Do You Need More Used Car Inventory?

I’ve been guilty in the past of snickering when someone says, “We never miss a trade.” Everybody misses trades and if you don’t believe it, think of the deals you have made in the past where you stole a deal by stepping up. The same thing happens in reverse.

Keep in mind that you never really know what a unit is worth until you sell it.

That said, in the last 6 months or so I have to say that the majority of the dealers are working hard to step up and capture anything and everything that shows up at their front door.

Even so, dealers are still running short on used inventory and still missing opportunities.

Every week my senior software engineer and I discuss how we can come up with an ingenious way to help dealers find more used cars. We know that if we could, we would knock it out of the park and dealers would be standing in line to do business with us.

Since we’re not quite there yet I have some suggestions for you:

1. Set up a temporary buying center at a remote location such as a mall, strip mall, or a vacant piece of property for a weekend. If the laws permit, put it in your competitor’s backyard. Since you’re not going to be selling cars at this temporary site, I’m thinking you’ll be legal in most states. Put up a tent with banners around it that include “Free Written Appraisal in 15 Minutes.” Or better yet, if you have a box van, put some signage on it and get to work.

2. If the temporary buying center works well, consider setting up a permanent buying center. Sure, the issue is going to be finding the right spot with a favorable rent factor. And, of course, staffing. With the software available today you don’t necessarily need a high-paid rock star. Keep your cost down by setting the hours for what you know to be those peak traffic times such as 10 to 7.

I’d suggest you think of this expense in terms of advertising dollars. You’re already spending a ton so you could consider moving some money around.

3. Don’t miss a trade. I know, I know, you’re not missing many, but let’s add one more piece to the equation; make sure in your save-a-deal meeting that you bring in all the appraisals from yesterday that you didn’t make.

Have a manager call those customers and up the ante by at least $500. Even if you think you already put all the money in the world in the unit, give it one last shot. You have nothing to lose and you might just capture a trade or two. Also, you might find out the real reason why they didn’t do business with you.

4. Pay extra. Yep, consider paying the salespeople a little extra for every deal that has a trade attached to it. It’s hard to measure how much impact they have on capturing the trade, but anything you can do to keep them interested is going to be a good investment.

5. Pay salespeople to find units for you. This idea is old as dirt and still worthy of consideration. Have them work sites like Facebook Marketplace, etc. If they can create a buy for you, then pay them. And pay them well. Add the cost of acquisition to the cost of the unit and it doesn’t impact salesman’s compensation. Win-win.

6. If you currently have software in place to mine your customer base, get re-focused on it and work it harder. If you don’t have the software, then get it.

The number one issue with dealers that use the software is the processes for follow-through are less than desirable. And frequently they have the wrong person doing the job. People skills are far more important than used car skills when it comes to capturing these customer’s vehicles.

Far too often this is a sloppy and unpleasant experience for the customer. Part of mining your customer base should be your ASMs asking if the customer would like a written appraisal for the value of their car.

7. Work harder to buy cars from your service customers. You can either serve up an appraisal on every unit that comes into your service department or have your service writers ask the customer if they would like a free written appraisal on their vehicle. Pay the service writer a bonus for every unit you’re able to buy.

8. Work harder at buying from auctions & rental car companies. I know it goes without saying, but I’ll say it anyway. You’re still going to have to use these sources.

Yes, you’re going to overpay 90% of the time. If you work smart you can still make it work for you. Make sure you shorten the life-cycle on these units with a goal in mind of finding a retail buyer at some number sooner than later. In most cases, you have to have a turn and burn mindset on these units. There’s a bunch of benefits of doing so and I’m confident you know what they are.

Work harder. Work smarter. Work more. That’s all I’m gonna say, Tommy Gibbs