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Bryant Gibby

Bryant Gibby Used car manager

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Enough used car gross????

     I'm sure we are in the same boat as most dealers right now, but I have been getting lectured about how my front end gross for used cars is too low lately. Anyone that knows used cars is aware of the fact that the market shifts quite a bit in October/November and it is really easy to get yourself in a bad position with regard to what you own your inventory for.  As a result, we have been pretty much buried in half of our inventory the last couple of months.

 

     In the past, we used to wholesale out of a lot of these cars towards the end of the year but now we keep everything and retail out of it. That strategy poses a problem when it comes to adhering to some sort of a turn policy. We figured we would just take the hit on the front end gross rather than take a huge wholesale loss for 2 months, and hopefully minimize the loss with any back end money made.  I feel like it is the best way to go and the owner and I both agree on this strategy.  However, he still gets all frustrated when our front end per car is $300 or so less than normal. It's a lose-lose for me!

 

     So the reason for the post is to figure out how we are doing compared to other stores.  We average approx $1400 per car on the front throughout most of the year ( used only ).  We have averaged right around $1000 over the last couple of months counting all the cars that were losers. I don't think those numbers are all that bad, but the GM thinks different. What is average gross these days on a used car? Are we really leaving that much money on the table? For my sake, I hope not! Let me know what you guys think.  P.S. The gross I'm referring to is after all costs including pack.

Ed Brooks
Bryant - You're caught between a rock and a hard place. It sounds like you're doing your level best to make the most money possible with your dealership's investment in pre-owned inventory. The "Old School" way of doing this was to maximize the Per Vehicle Retail Gross. Price high, negotiate down and eventually retail your way out of any problems. It sounds like you've adopted a "New School" philosophy of avoiding problems in the first place, turning inventory quickly and staying out of the wholesale-loss hole that many dealers still find themselves in. We may need to help bring your GM up-to-speed. Dale Pollak recorded a webinar last month that might help give you some ammunition. It's available here: http://www.vauto.com/company/news-resources/webinars.aspx titled Documentation Replaces Negotiation: 4 Easy and Effective Strategies to Improving Gross Profit. The first part of the webinar deals extensively with the "Old School" PVR-is-king mentality and might give you some good talking points. There's nothing to buy and no sales pitch at all. Just some information that might help you out. The path to making the most of a pre-owned inventory investment is no longer one that runs through per vehicle gross.

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