage, but also your used vehicle, fixed operations, and overall dealership profitability. Good luck and good selling.

If there is anything NCM Associates can do to help you and your business, just give us a call at 800-756-2620 or email info@ncmassociates.com.

Permanent link to this article: http://blog.ncm20.com/2017/07/old-school-meet-the-new-buyer/

Randy Fluharty

3 Ways the Service Drive Can Solve Your Pre-Owned Inventory Problem

Service Sales 2

How many times have you said, “I can’t find quality pre-owned vehicles and, when I do, I have to pay too much for them”? I’m sure it sounds familiar—we all know that gross starts from the moment we obtain a vehicle, either from trade, auction, wholesalers, rental companies, or any other means of purchase. Include various fees, and they reduce gross even more by the time we get the vehicle to our door.

After reviewing national dealership operational data, NCM has determined that, if done properly, 3-4% of your customer-pay repair orders should convert to either a new or used vehicle sale if you have a dedicated service drive procurement process. Dealerships most adept at doing this have a dedicated salesperson for the service lane with a unique pay plan to incentivize them, but you must have enough service customer-pay volume; otherwise, I would recommend a different approach. For example, if your dealership does 30 customer-pay repair orders a day, you have, on average, the ability to generate roughly one vehicle a day from your service lane; that’s 20+ sales, easily enough to support a person with help from others when things get busy. Of those sales, trades are involved most of the time, and you will keep a very high percentage of those transactions because most vehicles in the service department tend to be fewer than five years old and have been maintained, which helps in reducing reconditioning costs while adding to the gross. Plus, we likely have the vehicle’s history if we’ve already established a relationship with its owner; after all, they are in our service lane!

Your service department creates high-quality vehicles

In 2015, CarStory surveyed online pre-owned shoppers asking them to identify what things they wanted to know about a pre-owned vehicle. They reported 15 items; the top three were condition, accident history, and service history. When you acquire a vehicle off the service drive, you can easily attest to condition and service history, assuming the customer and vehicle have visited your service department regularly. When you consider the top three areas, the potential customer wants to know what are the “risk reducers.” They are already uneasy about potentially buying another person’s problem; however, vehicles maintained by a dealership are perceived as being of higher quality, as they have been repaired by technicians trained specifically for the brand and repairs have used parts designed specifically for that model while maintaining the highest engineering standards.

Identifying potential purchases during service appointments

A critical component of this approach is determining which customers are viable candidates; you are looking for owners in an equity position or near the end of their lease cycle. To do this, your service department or service BDC must have a robust daily appointment process that captures the information you need to determine if a customer is in equity, such as VIN and name. Here are my recommended three options for implementing a process at your dealership.

1. Use software

Look into the various software options and companies that drill into your service appointment function in your DMS and run the customer against your records to determine if the client is in an equity position, assuming you sold the vehicle. These tools will alert you if the customer is eligible for another vehicle based on equity and credit position with a relatively high level of certainty.

2. Review upcoming appointments

Another way to start—one that doesn’t require the same degree of investment—is to review tomorrow’s service appointments and identify vehicles that are between three and five years old. Then, have an F&I manager compare the customer’s information in your DMS to see if you sold the vehicle, and request that he or she evaluate its approximate equity or lease position. If you have an opportunity, determine a rough trade number for the customer and build a deal based on their last purchase or lease. Develop a script, and get started.

3. Evaluate on the service drive

A third option is to ask your service advisors to give you a heads up on expensive repair orders in the shop. Examine the vehicle and if you trade the car and keep it, give them the internal repair. If you wholesale it, pay them what the internal repair order would have paid them in commission since you probably sold a vehicle that you might not have sold anyway.

These are just three suggestions to get you started. Whatever method you choose, keep in mind the bottom line: Opportunities exist at your door every day, so why not take advantage of them?

Learn more about Randy Fluharty and how he and his NCM colleagues can help your dealership through 20 Groups and in-dealership consulting.

Permanent link to this article: http://blog.ncm20.com/2017/02/3-ways-the-service-drive-can-solve-your-pre-owned-inventory-problem/

Jerry Powers

#AskNCM: What are NCM’s best practices for used vehicle appraisals?

