There are a lot of common problems when it comes to the used car operations for new car dealers. But of all the problems and challenges that dealers face, the number one problem is that dealers trade or buy a unit and have a lack of “intent.”

Most would say “Of course I have intent. I intend to sell this unit and make some money.” That makes total sense, but the problem is it’s far too general.

That’s like saying you’re going to drive from NY to LA without a plan on how you intend to get there. How many of you have ever heard the saying, “Every used car has to stand on its own?” If you’ve been around long enough you understand the term and can probably agree with the statement.

That being true, how can you give them all the same shelf life? How can you not have a specific intent for each unit? Most dealers don’t think “What’s my intent” when a unit comes into their inventory. It makes no sense to paint them all with the same broad brush.

Intent starts with the appraisal and is finalized during the trade walk where the “final intent” is determined. If dealership managers would look at each unit and clearly state their intent they would have fewer inventory problems, turn would improve, and average gross, volume and ROI would go up.

I’m not going to go into the details here in this newsletter, but my life cycle management process gives you the disciplines to determine and carry out your “intent.” I will be making my life cycle app available to a limited number of dealers in early 2015.

My intent with this article is not to try to sell you something. My intent is to get you to think harder about what your own intent happens to be when you bring units into your inventory.

That’s all I’m gonna say, Tommy Gibbs

If you read Automotive News and other related publications then you know the value of used cars has started to head south. 

For some of you it’s no laughing matter. And for some of you, you’re sitting there with a smile on your face. You might even be using the secret code LOL.

Those that are smiling are smiling because they have the disciplines in place to make sure units don’t go over 60 days. Others are frowning because they have a lot of stuff sitting out on the used car lot way over 60 days.

They know they have a ton of water and with values dropping the water is moving up to flood levels. Might be panic time.

It’s very, very simple. If you are turning your inventory then you don’t really care what happens in the market. That’s because you’re always buying and selling in the same market.

Think about it; if you have units in stock that are aged, then you are not in today’s market. There are other dealers bringing those same units in the inventory today, for less money than you have in yours.

And, they can sell them for less and make more money than you can.

Kinda funny ain’t it? That’s all I’m gonna say, Tommy Gibbs

Dealers all over the country have a big push on buying cars from the public.

Many are spending thousands of dollars on advertising, marketing and software in an effort to find more and better cars at their front door. 

Some have even hired an “Equity Specialist” who has a full time presence in the service department and customer lounge in order to solicit customers with an offer of “Would you like us to appraise your car for you?”

Some dealers have even started an “exchange program” offering the customer a new or newer car for the same payment that they currently have. 

But wait, stop the presses! It’s a waste of time. Yes, it’s a waste of time if you haven’t put meaningful processes in place that are customer friendly and effective for you, your team and the customer.

Mistake #1: The tendency when someone says “Yes I’d like my car appraised” is to drop them off at the used car manager’s desk and leave. The person making contact with the customer needs to remain the contact. Though somewhat modified, there needs to be a “full routine” presentation by the contact person to each and every customer that says yes. 

Mistake #2: Most dealerships only want to buy what they know they can retail. If the program is going to be effective you have to be willing to buy anything from a stone piece of junk to a very expensive luxury car. CarMax has built the reputation that they will buy anything. Bring it to us-get a number. That should be your mantra.

Mistake #3: You try to steal it. What are you thinking? Get real. Get the unit. You will pay far more for it at the auction than you will at your own front door. Step up. Don’t be stupid. You need to own that unit.

Mistake #4: Giving verbal or handwritten appraisal quotes. Whatever you hand the customer needs to be computer generated in the most professional manner possible.(Appraisal Form) The quote should be good for a minimum of 7 days.(Voucher) The very brilliant Mike Porro of the Swope Auto Group even gives them a free CarFax report.

Mistake #5: Not paying the sales person or contact person based on the acquisition. If you want staff members to give the “full routine,” then you need to pay them just as if they sold a car. The full routine might actually inspire the seller to buy a car from you today or months down the road. Think about how much more efficient and cost effective it is when you can buy a car at the front door. The savings on the auction fees and transportation cost alone make it more than worthwhile for you to pay a reasonable commission.

Mistake #6: Someone hands them the appraisal and says, “Just let us know what you want to do.” The manager and the contact person need to do a complete review/presentation of the appraisal, answer questions and ask for the business.

Mistake #7: No one follows up with the customer. There should be a system in place to follow up within 24 hours, 1 week, etc. even if it means upping the ante $500 or so to acquire the car. There’s an old and very useful saying in the car business, “Follow them till they buy or die.” That saying applies to you buying their car as well.

Eliminate these 7 mistakes and you won’t be wasting your time, energy and money. That’s all I’m gonna say Tommy Gibbs