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Category Archive: Used Vehicles

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?

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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/

Robin Cunningham

Unrealized Opportunities in the Used Vehicle Department

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Forgive me for saying this, but from where I now stand, it is quite apparent to me that there is way more opportunity for improving profitability than most dealership managers are aware of. I certainly know looking back on my career (and I thought I was very pro-active) that there was so much more opportunity to be realized than I was able to completely grasp at the time.

Most people agree that there is more upside potential left on the table, they are just not aware how much there is or how to attain it. Today I’d like to share some of the upside potential that we see in relation to the used vehicle department. One of the primary opportunity areas in the used car department is in increasing the average ratio of used to new vehicle sales.

We work with a Nissan dealer, in a single city market, that three years ago was selling close to a 1:1 used to new ratio. They realized there were only so many new Nissans they could sell no matter how aggressive they got with pricing and marketing. So, they got very clear on what does and does not work in today’s used vehicle market. They made steady progress in the quality of their processes and accountability management, and today are selling a 3:1 used to new ratio.

One of their managers was in class a month or so ago made a comment during a discussion. He said that as a variable department, they “freak out if and when any used vehicle hits 21 days in stock.”  They so highly value the processes in place from each vehicle’s first day in stock, that at 21 days, they know something is going terribly wrong. That comment raised a lot of eyes in class, especially from the managers of stores with huge aging issues. To get to that 3:1 ratio took a lot of trial and error, and a high degree of trust in their processes. It was all made easier by beginning to see it adding up in more total used vehicle gross profit.

To realize that opportunity, especially if one is still struggling in the used vehicle department, a pretty systematic overhaul of everything is often needed. That would include such processes as:

  • Acquisition
  • Appraising
  • Stocking
  • Reconditioning
  • Initial Pricing
  • Internet Marketing
  • Re-pricing
  • Desking policy
  • Pay plans
  • Aging

For sure, the change in focus from the amount of gross per vehicle retail to total department gross is required. To clarify, we are not against getting as much gross per vehicle as you can; but you just need to know which market segment each vehicle you are stocking is in, so your pricing policy is not getting you into aging problems.

I have been saying of late that our initial pricing policy is our turn policy. If you are pricing above market average right out of the box, we rarely see the pricing come back in line before the vehicle has aging issues, because the above market price has kept it largely invisible to the shopping public on the Internet… where, of course, most shoppers are today.

I just referred to what “market segment” each vehicle is in. We break those segments into: A, B, C and W categories. CPO, of course, is another category and I am going to come back to that separately.

A Vehicles

An “A” vehicle is a one of a kind, mostly irreplaceable vehicle. It is generally easier to replace the customer than it is the car. These almost always come from a trade, either rare in the first place, with very low miles, or both. At most, this makes up 10% of inventory. These vehicles should have a much higher than average gross profit, so the opportunity there is for a higher PVR.

B Vehicles

The “B” car is usually our own brand and is still under factory warranty. These are the most available cars to us, through trade, auction or our service drive. This is the case for all dealers, so the day’s supply is high, relatively speaking. These cars have the highest potential for wholesale loss, largely due to over-pricing on the Internet. Because these are very nice cars with lower miles on them, it can be tempting to try to get “above market” prices for them. Without a doubt, most vehicles with aging issues come from this segment, especially the ones bought at auction.

Because this segment makes up 60+% of inventory dollars, it can have devastating effects when these dollars become aged. The strategy for this segment is to aggressively price them to market immediately, get the F&I turn and the gross profit from reconditioning, and then go get more just like it. These will have slightly less than an average gross profit per vehicle. But again, since this is where the largest dollar amount of inventory is, a faster turn will equate to more total departmental gross. Again, the focus and opportunity for total departmental gross profit has to be primary here.

C Vehicles

The next segment is the “C” car. These are cars that are out of factory warranty, though a warranty could still be sold. They have higher miles and don’t have to be in perfect condition. These are the vehicles everyone seems to be wanting and almost always come from trades. The opportunity is a gross per vehicle that can be at or slightly higher than average. The return on investment is higher because they have a lower average cost of sale. Fortunately, most dealers are keeping more of these vehicles for retail these days, because in the past many got wholesaled and were the key source of inventory for the independent dealers. I know I wholesaled a lot of those in my past, and I now realize how we were missing out on possibly the richest segment of the business.

CPO Vehicles

The other retail segment that gets uneven attention is the certified pre-owned category, or CPO as we all call it. The luxury brands are all strong in this segment, and those manufacturers play a key role in helping make sure it is viable by actively supporting the strategy. For most of the other brands we see a very spotty consistency of dealers taking full advantage of this opportunity. It truly is like a separate franchise and has to be treated that way.

I have seen dealers of almost any brand take full advantage of it and other dealers from those same brands try to play both sides off the middle. Those dealers end up not having many CPO vehicles and that likely leads to less total volume, less gross per vehicle, less reconditioning gross, less future service and parts gross — and ultimately less customer retention. The other thing I see happen with CPO vehicles is when a dealer trades or acquires vehicles other than their own brands that have a strong CPO compliance; it makes it harder for competing dealers to retail those vehicles successfully. One thing we see that can offset this are some of the third-party, certified pre-owned programs that are available in the market place, like the Motor Trend Certified Program.

