First let’s make something perfectly clear; sometimes it’s not so much what we buy, but what we don’t buy. If you have come to an understanding that being in the NEWSCAR Business is a self defeating prophesy then that is the first and most important step to take towards improving your Used Car business. (NEWSCARS is when the average cost of your used car inventory keeps creeping up and up until you end up with used cars that are too close in price point to your New Cars. When the factory comes out with rebates, interest rates, and a hot new employee purchase plan you get your head handed to you on a platter.)

Here are some other thoughts for you to ponder:

 

1. Car Max buys 40% of their cars from customers that don’t trade with them. Let’s assume that’s not possible for you, but even if you could buy 20 or 25% of your cars from customers that don’t buy from you then you are that much ahead of the game. You have to advertise it, and promote it all the time including on your website. It won’t happen by putting it in your ad for one week.  (For the life of me will you please tell me why you have not shopped Car Max to observe how they do things?  They do a lot of things that we can all learn from. Next time you see a Car Max store, drop in, play dumb, see what you can learn.)
2. Mobile Buying Center-take a truck, van, or Suv and paint it up as a mobile buying center. Assign a buyer or used car manager to drive it and make house calls if necessary in order to buy some cars from individuals that you would not normally get a shot at. If nothing else it’s great advertising a message that your dealership “will buy their car even if they don’t buy yours.”
3. It’s a given you can’t buy the cheaper cars at the auction. (I write like I talk and I call it what it is.)  But what you can do is not buy the expensive ones. Yes, there is a place for program and certified cars, but you have to keep them under control, be very price conscious and only have a few each in inventory. It does not need to be a big part of your stock.
4. We need to trade for more cars at the door. Especially those that fit a certain price tier.  For the most part cars and trucks under $15,000 are the ticket.  You need to study the Auto Count USA data to determine the fastest moving vehicles in your market, but even more important there needs to be a mindset to step up on those cars that fit the less than $15,000 retail target range. 
5. A full time buyer on the street and attending auctions and working other dealers is almost a must. You cannot find the cars you need by going to the auction once a week or every two weeks or when you need cars. You can use an outside buyer and they do not need to be a full time employee. It doesn’t matter if they are buying for other dealers. What matters is how you pay them and the list of vehicles you tell them to go look for. That list includes by model and price points you need.  Pay them well. You can pay them $500 per car, but they only get paid if and when you sell the car at a break even or a profit.  They are not just working auctions but working other dealers, who you probably don’t have access to.  $500 is not too much to pay if you get a car that turns quickly and keeps your Used Car manager at the store doing the things he or she needs to be doing. 
6. Depending on the size of your store, pick two sales people. Assign one trucks and one cars.  They need to be somewhat detailed people with good communication skills. Have them go through the paper, Auto Trader Magazine, or whatever type of Car Magazine they have at the 7-11 Store. Have them circle vehicles “For Sale by Owner.” Put the publication in their desk drawer. A week later have them get on the phone and call these people. By that time some reality should have set in for these sellers. Odds are they have been jerked around and aggravated by so called potential buyers. They will be in a much better mood to listen to your offer, plus they might even decide to trade with you.  If you are in a state where it’s an advantage to trade your car versus selling and then buying because of the tax code then you may want to set up an excel spread sheet to be able to do the math and point out how much more money they will need to get for their vehicle to overcome the tax issue, thus they may decide to trade with you.  For every car the sales person buys, pay them a nice finders fee. $200? What does it matter, you just got another car that you didn’t have to go to the auction to buy where you always pay stupid money.
7. You might want to consider setting up a similar program for your ASMs in service. If they have a customer they have written an estimate for and the customer opts not to do the repair and we trade them out, pay them $200 (whatever) as a finder’s fee. Make sure they understand to get paid they have to bring the customer personally to the sales manager, etc.
8. With today’s technology I believe we are close to being able to do the following:  Get a visual on this. In the customer lounge we have a LCD screen. This screen will be able to instantly post desirable vehicles that we have a need for.  Let’s say a hot model for us is a 2003 Camry.  We know that from our research and we have programmed those vehicles into our computer system. When a customer gets written up in Service Write up, the system automatically knows we need the car and it’s flashing on the screen telling the customer we need these cars please see Joe Smuck our sales manager if you own one. Furthermore, the system could automatically send these customers an e mail advising them of the same. Ok, in the meantime at the very least you could post a board of some sort in the Customer Lounge with the vehicles you know you have a need for.
9. Mining our own customer base. If you are not demanding e mail addresses from your sales staff and ASMs shame on you!  This list can be a powerful marketing tool for both sales and service.  Go after those customers that have the cars and trucks you need. Send them special e mail offers. “We have a need for your 2003 Toyota Camry. Print this coupon out for an extra $1000 trade allowance and present it after you make your best deal. If you’re not interested in buying a vehicle we are more than willing to buy yours and give you an additional $1000 over Kelly Blue book.”  Of course you can do direct mail as well with this. You have a huge customer base that you need to go after and most of us are not doing so. 

The first paragraph talked about it’s more about what we don’t buy. It’s also about what we don’t keep or at least what we don’t keep very long. There needs to be a mindset about attacking our more expensive units in stock and making them go away in a hurry. It’s imperative that we price these higher dollar units at a price point that makes someone want to come in and take them off our hands. Believe what you want, but the internet has changed the shopping habits of the car and truck buyer. They can now shop your price and vehicle like never before. There was a time in the business when you could sell almost any used car because there was “a butt for every seat.” That was true because it was hard for the buyer to compare your vehicle to others without driving all over town. Not true anymore. They can look at hundreds with the click of a button. Never forget we are working with a depreciating asset and the sooner you turn it the better.  Consideration should be given to putting bonus money on these more expensive cars sooner rather than later. Improving your used car business is about being pro active. Sitting around and waiting for a miracle to happen is very foolish and costly.