CALL US AT 1.866.756.2620

Category Archive: Used Vehicles

Robin Cunningham

Unrealized Opportunities in the Used Vehicle Department


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:

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:

Tom Hopkins

Diagnosing Your Clients’ Needs


When people think about making a vehicle purchase, they aren’t likely to compare talking with you to going to the doctor, but you should make that comparison when preparing to talk with clients. People trust doctors. They usually accept the diagnosis and prescription for wellness with few questions asked. That’s because they recognize doctors as experts in their fields. Your goal is to have your clients see you the same way. When they have an ache or pain related to their mode of transportation, they should immediately think of calling you. That’s because they’ll be confident you have the right prescription for their ailment.

To earn this level of respect and trust, you need to start every relationship with the right skills. These skills include a caring manner, a confident air, and your diagnostic tools. The tools you use in diagnosing the automotive needs of your clients may be as simple as a pad of paper and your product knowledge. They may include your past client experiences, personal experiences, or memories.

The most powerful diagnostic tools used by all people in sales are questions. Like a doctor, your use of questions begins with general areas of need. Then, based on the answers you are given, you narrow your questions down to where you can readily determine the right cure or solution for the clients’ needs.

Average car salespeople have this fantasy in which they think they should be able to simply present the wonderful features of their vehicles and the customer, seeing the value, says, “I’ll take it.” If customers made buying decisions based on features alone, that might work, but it’s a rare occasion when that happens.

The reality of it is that most buying decisions are based on past experiences, the experiences of others the client trusts, advertising, gut feelings, and hundreds of other factors that you can’t do much about. So, you have to start with questions to get them talking about their needs, wants, and perceptions of your product or service. The answers to these questions will help you put yourself in their shoes. Once you’re there, you’ll see what steps you need to take in order to help them make a sound buying decision.

Be sure to ask, “What past experience do you have with this type of vehicle?” It could be that they’re very well-versed on the features of an SUV or luxury sedan, even owned one in the past, and are seeking a new one of the same type. If they know little or nothing about the vehicle they’ve come to see, you’ll have to invest a bit more time in educating them as to the features and what they can expect.

Ask very specifically what they hope to accomplish with an investment in this particular type of vehicle. It could be that one of your vehicle’s key benefits is sought after by most clients. However, that feature does nothing for this particular client. You won’t want to turn them off by talking about something that doesn’t matter to them.

I like to use the analogy of a torpedo when talking about this subject. A torpedo leaves a ship in the general direction of its intended target. It bounces a signal off in the target direction. If the signal doesn’t come back, it corrects its direction to get back on course and sends another signal seeking feedback.

That’s what questioning does for you. You take off in a general direction with your questions. The answers you receive either tell you that you’re on target or that you need to take another track. Rarely will you take a direct course from initial contact to the vehicle sale. More often than not, you’ll find yourself zig-zagging but all the while heading in the general direction of the sale until you find just the right answer for each and every client.

Take a moment to think about the quality of the questions you are asking. How quickly and accurately are they bringing you back the information you need to move forward with a sale? If you continually get hung up in one aspect of your presentation, invest some non-client time writing out the questions you’re using now. Then, think about how you could rephrase them to get better feedback. An even better strategy is to make a list of all the information you need to have before asking for a decision. Then, work backwards, writing out the questions that will provide those answers. Either way, you’ll soon find yourself with better questions to ask, and a shorter, more efficient sales process.

Permanent link to this article:

Terry Wichmann

Car Dealers: Are you Paranoid Enough to Survive?


Andy Groves’ first business book was entitled, “Only the Paranoid Survive: How to Identify and Exploit the Crisis Points that Challenge Every Business.” The recent and relatively sudden decline in gasoline prices has me thinking about Mr. Groves’ theory, as what is great news for consumers and car dealers ironically often wreaks havoc on dealership profitability.

At NCM, our foundational service is peer-to-peer collaboration around dealership operating performance that results in profit improvement. We do this in our 20 Groups, our management training programs, and our in-dealership consulting programs where we can show how a dealer’s operation compares to his or her peers in the industry. But we also do this among our own internal retail experts using technologies that keep us connected, even though we are out in the “field” each and every day.

Last week, our internal teams here at NCM Associates were deliberating the impact of lower gas prices on the mix of cars and trucks the dealers will stock. Of course, the inventory mix almost always changes when gas prices decline noticeably and the demand for larger vehicles and trucks increases. At the same time, the manufacturers, who must keep their eye on their EPA numbers, are likely going to further incentivize small cars and pay for the additional incentives by increasing the price on SUVs and other so-called “gas-guzzlers.”  This is demand and supply economics complicated by regulation and it’s nothing new to car dealers.

