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Jared Hamilton
From: Jared Hamilton
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Bryant Gibby

Bryant Gibby Used car manager

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30 day turn policy?

    Our current turn policy for our used car department is a 90 day turn. We stick to our guns the majority of the time and make sure that we get off of the car in 90 days. However, sometimes we will make exceptions and let a car age past 90 days if auction values or going up on the same car and it would be difficult to go replace the same car for approximately the same money. In our opinion, it makes sense to throw our turn policy out the window in some cases in order to avoid a wholesale loss. We will then give the car up to 30 days more ( max of 120 ) days and price it # 1 in the market to make sure we have a good chance of retailing out of the car quickly.

 

     I recently attended the NADA Dealer Academy and used car turn was one of the many topics addressed during the week that I was there.  The teachers basically laughed at our current policy and told me that we should be on a strict 30 day turn policy with no exceptions. He made the same points that I already knew: more pack money, more doc fees, more back end money, more shop money, less flooring, and overall more profit.

 

     I agree with most of his points but I feel like it is impossible to get to a 30 day turn unless I’m ok with my front end gross dropping significantly. I feel like the pros don’t outweigh the cons. We discussed going to a 60 day turn and felt like we could kind of get the best of both worlds by doing that. We would like the extra volume, but it doesn’t make sense if we make less money in the long run.

 

     Does anyone agree with me? Are there really that many dealers out there that are on a 30 day turn policy? If so, I would love to hear about how you made it work and if you experienced a significant drop in front end gross. Let me know…..

Paul Cunha
I believe in a strict turn policy however to just say 30 days and the vehicle has to go I don't agree. Most likely the guy that laughed at you isn't a Pre-owned manager or if he was he probably didn't practice what he preaches. I believe that it's important to price vehicles at the market day one so that you don't run into aging issues, in most cases the reasons a vehicle ages on you is, "price too high", "condition" or simple the "demand" for that vehicle just isn't that high. But keep in mind that many of the cars out there simply just down turn on 30 days so to wholesale perfectly good vehicles that you are going to have to go out purchase, pay auction fees, recognition at rediculous prices just isn't good business sense. Again I believe in having a turn policy but to simply say 30 days and it's auction I don't agree.
Jim Bell
One word comes to mind and that is Velocity. If you haven't read the book, you need to. We are on a strict 60 turn and we are average days in stock of 25 days. Our gross doesn't suffer. If you're priced within the market aggressively, PVR may go down a little, but you should see your volume go up and therefore, more money to the bottom line plus any service/reconditioning profit. All around better for the dealership.
Paul Cunha
Jim, you are right on Velocity has to be the best book that i have ever read regarding this business. I went from 80 cars to 140 and to 170 the following 2 months..

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