How can I sell more pre-owned vehicles? This question comes up at hundreds of NCM Associates 20-Group meetings throughout the country.
I'm listing the best solutions that have been shared by thousands of dealers.
Develop an inventory model that includes:
- Make, model, trim, mileage and year.
- Retail price range or price point.
- Average turn in days.
- Optimum stocking levels.
- Aging policy by category.
Carry no less than 30, but no more than 40, dollar days' supply:
- Every segment of your profile should be tracked by days' supply.
- Ideal is 30 days' supply plus average cycle time for reconditioning.
- Purchase only what you need. Buy what turns. Don't shy away because “they are too high this week.”
- Higher marketplace-volatility vehicles should have a lower days' supply.
- Have a written buy plan for auctions.
Establish a strategic aging policy ? one policy may not fit all segments:
- Strive for an average inventory age that is below 30 days old. Measure it daily.
- High-volatility vehicles (factory auctions) need to go fast; 28 days or out.
- Older or hard to find models can be kept longer (stable wholesale values).
Have a price strategy for each segment:
- Determine the transaction price (not the starting price) for every segment and price accordingly.
- Establish price adjustment strategies based on days in stock and vehicle activity.
- Track all demo and write-up activity on every vehicle. Adjust accordingly.
- Inspect vehicles every 15th day in stock. Determine an exit strategy.
- Use the Internet to help determine price points.
Have an ad and marketing strategy that focuses on pre-owned vehicles:
- Create your own branding strategy.
- Establish funds tat drive shoppers to your website.
- Determine your two best Internet lead provider sources and grow them.
- Do at least three “Pre-Owned Vehicle Events” a year.
- Find your niche in your pre-owned market and become the best at it.
Maximize your Internet sales presence:
- Be sure your vehicle presentation is the best in class on your website.
- Us a great backdrop for vehicle photos and use it every time.
- Make web browsing easy. Inventory should be a click away.
Have a daily trade walk with key managers:
- Evaluate every trade daily to determine retail/wholesale disposition.
- Estimate reconditioning costs before reconditioning starts.
- Chose “best of the worst” and create a “transportation special” segment.
Manage reconditioning and track cycle time with a goal of 4-days average:
- Track every repair order.
- Track work being done by sublet vendors by having everything on a RO.
- Instill urgency in service department.
- Try to have one “go-to person” for your pre-owned vehicle manager to rely on for all reconditioning RO's.
- Hold service responsible for quality and comebacks.
Track your appraisal-to-purchase ratio with a goal of at least 60%:
- Track daily, weekly and monthly the number of appraised vehicles against deals made with a trade.
- Track each manager's appraisal-to-trade ratio and post it.
- Track your success ratio in trading off-brand vehicles vs. brand vehicles.
- Insist that your sales force does an active appraisal on every vehicle.
- Assign accountability for consistently missed appraisal values.
Have a clearly defined disposal strategy:
- Develop a sealed-bid sale process for non-retail trades.
- Determine your disposal strategy for retail off-brand products.
- Have a ‘Last Chance” section.
- Can you “E-tail” on eBay?
This is a compressed list. Look it over, sit down with your staff and use it as a starting point to sell more pre-owned vehicles.
Tony Albertson is executive conference moderator for NCM Associates. He is at email@example.com.