But as a consultant to those same car dealers, my bigger concern is what happens in the used vehicle market when the price of gas declines noticeably.  Savvy dealers (maybe those who are a little more paranoid than the rest) know that they must pay close attention to their used vehicle inventories in light of this short-term reality by managing their trades and pricing with the more likely, long-term reality in mind.

So dealers, what will you do to ensure you don’t wake up to a used vehicle inventory of SUVs and full-size pickups if/when the next crisis hits and the price of gas zooms to $4/gallon or more? If you’re not keeping a close eye on your inventory mix now, you’d better get a handle it soon, or let the used vehicle “write-downs” begin.

About Terry Wichmann:

Master dealership financial management and learn proven variable and fixed operations processes and management best practices that will help you drive more strategic growth and profitability. Click here for details. 

Permanent link to this article:

Robin Cunningham

Are Win-Win-Wins Possible in the Dealership World?

thumbs up

Is it just me, or does it seem like so much of what we take for granted in life is a zero-sum game? Meaning, if and when we or somebody wins… somebody else has to lose.

Football season has just started and baseball season is winding down; and it’s all about who is winning and losing. We take that for granted and quite honestly, don’t think much about it.

Even in our world of the retail automotive industry, there is a lot of zero-sum game thinking at work. We see the competition of Ford F-150s outselling Chevrolet Silverado; Camry outselling Accord; BMW, Lexus and Mercedes battling it out for the Luxury crown every year. In our local markets, dealers battle each other for the right to call themselves the number one selling dealer in town or the number one CSI dealer in town, of every brand. These are pretty innocent competitions really, but a lot of dollars are spent each year by the manufacturers (and some dealers) to make sure someone knows who the winners and losers are.

For the last three years I have worked as a lead instructor at the NCM Institute. I spend all my time with dealership managers, showing them how they and their associates can WIN in their department or, in the case of general managers, the total dealership. It became apparent to me some time back that the way we approach everything here is: NOT a zero-sum game! In fact, we believe there can be a win-win-win for all of our efforts.

  • A win for the customer
  • A win for the dealership
  • A win for our associates

As the Church Lady used to say on Saturday Night Live, “Well, isn’t that special?”

Church Lady - Dana Carvey

Yes it is! Let me give you a couple of examples.


Around 90% of all customers do all their pre-shopping of used vehicles on the internet. When we price our vehicles at “market-based” prices, we show all of our cards up front on both our website and any third-party sites that we use, including:

  • Pricing
  • Pictures
  • Vehicle descriptions,
  • “Why buy from us” marketing messages

When customers send e-leads, call us or walk in the door, they can interact with dealership personnel who have been trained on value-selling. That includes our salespeople being trained to anticipate that the customer has been on the internet, to acknowledge that, and reinforce that by using Value Folders that include:

  • Car Fax, service records
  • Reconditioning reports
  • Data confirming how competitive our pricing is

Week in and week out, the dealership managers we work with are confirming that they are discounting up to $700 average off of internet pricing…without the customer really even asking for it! When we price and sell our vehicles at or near the average price to market, especially within the first 30 days in stock, we get to turn our inventory dollars up to 12 times per year. Our salespeople get a commission from the highest average gross the car will ever have, and our customers are value-sold cars that they found themselves on the internet at a price they feel good about because we showed them all the supporting documentation to support their decision. Win, win, win!


Most service advisors are working with too many customers per day and taking inbound phone calls.  This pretty much guarantees that they do not have time to build the crucial relationship with each customer, which is their number one priority. Because they are too busy, there is rarely a walk around with the customer on each car; rarely is a menu or any recommended maintenance discussed; rarely is a multi-point inspection performed – and if it is, it rarely produces many additional service requests because our relationship with the customer isn’t that great.

When we slow down the service drive process and mandate that each service advisor perform a walk around with the customer, a trusting relationship begins to be established. If an appointment coordinator or BDC is taking inbound service calls, they can establish if the customer’s car needs anything based on time, mileage or history – over and above what they originally contacted us for. We can inform our advisors of this information and hold them accountable for communicating this to each customer. When we perform multi-point inspections and communicate any findings back to our clients, they will take that information more seriously due to the trusting relationship begun by our advisor. Our advisor will set the customer’s next service appointment based on time, mileage and history. The customer now has a reason to become a “retained” customer, the dealership gains the ongoing business from those customers – and the advisor not only generates more dollars and hours  per visit, but helps ensure that the customer wants to come back over the lifecycle of their vehicle.  Win, win, win!

