Question Used-Car Managers

How long has your pre-owned vehicle manager been in position in your store? Are they doing a good job? Are they successful? Okay, last question: how do you know?

There is a good chance your pre-owned vehicle manager has been in position in your store less than a year. I would give equal odds that the only way you determine if they are effective or not is by looking at the results on the financial statement at the end of the month.

Of course, the problem with this is there is no way to go back and change what was. Get too many bad results, and you're looking for a new manager.

Many general managers and some owners came from a predominantly new-car background with very limited used-car experience. This lack of knowledge as to what makes a great pre-owned vehicle manager leads to a natural tendency to make judgments based solely on results and not the behaviors that produce desired results.

Don't get me wrong, we are a results-based business. But do you know what a pre-owned vehicle manager should be doing on a daily basis to get good results? If your only answer is “sell cars, make gross,” you don't know.

So how do you know if you have the right guy or gal running your pre-owned vehicle department? Following is a list of questions based on the key components of pre-owned vehicle management that your pre-owned vehicle manager should be able to answer daily.

Forecast: What is our sales/gross forecast for this week, this month? Do we have enough sales people to make forecast? What is our current pace to forecast?

Reconditioning: How many vehicles do we have in process? What is the average cycle time? What is the average reconditioning cost per unit? What is our cycle time goal?

Inventory: How many unit days' supply do we have? How many dollar days' supply? Why did you buy a particular vehicle? How fast does it turn and what is the average margin we realize? How many certified units? How many as-is “C” cars or transportation units? How many units in stock are 15-16, 30-31 and 48-and-over days old? What are you doing with them? Where are the five oldest vehicles in stock? How are you sourcing the right inventory at the right price?

Pricing: How is the retail inventory priced compared to the current market? Is the pricing up to date and correct in the dealer management system?

Internet: How many pre-owned on the web? Are the pictures consistent and good quality? How many pictures per unit? What is in the background of the pictures? What percentage of the inventory has pictures? Do they all have good information regarding the unit? What can we do to improve our site?

Appraisal: How many appraisals have we done? What is our appraisal-to-trade ratio? Who appraised the trade? How many times are we bumping an appraisal? Why?

Lot/Merchandising: Did you walk the lot today? Are vehicles clean and priced. Are stickers, buyer guides and addendums in place? Are information/value folders on every vehicle that we can show the customer? What is in the folder? Is it presented to every potential customer during the sales process? What do the sales offices look like? Do we have point-of-sale materials on the certified pre-owned units?

Wholesale: How are we disposing of unwanted inventory? Are we under our turn policy? What is our wholesale forecast profit/loss? What is the wholesale profit/loss MTD? What is the variance from forecast? Why?

There is an old saying that lawyers use: “Never ask a question if you don't already know the answer.”

Success is the result of sound process and good behaviors. Before you look for the new “wunderkind” to run the pre-owned operation, ask yourself how much time you spent ensuring the correct behaviors were taught and implemented.

A number on the financial statement has never sold a single vehicle.

Tony Albertson is executive conference moderator for NCM Associates. He is at [email protected].