I would be remiss if I did not mention the very big opportunities that often get untapped in F&I. The public groups, who are under the most scrutiny of all, are at about $1,100 per vehicle retailed net after chargebacks. Many dealers are well above that, but most are way off that number and it really seems to be a focus issue. Selling more financial products and less focus on rate has been the trend, and it really seems to be working. Many of the financial service vendors provide the training as well.

W Vehicles

The last used vehicle segment is the “W” car or wholesale. There are two levels of wholesale: The ones we decide not to keep at the time of acquisition for various reasons (too many miles,  poor mechanical condition, or too expensive to keep). This level of W vehicles is actually a profit center.

Then, there are the vehicles we got for retail and for some reason have not sold. Maybe we have kept them for too long and now believe we have to get rid of them, often at a loss. Our friend Dale Pollak says there are only two reasons that could possibly happen: We somehow could not find the right price that others were selling the same vehicle during that time frame or we were unwilling to put the vehicle on that price. Knowing this is a possible unrealized opportunity can allow you take advantage of this.

This of course was just a very brief discussion of some of the most BASIC OPPORTUNITIES available in the used vehicle department that are very often not taken advantage of.

UV Training_Aug2015

Permanent link to this article: http://blog.ncm20.com/2015/07/unrealized-opportunities-in-the-used-vehicle-department/

Robin Cunningham

Is Your Used Vehicle Manager More of a Sales Manager or an Asset Manager?

Car key, credit card on a signed sales contract

This may seem like an odd question, but it’s at the root of a lot of challenges so many dealers have in being as successful and profitable as they can be in their Used Vehicle Departments.

Over the last two weeks at the NCM Institute, I was able to work with both a Used Vehicle class and a General Manager Executive Management class, where the primary discussion was used vehicle management.

One of the facts we deal with is that the average Used Vehicle Manager at a dealership has been in that position for less than one year.  For discussion sake, let’s say that one of the reasons could be that their predecessor got promoted to GSM or even GM.  The rest likely failed at being able to move the department successfully and profitably forward.

Two weeks ago during introductions, in the Used Vehicle Management I class, a young man stated that he had just been “promoted” to Used Vehicle Manager 2-3 weeks prior.  He had been the New Vehicle Manager for about a year before that and sold cars for a couple of years before that.   Without trying to  put him on the spot,  I casually asked him how much training he had gotten all the way back to his “selling days,” and then as he became a New Vehicle Manager.  He was given very little as a sales person and effectively none upon being “promoted” to a New Vehicle Sales Manager.  This really is the norm in our industry.  The very good news for this young man (and the dealer that chose to send him to us for some education and training;) is that he is going to have a much better chance to be successful in his new and very challenging position as a Used Vehicle Manager in today’s unforgiving marketplace.

This scenario of someone being “promoted” to Used Vehicle Manager from a New Vehicle Manager is very common, actually.  It is likely that this person has become a good closer and desk manager.  They may even have become good at working with salespeople on a daily basis to help them become more successful and productive.  This, however, does not prepare the person for almost any of the skills necessary in becoming successful as a Used Vehicle Manager.

Maybe one of the most key skills is the appraisal process.  This is every dealership’s #1 source of Used Vehicle Inventory.  We had a dealer’s daughter in class late last year who spent a number of years outside the dealership gaining experience in other environments.  This included working as an appraiser/buyer at Car Max.  When we were going around the room talking about people’s appraisal experience and philosophies, this young woman kind of stunned the guys in the room with just how thorough of an Appraisal Process she learned and performed while working at Car Max….it took her five minutes to explain the process.  When she was done, the one question that had come to my mind was how much training was she provided in order to do appraisals that thoroughly.  She thought about it for a second and said 6-7 MONTHS!!!  I then went around the room asking others how much training they had before they were allowed to appraise cars.  As you might imagine, the consensus was pretty close to zero.

As I often say we are only trying to uncover upside OPPORTUNITY for our students to identify and return to their dealerships with realistic ways to achieve them.

So, going back to the title of this blog: Is your Used Vehicle Manager more of a sales manager or an Asset Manager? More and more dealers are realizing that in today’s market, if they are going to get the greatest gross profit, and equally or more importantly, the maximum return on investment, they need someone to be a full time asset manager of their multi-million dollar investment in used vehicle inventory.

So beyond just the appraisal process that is so vital, there are also the STRATEGIES for: the software tools we use (AXX, First Look, vAuto, Red Bumper, etc.); pricing and re-pricing; reconditioning; internet presence (price, pictures, descriptions, placement); wholesaling (both primary wholesale and over-aged wholesale); tradeWalk/stock walk; model inventory, and so much more.

With the majority of salesforces being combined, selling both new and used vehicles, there really are plenty of people that are good closers and desk people.  So think seriously about making sure you have a dedicated Used Vehicle ASSET Manager – It’s more than a full time job itself.

Permanent link to this article: http://blog.ncm20.com/2015/02/is-your-used-vehicle-manager-more-of-a-sales-manager-or-an-asset-manager/

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