You’d be amazed, says NCM expert, Jerry Powers, at the number of dealerships that don’t have a defined used vehicle appraisal process.

So, how do you fix it? Jerry tells you how to make the most of the informal systems you already have, and shares the benchmarks you need to watch to stay on market.

Have another question for #AskNCM? Ask it below. Learn more about Jerry Powers and how he and his NCM colleagues can help your dealership through 20 Groups and in-dealership consulting.

Permanent link to this article: http://blog.ncm20.com/2016/11/askncm-what-are-ncms-best-practices-for-used-vehicle-appraisals/

Terry Wichmann

My Favorite Sales Wordtracks to Defend UV Gross Profit

Thinking man

Used Vehicle sales continue to be a critical part of any dealership’s strategy.

Quarter after quarter, used vehicle sales continue to perform: in July 2016 alone, it’s estimated that more than 3.6 million units sold. But no matter how aggressively you promote used vehicles, your dealership won’t make the most profit unless your sales team is consistently and firmly defending the gross profit on each and every vehicle they sell. Saying this is easy, but it’s often difficult to effectively train sales staff to protect each vehicle’s profit, leading to diminishing returns on sales.

To help train your sales team, here’s my simple—but effective—wordtracks to protect the gross margin on UV sales. I’ve used them for years. And this is a tool I frequently recommend to my consulting clients.

Defend your used vehicle gross profit with these wordtracks

(In this example, the selling price of the car on the dealership website and “on the windshield” is $14,750.)

1. Use the first 30 seconds to introduce yourself and the dealership.

Here are my recommended wordtracks:

- “ Our dealership/dealer group has been in business for __ years because we treat our customers very well and we know that price is important when a customer purchases a car (or truck) …”

- “You may be aware that __ thousand customers purchased used cars and truck from our dealership/dealer group last year.”

2. Get the prospect back to the dealership after the demo.

After a demo ride with a prospect, the salesperson should instruct her to park the used vehicle near the entrance Service Department. As she gets out of the car, the salesperson should say “… let’s go back to my desk and I will show you what we found and fixed on this car/truck.”

3. Do a trial close.

If possible, walk the prospects into the showroom through the Service Department and comment, “This is where you will bring your car for oil changes and other maintenance ….” See how the customer reacts.

4. Demonstrate the vehicle’s value.

After the prospects are seated at the salesperson’s desk/table, you should say, “I will get the value folder for this car and show you what we found and fixed on this car.” The salesperson should review each item in the folder with the prospect and watch for their head to nod in agreement a “trial close.”

After the review, sales staff should summarize the folder: “…and that’s why we know the selling price…$14,750…on this ___ is a fair price.”

The prospect’s response will tell you the next moves. If she responds, “I’ll give you $13,500 for it right now,” the salesperson now knows that the prospect likes the car, but she is trying to get it for less. The salesperson’s job is now to defend the gross. (“$13,500” is not yet an offer; it is an indication that the prospect is willing to buy the car).

5. Defend the gross against price objections.

Connect the reconditioning to the current price. Your salesperson should explain, “If you had come to our dealership and purchased this car ‘as is’ before we completed all the repairs on it, we may have sold it to you for less than $14,750.”

Review the value folder again, paying particular attention to the clean Carfax and intern internal repair orders which reflect all the repairs which were performed “at our (internal) cost.”

Reinforce that these documented items are the reason “we know that $14,750 is a fair price.”

6. Protect gross profit from counter offers.

If the prospect counters with “We’ll pay $14,000 right now,” the salesperson should try to overcome the price objection without taking an offer to the Sales Manager.

Use one of the following scripts to protect the vehicles gross profit:

  1. “What financial formula did you use to determine that this car is worth only $14,000?  We price our used cars and trucks very competitively on the internet; that’s why we sell so many of them: __ thousand alone in 2015. If we didn’t price them competitively, people like you wouldn’t find them on the internet.”
  2. “I imagine you spent several hours on the internet searching for a car like this one; you drove __ miles to our dealership to see it so you must feel it’s a fair price.  No one drives __ miles to see a car if they feel the price is too high. But, I understand you don’t want to ‘pay too much’ for this car.  But I think you know that $14,750 is a fair price. So, that you can go home and tell your friends that you ‘got us down’ on the price, you can purchase the car for $14,700 and still go back and tell your friends that you ‘got us down’ on the price.”

