Notifications & Messages

Jared Hamilton
From: Jared Hamilton
Hey - It’s time to join the thousands of other dealer professionals on DrivingSales. Create an account so you can get full access to the articles, discussions and people that are shaping the future of the automotive industry.
×
Jim Leman

Jim Leman Writing about dealer operations

Exclusive Blog Posts

How Local Influencers Can Boost Your Business

How Local Influencers Can Boost Your Business

‘Live On Location’ radio shows are still a staple in Saturday morning car sales. It’s been an effective way of capturing an audience&…

Fast vs First to Market

Fast vs First to Market

In a business where speed wins, first steps can lose.   Reasoning being—the distinct possibility—like is the case in any race&mdas…

Powerful Sales Questions to Ask and Sell More Cars

Powerful Sales Questions to Ask and Sell More Cars

  Using powerful questions in sales is one of the best ways to build rapport while gathering important information about your customer. …

Ways in Which Automotive Dealer Management System Helps Boost Profits and Minimize Expenses

Ways in Which Automotive Dealer Management System Helps Boost Profits and Minimize Expenses

Although most of the industries of today are transforming digitally, some skeptics do exist when it comes to investing in an automotive dealership manageme…

The secret of effective Japanese human resource management

The secret of effective Japanese human resource management

Human resource management is critical to the success of your business. And it seems that Japanese businesses understand the importance of this most. Be…

Grind Like Every Day is End of Month

By Jasen Rice, Founder/CEO Lotpop

You’re in the time business, which I’d guess you know all too well.

You know that time passes all too quickly – and often is allowed to slip by without your wringing a satisfactory return from its potential. You see that all too clearly later through the rear view mirror.

Selling profitably is always about time – and timing. Each of us has 30 days, plus or minus, on the calendar every month, but don’t you believe it; time flies!

Watch inventory aging like a hawk, responding proactively and quickly to move inventory at increasingly earlier aging dates if you hope to make a profit on your investments these days.

A Good March

You probably came off a good March – better than expected. According to MarketWatch, March auto sales were “surprisingly strong.” Citing Autodata information, MarketWatch said March SAAR sales were 17.45 million units, up from 16.57 the prior month.

When you come off a good month, the temptation can be to relax a little, but that is not helpful. High-five the gang, but get everyone back into the trenches. Your adversary, time, is already suited up and coming after you.

Keep an eye on interest rates. Edmunds reported in a late March report, Used Vehicle Market Poised for Record Sales in 2019, new-car interest rates jumped last year by 17 percent with used car rates increasing by 9 percent in the same period.

The report said market conditions have never been more favorable for CPO vehicles, which is good news. Take time to educate consumers about their value. “Many shoppers are unaware of the benefits of CPO vehicle programs, but given the tough financial conditions in the new market, it's never been a better time to look into them," said Ivan Drury, Edmunds' senior manager of industry analysis, in the Edmunds report.

Make it a Better April

Spring fever is hitting now, and consumers have more than a few distractions to keep from spending a warm, sunny afternoon at the car dealership. If you stocked up in used cars in March for a hopeful continuation of that success from your March Madness, you might be disappointed.

If you’re not grinding every day as if it’s already end of the month and moving cars off the lot within 31 days of their acquisition you’re already in trouble. Cars no longer age out as they once did. Oh, they age all right - right under your nose. Sixty days to make a little margin isn’t the risk anymore - it’s 31-to-45 days, and narrowing.

When cars age out faster than they once did, it influences your business in ways you’d do well to heed:

  • Buy smarter, so your vehicles sell sooner with more margin
  • Recon faster, so cars get front-line ready in 72 hours when they’re still fresh metal, not after 15 days, having consumed half of their prime margin potential in the shop
  • Sell from the data, not your gut. Reduce the asking price on cars as they approach 30-days and drop it increasingly more urgently as the unit hits 30 days.

 

Dale Pollak, writing recently in his blog Like I See It, discussed this topic. “Consider how quickly used vehicles run out of margin today compared to two years ago,” he wrote. “In 2017, used cars hit a 90 percent cost-to-market ratio around day 60. You could sell those vehicles then, and still make some money even it wasn’t all you wanted. This year, we’re seeing vehicles consistently hit the 90 percent cost-to-market ratio around day 30!”

That’s what I’m talking about here, so again, the message is: grind every day as if it’s month end if you want to sell cars and make money in this market. You can be sure that this routine will require even more out of you going forward. Here are a few ideas to help manage this risk

  • Watch your VDPs (video detail page) - are your cars attracting shopper eyeballs? What is the lead count on that car…why isn’t it selling? Did you buy it at the top of the market? And, no, you won’t retail out of it, sorry!

 

  •  
  •  
  • Follow and heed key metrics – inventory balance, aging, the cost to market and market pricing. As you observe make/model scoring metrics also look at the conversion percentages for those cars. Are they converting online? What is your lead count on those models?

 

  • Is inventory heavier on a particular year/make/model than your sell rate for those vehicles? Are you heavy in those cars at this time of year? How do those cars’ mileage averages compare to the market average? Is the segment heavy in that car at this time of year? How do your cars’ mileages compare to the market average? Are you too heavy at a particular price point?

 

Don’t wait until inventory approaches day 29 or 59 to look at the data – do it early and do it often. Take action if nothing is happening on your cars. Watch inventory creep, which occurs when the sale rate of your 31- to 45-day bucket has pulled back. Should you adjust pricing to attract eyeballs or get the phone to ring? Consider the color of the cars on your lot – what do the numbers say about that make, model and mileage in the color(s) of those you inventory. Is the color of the vehicle in demand or an oddball that you’ll need to drop the price on to move or spiff to sell it?

Focus your people, remarketing, marketing and energy on selling cars before 31 days.

To wrap up, if you don’t know, learn what it takes to:

  • Manage your used car inventory to maximize both gross and volume
  • Understand the metrics you should tweak to bump volume up by 25 to 30 percent
  • Excel at sourcing the cars you want to sell and then to sell what you carry
  • Become a proactive inventory manager rather than one who reacts to the market

 

 

 

 

 

 

 

 

Derrick Woolfson

Great article, especially regarding the aged inventory; with all of the information our CRM's provide us now, it is much easier to review the CRM for customers that might be a good fit for the aging inventory. It is also equally important for the used car sales manager to review the inventory tool, and if they notice the unit has aged - not having many VDP views - to adjust the pricing accordingly. 

 Unlock all of the community & features  Join Now