See? It is possible. One of the pleasures of my work is showing our clients exactly how win-win-wins can be achieved. If you would like more examples or are ready to learn more, feel free to contact me or any of our associates.


Permanent link to this article:

Larry Dorfman

CPO: What is Your Dealership Missing?

Larry Dorfman is the CEO of EasyCare and a new guest contributor to the Up to Speed blog. Since 1984, EasyCare has set the standard in automotive benefits created to enhance the vehicle buying and ownership experience. Read more about EasyCare here


As CPO sales continue to break records and consumers are consistently willing to pay more for them, making sure you are competitive AND able to hold profit on the “Other Makes and Models” (OMMs) in your auto dealership’s inventory becomes more and more important. How are you competing with the factory CPO vehicles in your market on an off-make vehicle in your inventory? Most dealers have one answer to that question: “Price.”

If that is your answer, why not certify your OMM vehicles to win online and in the showroom against your competitors’ factory CPO vehicles? Dealers who do are selling more cars, holding more profit and building more loyalty with the customers who are buying them. They are digitally advertising these vehicles as “Certified” or “CPO” and creating more conversion opportunities with consumers looking for certified vehicles. When the customer comes to the lot, they don’t have to compete on price alone. They have a much better “why buy here” story to tell/sell against their competitors’ CPO vehicles.

There are four keys to holding pre-owned margins in today’s digital marketplace.

I think we all agree that managing and pricing your inventory appropriately is the number one key to having a successful pre-owned process.  With that being said, implementing the following three items will put you head and shoulders above your peers:

Respond to the consumer’s search with a relevant ad. The more your ad and landing pages match the consumer’s search, the better chance you have of search engines displaying and consumers clicking your ad.

Provide as much information about the vehicle as possible on the landing page to build value up front and “win the click.” Research is clear; consumers shopping for “certified” are looking for certified, but many don’t actually understand what the specific CPO program covers. Educating them on the landing page will drive more conversions and more sales.

Certify as many of your pre-owned vehicles as possible. Consumers are paying more for the confidence they have in CPOs. Whether you are presenting a factory CPO, or an independent certified program on your other makes and models, certifying as many as you can creates more opportunities, more sales and more profit.

Adding certified value without process and training is just adding expense. The brilliant man who wrote Velocity and created V-Auto told me this years ago, and the statement is as true today as it was then.

The keys to certifying your other makes and models are:

  • Partner with a national brand consumers recognize and trust.
  • Keep the investment reasonable, and make sure you have a process that allows you to recover that investment in additional gross profit and in F&I.
  • Deliver a strong value proposition that makes your vehicles “different,” and most importantly…
  • Make sure your team is trained to deliver the experience you are promising online, in the showroom.

Other benefits you will enjoy from certifying your OMM vehicles are: offering more on trades for “hot” other make vehicles in your market, buying more vehicles out of your database and service department, and bringing more balance in your overall pre-owned operations.


Permanent link to this article:

Robin Cunningham

How Profitable is Incremental Growth?

Composite Review

I think it is safe to say that every business operator is planning, forecasting, or at least hoping to increase their sales and profits in whatever business he or she is involved in.

In the retail automobile business, that growth can come in many forms, such as:

  • Selling more new or used vehicles
  • Increasing the gross profits of the vehicles you already sell
  • Increasing finance & insurance income per vehicle retail
  • Reducing the aging of your used vehicle inventory
  • Reducing your reconditioning cycle time in order to get the vehicle front-line ready sooner
  • Increasing the repair order count in the service department
  • Increasing the gross profit margin in the service department
  • Increasing the number of parts on the shelf that the service department needs each day

There are many more forms growth can take, of course, but these are pretty representative of the opportunities available to most dealerships we work with.

The reason I say that incremental growth, resulting from actions like those mentioned above are far more profitable than one might think, is because, for the most part, the personnel, semi-fixed, and fixed expenses are going to be nearly the same in our operating departments, whether or not we drive increased sales and gross.

If we can keep the selling expenses in the range of 30-35% of total all-in gross, when we incrementally add more gross, we can retain 65-70% of that increased income as net profit on the bottom line. If a dealership is doing really well, its total expenses will typically run 70% of gross profit, leaving a net profit metric of 30% net-to-gross. So growing our business, while being able to maintain our expenses at best practice levels, can drive more than double the incremental net-to-gross metric than would typically be the case.

