CDK's purchase of Auto/Mate may create a major disruption in the dealer management system (DMS) industry. Here is our take. DOWNLOAD
I recently attended a 20 group meeting where we had a long conversation going back and forth on to what extent you should recondition and warranty a cash and carry vehicle. To me, a cash and carry vehicle is a $2,000-$10,000 car that is older with higher miles. We typically fix the major stuff on those vehicles when we sell them and usually don't worry about the small stuff. We sell them as is but fully disclose any issues the vehicle may have up front to the customer.
There were a lot of dealers that we talked to that fully recondition those vehicles and also offer some sort of a basic warranty for 6 months or so. Their argument is that you can sell the car for more money if you spend more on recon and offer a warranty. They offer the warranty because they say if a customer comes back after the purchase with a problem, they are going to fix it anyway in order to protect their reputation.
I see their point, but I feel like you can protect your reputation in most cases by fully disclosing everything that the vehicle needs at the point of sale and occasionally fixing things after the fact. I feel like we have things pretty dialed in with those cars, but they had me second-guessing the way that we sell those cars. I'm also torn as to whether or not we should put a warranty of some sort on them.
Let me know what you guys do with those cars. I would love to hear what works for your dealerships.