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Tag Archive: used cars

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

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/

Tom Hopkins

Setting Realistic Sales Goals

Success conceptAchieving sales volume goals is one of the biggest challenges any automotive salesperson faces. This is a pretty straight forward industry. If you’re not making the cut, you can quickly find yourself cut from the team.

There are so many factors that can affect that final number, that you have to stay on top of every aspect of your sales activities and keep making client contacts.

Hopefully, you are dedicated, professional, and motivated to achieve your auto sales career goals. If you are not, read no further. Instead, start looking for another product to market, something that lights a fire in your belly, something you truly believe in.

If you aren’t truly excited about the product you are offering, it will show in your demeanor or in some little thing you say or do while with potential clients. They’ll sense it, and little doubts and fears will arise in them about purchasing your vehicle. So, first and foremost, in order to achieve anything in this business, you have to believe in your line of vehicles, in the company you represent, and in your own ability to excite others about them.

Let’s assume for now, though, that you do have the knowledge, the belief and the right attitude in place. How do you set and achieve the sales goals? Start, by setting a financial goal for yourself for the year. Break it down into quarters and months. Is the monthly goal realistic? If not, you either need to downsize your goal or super-size your skills. You decide.

Next, consider the average amount you earn on a typical automobile sale. Divide that into your monthly earning goal to see how many vehicles you need to move this month. Consider your gut reaction and first thoughts when you see that number. Is it one of “Hey, I can do that”? Or, is it, “Wow! How am I going to do that?”

If it seems easy, consider increasing your sales goal. If it seems like it will be a challenge, good. Your goal should be something that both excites you and makes you stretch a bit each month.

When you’re in stretch-mode:

  • You’ll be open to learning new ways of connecting with people.
  • You’ll look forward to making follow up calls and contacting those who are referred to you.
  • You’ll get out of bed in the morning with excitement to face the day and accomplish something positive.

This next step in achieving your goals is critical: Multiply your sales ratio by the number of vehicles determined above to learn how many people you need to connect with this month. Do you typically sell every fourth client you meet at your dealership? If so, your ratio is 1:4. If you need to get people happily involved in 10 vehicles to achieve your earnings goal, you’ll need to meet 40 of them in order to do so. That’s when you’re working with the law of averages.

Is it realistic for you to meet 40 people this month? If not, again, you either downsize your goals or learn new and better ways to meet people, put them at ease, and get them to like you, trust you, and want to listen to you.

That’s the bottom line of what selling is all about. People buy from people they like.

  • If you’re not like-able, you’re out of luck.
  • If you’re not knowledgeable, they won’t trust you.
  • If you want people to listen to you and take your advice about vehicle ownership, you have to learn to listen to them.
  • If you ask questions and get them talking, they’ll tell you exactly what they want to own…not just the make and model of the vehicle, but the features, the economy, the cool color, whatever it is that will make them say, “Yes, that’s the car for me.”

So, in getting back to these 40 people you need to meet this month, where are you going to connect with them? Hopefully, you’re not one of those salespeople who waits in the lot, hoping the company advertising campaign will bring ‘em in droves. To achieve your automotive selling goals, you have to invest time in reaching out to people all on your own.

Call your past clients to see if they’re still happy with their vehicles. These calls shouldn’t take more than two minutes each. It’s just a way of touching base, making them feel important and giving them an opportunity to tell you once again how happy they are. If they’re happy, you have the right to ask them for referral business. If they’re not, you need to know about it because their unhappiness can cost you a lot of future business.

Knowing your target for meeting people is the way to achieve the sales goals you’re reaching for.

desking

Permanent link to this article: http://blog.ncm20.com/2015/02/setting-realistic-sales-goals/