Used-Car Dept. No Longer Place to Hide All Your Sins

SAN DIEGO — In the old days, when used-car dealers acquired their sometimes-deserved reputation for shady activities, many saw nothing wrong with keeping a fact or two from the unwary buyer.

The “used-car operation used to be the place where you could hide all your sins,” says Doug Hadden, corporate sales and optimization manager for DealerTrack.

Those methods don't work in the modern dealership, he says. At both the wholesale and retail ends of the marketing process, transparency and openness are the new bywords. Guesswork and inadequately informed decision-making are obsolete.

The old “3-G” method of managing inventory (Gamble, Guess, Guts) is gone, Hadden says at a workshop titled “Buy Right, Sell Fast” at the 2010 National Remarketing Conference here.

To ensure future success in selling used cars, “decisions are going to be made based on data,” such as real-time values and local demand for particular car models.

Randy Biel, remarketing director for Chase, offers “3 Cs” for selecting cars on the wholesale market: condition, color and content.

Paying close attention to those translates into higher retail prices and profits. For a given model, if the “average is 10 grand, but your 3 Cs are good, maybe 12 grand” is an achievable price, he says. Fall short on those three factors, and the car might bring only $8,000.

Inventory is a matter of “constant analytics and re-analytics,” Biel says. “Constantly do your measuring.” In reconditioning vehicles, it also is vital to know “what to fix and what not to fix.”

“If you're going to own a dealership today, you've got to own the process,” says Len Critcher of eCarlist, “That means doing as many things as possible yourself rather than having outsiders do them; taking photographs for your web site, for example.”

The sales process is different today, he says. “It's holistic, transparent data on all of your operations.”

Modern methods must be followed start to finish, says Jim DesRocher, vice-president of DAASW. If customer interaction is flawed at the beginning, chances are the end result will suffer.

“There's that human factor, too,” Crichter says. Computers can't consider everything, such as whether a previous owner smoked in the car, potentially decreasing its value in the eyes of a prospective new owner.

A new breed of customer is turning up at used-car lots. “Your customer is more educated than the dealer, in most cases,” Crichter says, noting that consumers use the Internet to research a single model or small group of models.

“They've looked on Auto Trader, on Cars.com, on eBay,” he says. “You'd better be able to understand where they're coming from.”

Use of the Internet as both a buying and selling tool has become a new reality, yet brick-and-mortar dealerships still play an important role, he says, citing the need for a physical presence. “You can't have a strictly Internet operation.”

Helpful as the Internet is, technology isn't everything when it comes to car buying and selling.

After researching and finding a vehicle online, customers “buy the car from people they like,” Crichter says. “You need to make relationships.”

Successful dealers balance that with the need for modern technology.

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