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In the old days of used car retailing, measuring sales performance was relatively easy. There were a few key performance indicators (KPI's) such as retained profit per unit, average preparation cost, units sold, number of over-age units and a few others. Measuring these at the end of each month told a reasonably accurate story of what sort of job the department was doing.
But, let's face it, many dealers operated like this: they ran for the month, delivered all vehicles and closed all the deals in accounting about a week into the following month and released the finalised management accounts by about the 10th of the following month. By the time the management teams sat together to review all this, it was history and they were already half way through the next month so probably too late to fix anything that they found went wrong last month. Sound familiar?
As with the accounting KPI's above, the sales activity KPI's were once simple as well. Number of up's, phone calls, internet leads, presentations, test drives, writes, deals done and delivered just about covered it all.
For dealers practising velocity management principles in their used car retailing today there are new metrics. True velocity management means taking steps to monitor and control a new set of key performance indicators and what's more it is important to monitor these far more frequently than before. Now, everything is much more immediate. The rate of change is greater and the old saying" If you don't monitor it you cannot control it" is as true as ever. Fortunately, the technology of today amplifies our ability to measure and control and the best dealers have procedures in place to do so.
The new metrics for used car velocity
Let's look at what we need to inspect. On top of the traditional measures , below is a list of the new metrics . I am sure there could be others to add so if you wish to contribute to the list please add on with a comment on this blog article. Some will be more important than others but, be sure, all will be contributory factors to success as a velocity dealer.
Total units in inventory
Inventory profile by Age bucket
Inventory profile by Price bucket
Inventory profile by Vehicle Type bucket
Percent of total units on display for sale on lot
Percent of total units priced
Percent of total units on internet
Percent of total units with pictures
Overall `cost-to market` price
Overall `price-to-market` retail price
Overall Average Days in Stock
Percent Trades in total inventory
Percent Purchases in total inventory
Overall Average margin ( $ spread)
Discount $ amount (%) on sold units
Sales rate units per day/week/month
Inventory turn rate
Average appraisal value cost-to-market %
Appraisal value cost-to-market% by appraiser
Average inventory preparation cost
Average preparation cost by Price bucket
Average days to sell by Price bucket
Average days to sell by Vehicle Type
Purchase to delivery lead times.
SEO results / Google analytics.
Search Results Pages shown
Vehicle Detail Pages viewed
Online leads - OEM website
Online leads - Dealer websites
Online leads - Social
The above are key measurements that contribute to used sales performance in the current climate. Bear in mind that the rapid rate of change in the market means reporting procedures for these must in place and be readily accessible, easily produced and frequently reviewed. That said, all this needs to be done without taking one's eye off the ball and ensuring the end result of getting the job done is the main focus. The secret is to allocate responsibilities and accountability and to have daily practices and reporting procedures in place which allow access to this with ease.
Too much analysis? Remember, a fighter always gets knocked down by the punch he does not see coming!
And I am sure there are omissions and additions you can think of and I apologise to any dealers who may use different terminology to the above. This post is not meant to be the definitive guide but more a thought-provoker to assist you with your implementation of velocity principles. That said, a definitve guide would be a useful resource. If you have any additions or other suggestions please email me and I will publish updates later.