At this point, if the prospect continues to offer less than $14,700, the salesperson should take the offer to the Sales Manager who should attempt to close at $14,700.

How does your dealership defend the gross? Tell us below. Have more dealership concerns? Meet with Terry or another NCM Consultant to identify opportunities for improvement in your store.

 

Permanent link to this article: http://blog.ncm20.com/2016/08/my-favorite-sales-wordtracks-to-defend-uv-gross-profit/

NCM Associates

#AskNCM: What’s the silver bullet to improve UV?

Is there a secret to increased used vehicle profits? “Yes!” says NCM expert Robin. Find out what Robin thinks are the most important things you can do to improve your UV department. Here’s a hint: Get your “walking” shoes on!

Have you already started Robin’s must-do recommendations for pre-owned? Tell us about it below. Have another question for #AskNCM – comment below! 

Permanent link to this article: http://blog.ncm20.com/2016/06/askncm-whats-the-silver-bullet-to-improve-uv/

NCM Associates

#askNCM: Why should I market a vehicle before reconditioning?

Marketing and detailing vehicles for resale are primary processes for any successful used vehicle department. But how should you time these activities?

The answer comes down to marketing. If you wait out the reconditioning cycle time, Robin Cunningham warns, you’ll slow down the sales process … and reduce your profits!

How do you time your reconditioning and marketing activities? Tell us below! Want to #AskNCM a question? Leave a comment below, and we’ll answer it!

Permanent link to this article: http://blog.ncm20.com/2016/04/askncm-why-should-i-market-a-vehicle-before-reconditioning/

Dustin Kerr

Watch Out For Tax Season Temptations

Car taxes  design

It’s that time again. Right now, buy-here, pay-here dealers are in their busiest time of the year: tax season.

Although most dealers will tell you that tax season is not nearly as crazy as it used to be, there’s no denying that it’s still a major event in our business. BHPH dealers are likely to sell more cars—and collect more cash—in the next couple of months than any other month for the rest of the year.

Tax season means buyers, but what kind?

Sadly, it’s not all good news. It’s during tax season that we put our worst performing paper on the books. Flush with income tax returns, people walk into our dealerships with $1,000, $2,500, maybe even $4,000 or more down. And, just as giddy as our buyers, we completely forget about our underwriting guidelines and the fact that we are still going to have to collect on this account for the next two to three years.

Now, some dealers simply don’t care how well the paper performs. They feel that the cash down overshadows the risk of bad underwriting. And, many argue, they will just get the car back quickly if the customer defaults.

Now, I don’t entirely disagree with this philosophy. There is a certain point where the amount of cash down mitigates the risk involved. However, I always tell my consulting clients that there’s a way to do both—get the large cash down payments and properly underwrite each loan to ensure the highest probability of success.

And that approach, I think, is better.

 

Don’t lower your standards

The first thing we need to do? Slooowwww dooowwnnn! Hey, I get it. This time of year is very hectic, not only with sales but also with collections. It’s very likely we have more people in our lobby right now than any other time of the year.

When things start to get a little crazy, though, usually the first thing to suffer is attention to detail. Go back and look at the applications that were collected during tax season the last couple of years and compare them to applications collected during the rest of the year. If yours is like most dealerships, you’ll see a significant difference in the quality of information collected.

You need to discuss this situation with your staff ahead of time. Make it very clear that incomplete applications will not be accepted. (And, I mean be stern about it: It’s non-negotiable!)

Remember, you have to collect on this account for the next few years. A quality application is the first step to making sure you can do that.

The next thing I usually see that sets us up for failure is a complete disregard for payment to- income percentages. We all know by now, or should know by now, that accounts with payments greater than 25 percent of net income perform at a much worse rate than those with payments below 25 percent net income.

