Used Vehicles
Used Vehicle Department Check-Up
By Bob Dilmore
Today is a great day to call the used car lot person on the intercom and strike fear in the hearts of those responsible for used vehicle inventory management.
At least twice a month, a client of mine who has few peers at the level of success he has achieved in "moving the iron" at incredible grosses, selects all vehicles that have been on the used vehicle display lot for 25 or more days for his personal inspection. The reconditioning process utilized in his store is as thorough as any I've seen, but if a vehicle hasn't moved in 25 days, he knows something is preventing that unit from being sold, and usually it isn't price.
After a thorough inspection, start-up and test drive, a decision is made to "wholesale," or to perform needed repairs, clean further or maybe buy a new set of tires. The vehicle is repriced and sometimes spiffed, but the used vehicle department is charged with the responsibility of selling the car within the next two weeks. At day 45 in stock, if not sold, the car becomes part of the George Washington program– it's history!
This relentless discipline makes sense if you study the many used vehicle focus reports that we and other Twenty Group providers perform for groups representing all makes. For the first five to seven days in stock, gross per car is not as strong as it is from the seventh to the twentieth day. Maybe it's because the car was sold prior to thorough reconditioning–a mistake, because potential gross was lost and internal labor and parts sales lost as well. Maybe an employee spotted an especially nice vehicle and scarfed it up–same mistake. (Sorry, employees shouldn't get first pick of potentially high gross used vehicles, a mandatory 25-day in-stock rule for employees avoids this issue.)
The real eye opener in reviewing used vehicle focus studies is the dramatic drop in gross profit that occurs after a unit remains on the lot past 45 days. It's a "no brainer," dealers need to absolutely insist that units be wholesaled after 45 days. Invest your capital in fresh merchandise and go for the turn.
But the strongest message of all that consistently reverberates through the organization mentioned above is that the boss is constantly checking the quality of the used vehicle inventory, observing missed or bumped appraisals, shoddy internal labor and inventory mismanagement or pricing.
Does it work for him? You be the judge. Selling 1.4 used vehicles retail in ratio to his new unit sales, with the highest front and back side gross in his group; this guy is bulletproof. This hands-on approach by the dealer himself has solved his used car problems forever. Try it yourself and see!
Bob Dilmore is chairman and CEO of Management Performance Group. bdilmore@dealeronline.com
