Do You Serve Up and Under-Allowance?

When I ask dealers and managers if they under-allow on trades, some will say yes. Some will say occasionally and, some will even say no we don’t do that.

Let me suggest that if you’re going to under-allow, go all in and do it with all your customers, not just those you think are stupid or drunk. That may be a little harsh, but I want you to get the point. Stop picking and choosing.

My under-allowance grid goes like this:

ACV of $30,000 and up $3,000
ACV of $20,000 and up $2,500
ACV of $15,000 and up $2,000
ACV of $10,000 and up $1,500
ACV of $5,000 and up $1,000
ACV of $5,000 and below $500

You may not like my grid and that’s fine. Come up with your own. Then come up with the discipline to serve it up to everyone that has a trade.

If you do so, one of three things will happen:

1. Some will say yes, and you make some extra gross.
2. The customer will quickly adjust their thinking as to the value of their vehicle.
3. If you are a store that still negotiates, then you just put yourself in a much better bargaining position.

There are a few customers you might have to peel off the ceiling. That’s ok. That’s why you’re paid the big bucks.

Utilizing an under-allowance isn’t “old school.”

It’s common sense. That’s all I’m gonna say. Tommy Gibbs