I read an article about some of the top pre-owned dealers in the nation, and what struck me was the similarities in their business model and day-to-day processes.
What struck me further is that they are in very diverse markets, yet equally successful. So, what do they know or have or do that others don't?
A day does not go by that this question doesn't come up. It seems everyone is looking for the silver bullet that will provide quick success in our pre-owned department. Here's the bad news. There is no silver bullet and there is no quick success.
The first thing the successful dealers share is a quality inventory-management system using a software application to track what sells and what doesn't. Interestingly, it seems to make no difference which system they are on be it V-Auto, American Auto Exchange, First Look, etc.
What separates them from the rest, however, is a complete knowledge of how it works, what it is telling them and how to use the information.
Unfortunately, what I see happen all too often is a dealer invest in a program, have the company representative come to the store to do the initial training and installation, introduce the pre-owned vehicle manager to the representative and then leave the room.
The representative leaves you with a pre-owned vehicle manager that is uncomfortable with the system and very few buy in on a new process. The successful dealers do not let the company's representative leave until everyone in the store understands the need, the process and the utilization of the program.
The second common area is a defined process for reconditioning.
The benchmark dealers average three to four days from acquisition to the display area. They have taken the time to track and analyze every step in this process to ensure the used vehicle placed on the display area is ready for retail in a timely manner. For many dealers it will take 10 to 12 days to recondition a vehicle, and some don't even bother tracking it.
A third common trait among the successful dealers is daily disciplined inventory management.
This starts with having a pricing model that is based on the current market and is strictly adhered to.
The best focus daily attention on every unit in stock as it ages. They all use some form of the bucket system and achieve a set turn policy of 45 or 60 days.
Their used-vehicle managers run an inventory report daily by days in stock and identify specific units as they age to determine if the vehicle is priced on the market, reconditioned properly or needs to be wholesaled.
They wholesale units much sooner than the average dealer. Most average dealers have a hard turn policy, but predictably and unfortunately, the first time the used-vehicle manager looks at the vehicle is when it is near the limits of the maximum days allowed.
Finally, the successful have all invested heavily in their Internet presence. They treat the Internet as if it were another physical location. There are specific processes in place for how the inventory is displayed, merchandised and how it is priced.
There is a commitment to the quality of information posted and the way it is displayed visually on web pages. To support this they have the software and trained personnel to manage this as a separate department. The successful have done their homework and performed all the research necessary to be more than competitive in the virtual environment.
The method of achieving success in our used vehicle department is not just a matter of having the latest software or hiring the current used vehicle “guru” you heard speak at the last convention.
Neither is it about having the same tools and knowledge as the top performers. Start with your level of commitment, examine your daily processes and remember that success only comes with actually “doing” what the successful do. Well, Tonto, sorry, but I'm all out of “silver bullets.”
Tony Albertson is executive conference moderator for NCM Associates. He is at [email protected].
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