There are several places we see this demonstrated during our NCM Institute classes. Our students are encouraged to develop and document at least two Guarantee of Action Plans (GOAs) each evening after class and then present them to the class the following morning. These GOAs describe and quantify their ideas. The GOA could be something like selling 10 more used vehicles per month by pricing them more competitively to the market. The quantification might look like this: 10 incremental used vehicles at $2,976 all-in gross, which would be $29,760 additional gross per month, or $357,120 annually.

The primary selling expenses (commissions to salespeople, F&I producers, and sales managers, advertising, floor plan interest, policy and delivery expense) will be maintained at no more than 35%, and assuming that no additional incremental expense is required, the department would retain 65% of the $357,120 or $232,128 in additional net profit. The equation I used looks like this: (10 x $2,976 x 12 x 65%)  If these 10 extra vehicles were not sold, the same 65% in expenses would still be incurred; but not any extra gross profit nor subsequent net profit.

When working with variable department managers, another action we suggest our students begin focusing on every day is to reduce the price-to-sale gap. That is the difference between the advertised Internet price of a specific vehicle and the actual retail transaction price at the time of sale. In the beginning, this can be a huge number, so we suggest starting at a target reduction of $200 per car.  As an example, for a dealership retailing 80 used cars per month, reducing its average price-to-sale gap by $200 per vehicle, and keeping its variable selling expenses at no more than 35%, would increase its net profit by $124,800. The equation I used looks like this:  (80 x $200 x 12 x 65%).

By the way, we work with a lot of variable managers, and, before we begin teaching them this best practice, they tell us that they believe their true average price-sale-gap is currently at least $700 per vehicle retailed… off Internet pricing! (Don’t get me started!) So the $200 per vehicle target reduction that we’re suggesting is extremely conservative.

As I said at the beginning, there are numerous opportunities for increasing sales, gross and reducing expenses in our dealerships these days. I hope my brief message validates for you the powerful effect that incremental growth, combined with a controlled expense structure, will have on your bottom line!


Permanent link to this article:

Garry House

The Changing Role of Used Vehicle Management


Over the last ten years, anyone who has not witnessed dramatic changes in the used vehicle arena must have his/her head in the sand. Why is it then that so many franchised new vehicle dealers have thus far failed to effectively adjust to these changes? So that you understand what I’m talking about, I’ll just mention two of these impactful changes:

1. The Growth of the Internet as a Marketing Source

2. The Advantages Available through Inventory Optimization Technology

Even the language is changing! The used vehicle manager who was successful ten years ago wouldn’t even be able to communicate today. What did he need to know about inventory turns, price-to-sale gap, SRPs and DVPs, etc.?

Most importantly, the scope of used vehicle management responsibilities has massively expanded. At the used vehicle management classes offered by the NCM Institute, we now define and discuss the 30 Regular Responsibilities that must be performed in a well-run pre-owned vehicle department.

NCM Institute divides these responsibilities into three major categories: Inventory Management, Marketing, and Sales Production. It quickly becomes apparent to our students that even Superman, working 80 hours per week, cannot effectively perform these responsibilities individually.

Many of these numerous tasks must be assumed by, or delegated to, other members of the dealership sales team. In some dealerships, the used vehicle department manager position has been totally eliminated from the organization chart. Instead, the position has been replaced by one or more of the following:

  • Group Used Vehicle Systems Coordinator
  • Used Vehicle Digital Marketing Director
  • Used Vehicle Sales Production Manager
  • Used Vehicle Inventory Manager
  • Used Vehicle Acquisition Specialist
  • Used Vehicle Pricing Administrator

Without a used vehicle department manager, either the GM (or GSM, if applicable) must “own” the aforementioned 30 Regular Responsibilities, and he/she must ensure that each of the responsibilities is effectively delegated and executed. Future articles of Up To Speed will present and discuss in detail many of these individual responsibilities.

Need help structuring your dealership to capitalize on used vehicle department opportunities?  Reach out to your NCM 20 Group moderator or Retail Operations Consulting coach, or sign up for the NCM Institute’s courses in Used Vehicle Management.  Call us at 866.756.2620; we’ll listen and recommend a solution that’s right for you.

UV Training

Permanent link to this article:

Paul Stowe

Check Your Used Vehicle Manager’s Thinking… Then Have a Conversation


Mr./Ms. Dealer:

There continues to be a great deal of misconception in sales managers’ thinking about why they’re not able to increase used vehicle volume. Industry metrics confirm that those dealers not performing at a minimum 1-to-1 New-to-Used retail sales ratio are just not participating in the opportunities of the current market.