I’ve found that dealers and managers forget this rule when a large down payment is made. The attitude seems to be, “If they have skin in the game, they’ll make all the payments.”

Sad news, friends, but this just simply isn’t the case with most customers.

 

Don’t forget that tax money is free money

Here’s an important lesson I’ve learned after reviewing hundreds of thousands of loans over the years: The down payment amount has very little to do with how well a loan performs.

As far as our customers are concerned, that sizeable tax return is just free money. This sudden windfall isn’t a result of careful budgeting or pinching pennies for a down payment. No, it’s a bonus with very little emotional attachment.

Don’t compromise your payment to income standards just because the customer has a big down payment. Remember, all that tax money will be spent very soon, and they will only have their weekly paycheck available to make their car payment.

 

Don’t forget the delivery and closing process

Another area I see slip during tax season is the closing process. I consider the application and closing to be the most important aspect of the collections process. And, if you’ve ever read my articles, watched my BHPH Tip of Month video segments, or attended one of my training or consulting sessions through NCM, you know that I firmly believe that an improperly closed loan is a charge off waiting to happen!

In this busy time of year, it may seem like a simple solution to ask our commissioned sales team to close the loan instead of a manager or a collector. Sure, it might speed up the process, but the whole point of having a manager or collector close the loan is to double check and ensure that the salesperson hasn’t missed or skipped an item because they were afraid of losing a deal.

Don’t do be tempted to “streamline” the close; you’ll just pay for it later. Keep your processes intact, and have a dedicated person or team well-trained in the closing procedure review every application. And never let them veer off track just because you are busy.

 

Make the most out of tax season

I know how exciting this time of year is, but you can’t afford to be burned. Remember, these could be the worst-performing deals you make all year.

Make sure you have a great application process in place, follow your payment-to-income guidelines and don’t short-cut your closing procedures. If you do these three things, you can enjoy the cash windfall of February and March without the headaches that come in July and August.

Article originally published in the January/February 2016 issue of the BHPH Report. Be sure to check out the full issue!

 

Permanent link to this article: http://blog.ncm20.com/2016/04/bhph-tax-season-temptations/

Lee Michaelson

What do I do with today’s bucket jumpers?

Cars

Bucket jumpers—vehicles that reach 16, 31 or 43 days in inventory—pose a huge strain on your dealership. Make certain your bucket jumpers get all the attention required to reduce inventory aging issues and improve turn.

Investigate the vehicle

A vehicle becomes a bucket jumper by sitting too long in your inventory. The first thing you need to do is check on how much interest the vehicle is generating on the internet.

Prior to the stock walk process, analyze how much prospect activity garnered attention on each vehicle. Here’s what I suggest you evaluate:

  1. The number of times the vehicle appeared on a search results page (SRP)
  2. How often prospects clicked through to the vehicle details page (VDP)
  3. The vehicle’s VDP conversion percentage (Divide VDP by SRP)
  4. Confirm the number of inbound phone calls received on each vehicle
  5. Check the number of emails received requesting information for each

Once you have a sense of how much interest the bucket jumper has generated, inspect it in person:

  1. Open all of the doors, the hood and the trunk; identify any issues that require correction.
  2. Start the vehicle. Does it operate properly? Check all systems such as climate, navigation and audio. Open the sunroof, and make certain the windows, locks and seats are in proper working order.
  3. Inspect the exterior for problems that require correction.
  4. Determine if the vehicle needs detailed again.
  5. Keep a list of the vehicles you identify that need additional reconditioning, and make certain the reconditioning is completed in a timely manner.

Involve your staff

The most important question about a bucket jumper is: Why haven’t we sold it? Ask your staff how many opportunities you’ve had on lingering inventory and how many of those opportunities went on a demonstration drive. Get their feedback about the vehicles, especially any comments they remember from customers.

Once you’ve gathered all the information—how much interest the car is generating, its condition and how many people have seen or test driven the car—it’s time to implement your action plan.

Address the problems

Typically, there are three possible resolutions to the bucket jumper problem. The vehicle needs additional reconditioning—arrange for the repairs immediately or wholesale the unit. The vehicle is priced too high—keep it, but adjust the price immediately. It’s not a good vehicle for retail—wholesale the vehicle and redeploy the cash.

