Harry Criswell’s Brave New World: Selling Used Cars

Special Report

Ward’s
Dealer 500

The used-car business is big business these days, with a slumping economy and gasoline prices hovering around $4 a gallon.

And although Harry Criswell III has had much success with new-vehicle sales through his Chevrolet, Honda, Nissan and Hummer stores, his used-car business flourished in 2007 and is on the same track for this year.

Last year, Criswell Chevrolet's used-car operation in Gaithersburg, MD, sold a total of 1,165 used vehicles, 777 off the lot and another 388 through the Internet.

“We'll probably run somewhere in the 1,500 -1,600 range for used,” Criswell says. “We have expanded our operations and we are getting ready to build a Certified General Motors Used-Car Center with a showroom.”

The 25,000-sq.-ft. facility will have a six-car showroom for used vehicles, a dozen sales people, three used-car service inspection bays, as well as a GM Quick Lube, GM Quick Service and a tunnel car wash.

Criswell avoids a potential downside to a pre-owned vehicle operation. “Selling bad used cars is the easiest way to get a terrible reputation, so we just don't do it,” he says.

“Our used-car business is up about 35% -40% over last year for the first four months. It's interesting right now, people are buying smaller cars, but it creates opportunities to trade-in SUVs, and for probably lower prices than we have in the past.”

A certain segment of the market needs extra vehicle room, especially active families, Criswell says.

“They are finding that there's a great opportunity to buy really clean, low-mileage, full-size and mid-size SUVs at great prices,” he says. “That margin is definitely down from a price-integrity standpoint, but it creates other opportunities for people who desire those products in the past and couldn't afford them.”

The dealership has a reputation for stocking 15-25 Corvettes at all times, and also medium-duty trucks and vans.

“Corvettes and commercial trucks are big deals for us,” he says. “I'll probably pay more money for one of those than my competition around here.

“We're not afraid of them, we know what they're worth, and most other people don't want to mess with them.”

In addition, Criswell says they love to trade those kinds of vehicles, but it took 25 years to develop those relationships with the consumers.

“We know that everybody is hedging a little bit, and a lot of people are buying slightly-used products,” Criswell says. “The Corvette and used-commercial truck business is great, but you have to know what they're worth, and what you can sell them for.

“I've got some really seasoned guys here that know what the value of a car is. You can probably get 10 guys to look at a car and they will all give you 10 different numbers. You have to know your market, and what you specialize in.”

Criswell's dealerships are currently using Reynolds and Reynolds' dealer management system to manage inventories.

“But we also do it the old-fashioned way,” he says. “We keep some hand-written records, and do used-car check-in sheets on every car manually so we have a back-up on everything.”

“Ironically, because of our Internet advertising, it forces you to do everything over the computer,” he adds. “We've written some PC-based software ourselves that we've been able to integrate back into our inventory systems. That's how we do it, although I know it sounds like a little ‘by the seat of our pants.’”

One of the ways that Criswell's Chevrolet dealership has been successful, in 2007 and through the first four months of this year, is by accepting several “trade-ins” that most other dealers around the U.S. wouldn't.

“Someone brought in a motor home, and my guys said it was a great opportunity,” Criswell says. “We are looking at it from that point of view, as we'll trade anything now.

“We are in the motorcycle business, and we trade those, boats, trailers. We have ways of moving that stuff since we are in all of those businesses.”

Criswell says a lot of dealers right now look at trade and get overly conservative. But, his used-car business is venturing into other areas without trepidation.

“That conservative nature is out the window, and they are actually super aggressive with it,” he says. “And when nobody else is doing those unique kind of products, it gives us an advantage.”

Currently, Criswell's dealerships sell Chevy, Honda, Nissan, Hummer, Lotus and Isuzu commercial trucks. They also sell all of the medium-duty General Motors' products, S-Series, T-Series, and W-Series, and many types of motorcycles.

The Chevrolet store is ranked 74th on this year's Ward's Dealer 500. His Honda dealership is 408th.

Despite success in the new-vehicle retail business, he is jumping into the used-car business in a huge way.

“I have two general managers, and both were great used-car guys. They both started off in used-car operations, and have three or four franchises they are running right now, but they love used cars,” Criswell says.

“I'm not sure if there's been a time in the last two or three decades where used cars have become as big of an opportunity as it is today.

“What we are stocking by the end of this year, it will be pushing $6.5 to $7 million in used cars at a time,” Criswell says.

“It's a natural progression that's taking place now, as our new vehicle inventories are coming down, based on demand, we are expanding our used-car inventories, and unfortunately we have some space constraints, but it's enabled us to grow our used-car business.”

Criswell says his crew has been able to get some good used cars on the lots, and as they've increased their inventory, sales continue to increase.

“I know there's a point of diminishing return there, we just haven't hit it yet,” he says. “We were running about $1.5 million with Chevrolet used, and now we are up to about $3.5 million. I said the other day to ‘dump another $1 million into it, and let's see where we go with it.’ As long as we are turning the cars, and getting true 60-to-90 day turns on everything, it works.”

If a used-vehicle still remains on the lot on the 91st day, Criswell says it gets written down 5%, and on the 121st day, it gets marked down another 5%.

“And that comes right out of their gross. I might have only one dozen 90-day old cars, out of almost $6 million, they keep moving pretty good,” Criswell says.

“It's profitable for us, it's a good investment for us, and no offense to the factories, but I don't have to listen to all of their requirements. “It's just so much easier, all I have to do is make the customer happy, and do things according to the state and local areas we do business in, and everybody's happy.”

Criswell is in the process of trying to purchase a Suzuki franchise now, and they are also working on a couple of other franchises.

His brother, George, has an Acura and Audi dealership in Annapolis, Maryland. The Criswell name is synonymous with car and truck sales in Maryland.

They built the current Chevrolet store in 1972, and Harry has been there since late 1979-80.

“My grandfather opened up his first Chevrolet store in the 1920s,” says Criswell, who adds that the store he originally purchased cost $300. “The land that we are building our Nissan store on right now is $18.50 a square foot … I'd only get about 20 feet for $300.”