Don’t Just Offer Certified Pre-Owned Vehicles, Market Them

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Is that new used-car superstore actually you?

With all of those once-new models about to re-enter the market as used vehicles, expect a 2015 decline in pre-owned prices.

With new-car margins getting thinner, dealers have been leaning on used-car sales to make back net profit. When the used-model values decline what’s left?

Finance and insurance? Sure, but I assume you have been maximizing F&I already. Lower floor plan expense? Maybe.

What to do?

A sure way to build gross is to specialize in certified pre-owned vehicles. Candidly, it surprises me when dealers find that when this simple idea is so effective, as if they didn’t really believe.

Sit down and consider that there is a good percentage of people searching for a pre-owned pickup truck in your market right now.

Don’t forget about how many suburban moms would like a slightly used family SUV at half of the original MSRP. Then finally there’s the college student searching for cheap transportation.

Why watch all of these car buyers default to a big national dealer chain when you are just as able to provide that pre-owned inventory at a great value with just a little bit of early planning? Why let national firms have so much fun?

With all of the data today, there really isn’t an excuse not be cutting-edge with your pre-owned inventory. You probably have the best market knowledge about the most popular models and makes in your area. Consider running a report today on the top-selling makes and models locally on the entry-level prices and market for $159 a month or lower. Just a small collection of each of these models will suffice.

Consider marketing these pre-owned values against your own new-vehicle inventory. Perhaps feature them in a TV spot showing the new model and then right behind that, a pre-owned version of the same vehicle with much lower sticker and payments.

If it’s true that only 66% of buyers actually purchased the car that brought them into the dealership originally, then switching a new-car buyer to a similar pre-owned model should not be that difficult.

Yes, many buyers enter your dealership looking for a new vehicle, but the superior value presented in a certified unit can motivate a different purchase.

I experienced this when selling cars how easy it was to sell CPO value. I would talk about how fast a CPO would be worth close to the same market value of a new one in just a few short years.

Odds are your salespeople are already recommending pre-owned inventory. But are you helping by marketing those vehicles?

You can create your own market. A CPO pickup truck, for example, is a market segment that is seldom capitalized in many cities.

Fact: the top-selling Hyundai dealer in the nation also owns the top selling certified preowned Hyundai dealership in the nation. Coincidence? I don’t think so. This dealer studied his local market and created a destination CPO superstore.

Drive margins using smart pre-owned inventory planning and advertising. Drive those buyers directly to your website and bring them in. Your 2015 profitability will thank you for it. 

Finally, consider joining my March 20 live webinar entitled “3 Big Ways to Build your Net Profit in 2015.” It’s free to all WardsAuto readers. Register here.

Adam Armbruster is a senior partner in the business growth firm Eckstein, Summers, Armbruster & Co. He can be reached at 941-928-7192.