Car Dealership Pre-Owned Manager: Not All Black & White

Floridians think they’ll fry inside of black-on-black vehicles, but in other markets people think they’re cool.

That’s evidence of how car markets are distinctively different, says Craig White, used-car manager at Ourisman Lexus in Rockville, MD, north of Washington, D.C.   

He’s a stickler at his job, selling about 165 pre-owned vehicles a month.

A native of Atlanta, where his auto-retailing career started decades ago, he talks in a Wards Q&A about his job, market differences and how not to get burned in the used-car end of the business.

Here’s an edited version of the interview.    

Wards: You started in Atlanta and now work in metro Washington. What’s different between those markets?

White: Everyone’s market is different. My market here in Maryland is different than it was at the Lexus store I worked at in Atlanta.   

Wards: What’s different?

White: Up here, everything is all-wheel drive. You could not sell a front-wheel car here. People here don’t care much about 20-in. wheels or that kind of stuff. I guess they feel that when it snows, their wheels will get destroyed or whatever.

In Atlanta, you couldn’t give away an RX350 (CUV) if it didn’t have the 20-in. wheel package.

Wards: Why’s that?

White: Atlanta likes bling. Another vehicle we couldn’t give away there is a hybrid. That car would age out on you. Here, they sell extremely fast.        

Wards: I was told you purchase black-on-black vehicles from Florida, ship them up and sell them in Maryland.

White: In Florida or anywhere in the South, usually a black-on-black car doesn’t sell well just because people think it gets too hot in the sun, whether it does or not. It’s a buyer mindset. Whereas here, they sell well. So we figured, “Why not go to Florida, where there are a lot of auctions and inventory, and look for black-on-black cars that don’t sell well there but do up here?” I can pay less for them opposed to buying them in my backyard where I’ll have more competition.        

Wards:How are there black-on-black vehicles in Florida in the first place if hardly anyone buys them down there?

White: A lot of people live up here, have second homes there and may turn in their lease car there.

Cars are shipped all over the country. The Orlando (auction) is a really big sale. There’s lots of inventory from lots of different places. You’ll see Northern dealers show up at Orlando sales. First of all, they want to be in the warmer weather and go golfing in December.

Dealers will ship cars to that Orlando sale because they think they’ll get more money for them.

Wards: Is it possible a daring Florida resident or two might buy black-on-black because they like that color scheme?

White: Sure. But in Jacksonville, about 60% of the cars in the parking lots are white.    

Wards: Is shipping vehicles from Florida to Maryland expensive?

White: You have shipping costs built into your business plan.   

Wards: How far do you go out geographically for vehicles? What’s your limit?

salesman and customer at used car lot_0

Wards: It might be cheaper if it goes up the Mississippi River on a barge.

White:  You may be right. I never thought about that.   

Wards: You use vAuto’s Stockwave software to find and acquire inventory. How do you use that tool?

White:  Basically, it’s my auction-sourcing tool. I set up a couple of profiles or business plans in Stockwave. I have one for certified pre-owned vehicles and one for other brands. With CPOs, there are higher reconditioning costs to get them certified. With the others, there aren’t, so you can pay a bit more (at auction) for them. 

Once I have it set up, Stockwave makes it easy. It finds cars that meet my entered criteria. It reduces the homework of trying to find the right cars that meet your business profile.

Wards: How’d you get into the business, and how long have you been in it? 

White:  A long, long time ago. This is my 35^th year.

Wards: Have you always been a used-car manager?

White:  I’ve done everything on the sales side of the store.  

Wards: What’s the typical day in the life of a used-car manager?

White:  That’s kind of a weird question. I’m not trying to put myself on a pedestal at all, but a typical used-car guy doesn’t pay that much attention to inventory. That’s why a lot of guys end up with cars that age out on them. They are afraid to drop the price and get rid of the car. They fall in love with the car. They think a particular car should make this much money, and it ends up sitting on the lot for 50, 60, 70 days. And when the dealer finally tells them to drop the hammer, they lose four grand.

A typical day for me is spent looking at every car, every day. I make sure my descriptions are right and my marketing is good. I pay attention to pricing, pictures and any specific equipment I can highlight. Days’ supply and turn still are the two most important things.

Once a car in your inventory hits 20 days, typically your profit is gone and you better get rid of that car or you’ll start losing money.           

Wards: A lot of used-car managers did, and presumably some still do, use gut instinct to buy inventory. Do you?

White:  All my decisions are based on data.

Wards: Are used-car managers who use gut instinct an endangered or extinct species?

White: Some guys still buy on emotion. You see them at sales. They keep raising their hand. They have to have that car. They’re almost bidding against the Coke machine, because not many other people are bidding.   

If you are a car guy and have been doing it as long as I have, there are still cars that excite you. But you better do your homework if you buy one. Otherwise you’re going to get burned.   

Wards: What cars excite you?

White:  They have to be $200,000-plus to excite me anymore. I’ve looked at so many cars, I rarely get emotional about them. I can’t afford to.

Wards: What advice would you give to someone starting out in the used-car end of the business?

White: Be regimented every day. Have a process in place. The first thing I do daily is price cars that hit my inventory. I write the descriptions and ads. I make sure I get them in the shop (if they need reconditioning and detailing).

Get pictures up as quickly as possible, because people won’t look at a (listed) car without pictures. If a car isn’t selling, it’s either because you got bad pictures, or it’s priced too high or has a super-high days’ supply.

Be disciplined in the mundane things that no one likes to do. But if you don’t do them, you get in trouble. Have a plan in place for every car. If you aren’t on top of all that, it’s going to get away from you, especially at a big store.

I learned this a long time ago: The biggest place a dealer can make money – or lose money – is the used-car department.