The serious Automobile Dealers are constantly looking for answers. Or to say it another way, the excellent dealers are always in pursuit of excellence. The really smart ones know that they never get it right and they thrive on the chase, knowing the chase never ends.
I often run into dealers who "over think" their used car operations. It’s not a perfect science and you’re going to make some mistakes. There are a lot of great tools out there such as vAuto, Auto Trader and Auto Count, USA, but they are just that, tools.
In the pursuit of excellence Dealers often feel these tools should put them in a perfect place. They do put you in a perfect place to be competitive, but you still have to use your brain, which means using some common sense.
I was having a conversation with a dealer recently about the fact that they had an oversupply of used trucks in stock, many of which were starting to age. The question was, as they trade other trucks in, should they wholesale those newer pieces and continue to try to retail the older ones or should they keep the newer ones and dump the older ones in the wholesale market?
The answer is yes and no. There is no one answer to that question. Of course you are going to use all the tools on hand to help you understand the law of supply and demand in the market, but beyond that it can be a bit fuzzy.
So, I’m going to answer this question with a question. Why would you want to dump a fresh retailable (I made that word up) piece that you have less money in than the ones you currently have in inventory? Unless there are extenuating circumstances I would never get rid of that fresh piece.
I might dump it if it’s a $35,000 truck, but if it’s a truck that can be retailed then it stays and gets a shot. I might also limit the number of days I will allow it to hang out at my place, but if I think I can make money on that truck then there is no way I’m going to let Bubba and the Gang have that truck. (If you’ve not heard me speak, I refer to Bubba as anyone you wholesale to.)
As for those others I still have in stock, I can assure you that if they are starting to age then someone has not been paying attention. First and foremost you have to fix that issue. When the management team practices "Life Cycle Management" and assigns every unit an expiration date as they come into inventory, I can guarantee you most of those issues never come to the surface.
You have to learn to identify problem units on day one not day sixty-one. You can only do that by understanding life cycle factors. Your managers have to have the ability to spot the "Early Warning Signs" which allow you to control your inventory, not your inventory to control you.
But, it is what it is. So for the moment the only thing you can do with those trucks is price them right and make them go away. I’ve never once mentioned you should take them to the auction and lose money. If you’re going to lose money lose it with a retail customer.
This business still requires thinking and it requires the right tools, but you can over think it, so, don’t…That’s all I’m gonna say, Tommy Gibbs