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Richard Holland

Richard Holland Managing Director

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For Used Vehicle Acquisition, There’s No Place Like Home

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One of the pain points I frequently hear from dealers is how to acquire frontline pre-owned vehicles for their stores. Having an available solid inventory of used vehicles for customers is imperative. Not everyone will be able to (or even want to) buy a new vehicle. To run smoothly and continuously generate revenue, dealers must continuously acquire vehicles. This provides available alternatives if a customer chooses to switch from new to used. In addition, the front-end gross profit potential from a used vehicle is typically higher than that of a new vehicle. However, competition to acquire these units can be very heavy at physical and online auctions. And dealers frequently fail to purchase as many as they would like because of inflated bidding. Once transportation and reconditioning costs are integrated, used car managers can be forced to pass on some pretty desirable units for their stores. Due to these challenges, dealers are having to be more creative in finding this inventory.

Some highly successful dealers have found a simple way to accomplish this. It involves less effort and presents greater potential than any auction they could attend – and that is from customer vehicles in their own service drive. This is certainly not a new concept. Many a sales manager has directed salespeople to work the service drive.

The service drive offers a wealth of opportunity for dealerships. It is the single most valuable resource for inventory acquisition. The benefits of using the service drive for acquisition are multi-fold. Dealers will typically be familiar with a vehicle in their service drive through service records. Chances are good that they may even have sold the vehicle new to the customer. There are no transportation costs. And there almost certainly won’t be any outbidding by a competitor!

The challenge is developing a system that is not perceived as intrusive by your service customer. Customer experience is imperative. If you bombard your customers with sales messages every time they come in for service, you increase the likelihood that a customer may decide not to return. A blanket approach is also not effective. Dealers can’t play the numbers game on a universal scale in the service drive by approaching every customer and hoping they get lucky.

However, turning your service drive into a sales drive in a non-intrusive way is not as difficult as one would imagine. Chances are good that a service department knows what vehicles are scheduled for service the next day. A daily report of the next day’s appointments can be a valuable resource for a used car manager. They can then identify high interest vehicles and cross-reference those vehicles with book values and DMS data such as payoff, equity positions, credit information, as well as prior purchasing behavior. This then enables the quick identification of any vehicles of interest and customers that are in the best position to be approached to sell their vehicle and acquire a new one.

Service departments see many vehicles on a daily basis. Certainly not every customer is in a position to trade-in their current vehicle. However, by identifying and targeting those customers most likely to be interested, and those vehicles most valuable to acquire for used inventory, dealers will achieve better results. The key is to gather personalized information to approach these customers with, tailored to their specific situations. This transforms the effort from being intrusive, to being informative and potentially beneficial to both the dealership AND the customer.

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