Selling the bucket jumper list

Be aware that the decision to keep a bucket jumper means a commitment to more work. Not only will you likely need to adjust its price, but you’ll need to evaluate its marketing and merchandising. Once these are addressed, you should see movement; if not, it’s time to reevaluate.

Are the bucket jumpers in your inventory slowing your sales? Share your experiences below. 

Permanent link to this article: http://blog.ncm20.com/2015/10/what-do-i-do-with-todays-bucket-jumpers/

Steve Emery

Are You Really Managing Your Used Cars?

emery_blog

For most dealers, the used car department is the biggest opportunity for increasing profitability. Unlike new cars, a dealer can stock any used car they choose. Most volume and gross issues are directly related to those choices and how the inventory is managed through final sale. No doubt, there is an “art” to managing used cars, and dealers who are getting the best results have added some “science” to it. This enables them to be proactive vs. reactive in managing their inventory.

What is the best Inventory for you to stock?

Do you know what have been fast-turning cars at your store? There are a variety of software tools that can look at your sales history and identify these for you. Any retailer knows this, down to the color, options, price point, etc. Once you know what these cars are, you can develop a core inventory. These are the cars that you want to make up the bulk of your inventory. They probably aren’t the ones you are currently buying by the truckload from the factory auction, so the majority of your inventory could be in slower-turning units, reducing volume and gross. Is your buyer guessing or knowing with your 7-figure checkbook? Proactive dealers use their core inventory as a shopping list for their buyers and track what percent of those units make up their current stock (goal 80%).

What are the best sources for these units?

Core inventory tends not to be auction program cars. Proactive dealers use these methods to increase their percent of core inventory:

  • Check the back door. Are you currently wholesaling core inventory?
  • These units come to you every day; just look at the Service drive! Many dealers spiff Service Advisors for letting them know core inventory is in for Service today. Managers do an appraisal and contact the customer.
  • Use direct mail to target current customers who drive core inventory. Invite them in for a special sale or service offer.
  • Who has the bigger house, you or your wholesaler? Develop a network of other dealerships you will buy from. Their non-core inventory could be your core inventory.

How can you improve recon time, cost and quality?

It makes no sense to buy great cars just to have them take forever in recon and come out in less-than-saleable condition. To proactively manage recon, many dealers have incorporated these processes:

  • When buying a car, fill out a 2-part recon pre-approval sheet. Check off what you already know the unit needs and set a dollar limit so Service isn’t held up waiting for approval. Place a copy in a dated folder 3-5 days out; review the folder every day looking for cars bottlenecked in the recon process.
  • Have ready cars pulled up to the front. Compare the approved recon with the actual RO for cost. Have someone in Sales test drive the car to ensure it’s in saleable condition. If the cost and quality are right, then close the RO.

How can we do a better job managing aging inventory and wholesale?

We all know that grosses tend to decline with the age of the car. Do you proactively manage units as they age to increase their chances for retail sale and avoid wholesale loss? When is a unit considered “old” to you? If 60 days is your turn policy, when do you take a look at the car? Answer: typically 45 days. Numerous studies have shown the highest gross peaking at 21 days. Proactive dealers are looking at aging units at 21, 42, and 63 days:

  • At 21 days, check the car for defects, re-clean, and park in the “hot spot.” Consider identifying the car as a “manager’s special,” spiffing it, reducing price, wholesaling it.
  • At 42 days, can we wholesale the car now? Put it on eBay? Trade with another dealer? Park in a “clearance zone” on the lot?
  • At 63 days, take it to the best place for wholesale. Depending on the unit, this may be a wholesaler, another dealer, or as a last option, auction.

None of these techniques are expensive to implement, especially when compared to what you may be losing in units, gross, and wholesale. Proactive dealers are managing their core inventory, taking their used car department to the next level of profitability.

For questions, reach out to $teve at 913-645-2915 or semery@ncm20.com.

UV Training

Permanent link to this article: http://blog.ncm20.com/2015/07/are-you-really-managing-your-used-cars/

Older posts «