Has the Internet really changed the used-car business? Yes and no.
Back in the late 1970s and early 1980s, consumers were far less able to sell cars on their own. So they usually accept the offerings of a franchised or used-car dealer.
It was a time when finance companies didn't offer the long-term financing options that are available today.
And back then, auto makers did not sell hundreds of thousands of vehicles to rental car companies, then purchase them back and dump them on the market.
This was a time when the market truly controlled the resale values of all used vehicles, both retail and wholesale. It was not a time when negative equity, artificial supply and consumer and dealer fears ruled.
Fast forward to when consumers appraise their cars on-line; research wholesale values and retail values on vehicles of interest from their offices or dining-room tables; and locate the dealerships or used-car lots that offer their vehicles of choice.
Oh, and they can find out the asking prices for vehicles in stock and even arrange their own financing on-line.
What does all this mean?
Well, while consumers are much more empowered to shop and negotiate with us, the fundamentals of good pre-owned operations management have not changed.
Back in the day, stellar pre-owned operators knew where to source their inventory of choice and knew what price this inventory would command. They knew how to recondition cars properly to get the job done. They knew when and where to send the inventory wholesale and what it would bring across the auction block.
So, what has changed? Nothing.
Even with the most empowered consumer in our history, we have so many additional tools and resources at our command. There is no reason a dealer should not excel in the pre-owned world.
With new-car competition and margin compression continuing to mount, a franchised dealer may have to become a stellar pre-owned operator just to survive. But who wants to just survive?
Think of what's available that allows you to be more efficient and effective in your pre-owned department. Such as:
- Factory off-lease units and associated websites.
- Live auction simulcasts.
- Brick-and-mortar auctions.
- Online vehicle exchanges and dealer auction sites.
- Consumer listings such as eBay, AutoTrader, Cars.com.
- Manheim Auctions.
- ADESA Auctions.
- Independent auctions.
- Online dealer auctions and exchanges.
- eBay, AutoTrader.com, Cars.com and other dealer and consumer websites.
- Online trucking and freight forwarding companies.
- Dozens of traditional freight company opportunities and their associated company websites.
On-line Sales Aids:
- New- and used-vehicle product information online.
- Internet lead providers.
- Internet-based finance opportunities.
- Competitive pricing information.
- Dealership business development centers and Internet sales departments.
- Customer-relationship management and phone call monitoring companies.
- Dealer and auto maker websites.
When you look at tools and resources available, why fret about empowered consumers?
The only ones worried about the Internet resources, consumer empowerment and competition are dealers failing in pre-owned operations.
If you are not as successful as you would like to be in the pre-owned department, learn to use the new tools and resources to your advantage.
More importantly, learn to execute the basic fundamentals of inventory management, merchandising and advertising, retail sales management and owner retention.
Ed Curry is director of pre-owned operations for NCM in-house training and consulting. He can be reached at [email protected].