So why do our managers continue to have these misconceptions? What follows are some common reasons we hear during our dealership consulting engagements. My responses should help you combat these misunderstandings that are prevalent in our industry today, and they’ll also help you have the conversation that will turn this thinking around.

“I need more inventory to sell more cars.”

You might, but first, do you understand and practice an aggressive “turn” mentality? If not, you are five years behind in your skill set. If you have an aging issue right now – why? Should your dealer give you more dollars to invest unwisely? Just a hint… great operators do believe a 30-day (or faster) turn is attainable. Our Benchmark metrics validate that a 45-day turn is very common, regardless of franchise. Do you understand that if you turn your inventory more efficiently, your volume will increase?

“I cannot find the ‘right cars’ and when I do, they are too expensive.”

Come on! The vehicles are out there! You might have to work every day to source them. What makes you think you are smarter than the market which dictates the cost and sales price of inventory? What is your acquisition plan? What do you buy each week to inventory?

“If I price to market, my grosses are too low.”

This is so common. Question: Have you ever put more money into a trade to make a new car deal? If so, of course you reduced the new car gross – right? If not, what have you just done to the integrity of your pricing model and your used unit gross potential? (Most OEM incentive money is being paid on new car sales. Why in the world would you destroy your acquisition disciplines, bumping used trade-in inventory values and not reduce new car gross to its true transaction value?)

A new car deal is a new car deal, albeit an OEM incentivized transaction. A used vehicle trade acquisition is an investment decision. Buy it right or understand the impact on potential grosses, salability, and aging of your used vehicle dollar investment; in other words, your true return on investment of your dollars, Mr./Ms. Dealer.

Have the conversation.

Understand and clear the air on these misconceptions, if they apply. Ask your manager to give you a plan to increase used unit volume profitably beginning right now. Get it in writing. There is too much missed profit opportunity, let alone the impact of adding new customers to your owner base.

UV Training

Permanent link to this article:

Garry House

The Importance of the Used Vehicle Value Folder


Unquestionably, the Internet has changed used vehicle shopping habits and as a result, many dealers have altered their manner of presenting and pricing pre-owned cars and trucks. Today’s successful used vehicle merchant recognizes the changed market realities and adapts accordingly. In order to ensure that our vehicle makes it to the prospect’s “short list,” we must have an aggressive, competitive pricing policy – but we must also have a sales process that effectively defends margins.

Adding the presentation of the value folder (or evidence jacket, inventory dossier, etc.) as a step in the used vehicle sales process will increase our closing rates and optimize our grosses. The NCM Retail Operations team has proven that the effective implementation and execution of the value folder process has increased our clients’ used retail volume by 10% or more. The operative word here is obviously effective.”

Where should this step be integrated into the sales process?

One place and one place only: Immediately following the demonstration drive. Once the demo has been completed, the salesperson should simply say, “Follow me, and I’ll show you the complete history on this vehicle.” Not only does this step set up the value presentation, it moves the customer from the tarmac to the closing office, where the remainder of the sales process can be closely monitored by sales management.

Where should the value folders be stored and maintained?

At the location from which the desking manager operates. The value folder presentation must occur before the deal write-up step begins.The desking manager must observe the salesperson remove and return the value folder.

What should be included in each value folder?

Dale Pollak, president of vAuto, emphasizes that the purpose of the value folder is to “replace negotiation with documentation.” Therefore, in answering this question, recognize that more is better. The reason the customer is visiting our dealership is because our vehicle offers the most attractive combination of mileage, color, equipment and cost. The value folder content must validate and affirm these considerations, as well as many others that may trouble the prospect. Never forget that since the beginning of the used car business, the number one fear of the customer is buying someone else’s problem. The NCM Retail Operations team recommends that the value folder contain at least 10 items, including a copy of the CarFax or AutoCheck report, a description of the reconditioning process and copies of all reconditioning R.O.s, a market analysis report on the vehicle, the detail of any warranty information on the vehicle, and any other materials that will serve as evidence that your customer is in the right place to do business.

The used vehicle value folder process is taught in the Used Vehicle Profit Improvement Program (UVPIP) offered by the NCM Retail Operations division. For more information about UVPIP, click here. This process is also presented in Principles of Used Vehicle Management II, offered by the NCM Institute Center for Automotive Retail Excellence. To request more information about either of these programs, call 866.756.2620 or click here.


Permanent link to this article:

Older posts «

» Newer posts