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Jared Hamilton
From: Jared Hamilton
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Skip the Auctions: Fortifying Your Pre-Owned Inventory

A trend is developing in the used car industry: prices on used cars are up 30% since 2008 and they could go even higher. It’s not uncommon to see a 1999 Toyota Corolla on the road and it won’t be sputtering along covered in rust spots, either. Simply put, cars are being built better to last longer. If a car buyer can’t afford a new vehicle, they know they can put faith in a used car to last them longer than just the drive off the lot. With demand (and prices) on used vehicles growing higher every year, do you have the right stock of pre-owned vehicles? What’s your plan to get these on your lot?

Gas prices are at a similar high, so car buyers are looking at more fuel efficient options, like the Toyota Prius or Chevrolet Malibu. Car auctions may have been your go-to for a used Prius or Malibu in the past, but every other dealer will be there as well.

So how can you get the best deals? Your customers. Use your database to specifically target which pre-owned vehicles you’d like to stock up on and set into motion a buy back campaign. If you already know all of the individuals who bought a Toyota Camry from your dealership in the last four years, it will be easy to target these cars specifically to buy back. You don’t need to go to an auction, where the prices will go up and up as dealers try to outbid one another; just look at the cars you’ve already sold.

Get your salesman involved, too. If they see a 2007 Chevrolet Malibu drive on the lot, offer an incentive for every appraisal they can get for a potential buy back from the car’s owner. Who knows – your stock of pre-owned vehicles could literally drive themselves onto your lot.

As long as this trend in used cars keeps up, the demand amongst dealers to bolster their pre-owned inventory will be high. So where will you be getting yours from?

Charles Gallaer
I tried everything from sales people calling people in our crm to me calling people that listed their cars for sale in the local paper. The best successes I had were: 1. Telling the ASMs and service managers what cars I was looking for and paying a spiff when I ended up buying one of their customer's vehicles. 2. Convincing the owner to put up a message on an electronic billboard that our store would buy someone's car even if they didn't buy a car from us. 3. I printed a bunch of business cards that had my name on them and a message on the back that I gave free cash estimates on the value of their vehicle. I would place these business cards on cars I saw in mall parking lots, restaurants, etc.
Stacy Mueller
Thanks for your response, Charles. I'm interested in hearing how #3 worked out- it seems like a good and potentially inexpensive way to spread the word to the right target. How many responses were you getting on average every week?
Charles Gallaer
I would get at least 4-5 responses/week, but that really depended on what kind of inventory I was looking for. I didn't track how many of these deals I "closed" because I had a wide variety of inventory needs that would lead to very different closing rates. My dealership group has a buy-here/pay-here business and that business requires a specific type of vehicle. For those kinds of cars (ones where I would like to have an ACV of between $3k-5k), I got a much higher response then say putting my card on a car that might have an ACV of $15k+. I also got better responses when I put my cards on vehicles belonging to military personnel. There were several military bases near our store and servicemen/women were always in need of disposing of their vehicle because of overseas deployments. While I got the least amount of traffic from #3, it cost the least (just my time and the $$$ for the cards). My most effective was eliciting the aid of my service department. There were several benefits to this approach. 1) ASMs and SM had ownership in the car they recommended to me, so they normally knew a lot about the cars I bought and their condition. So my recon costs were lower, thus giving me more room to offer more money for the vehicles I needed. 2) We had a lot of old customers, so we made it known to them that if they had a change in circumstances (moved to a nursing home, couldn't drive any more, etc) we were happy to purchase their vehicle. I could typically buy 10-20 units/month using methods like these for an inventory of 70-80 vehicles.

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