There are times when I struggle as to how much I want to “share” with you in my free newsletter. I often ask myself, “Should I save this for my paying clients?” This is one of those times, but what the heck, here you go.
If you’ve heard me speak or read any of my material, you know I believe it’s way past the time we had two-tiered pricing from the service & parts department to the used car department.
A different price structure for your cheaper used cars will pile up more gross and put more profit on your bottom line.
It’s a tough sell for those dealers locked into stinky old legacy thinking who have “always done it that way.” I, of all people, realize how difficult change can be.
I have a story for you. I had my car serviced recently and upon hearing the quote I asked, “Hey, can you give me a discount?”
The service writer said, “Sure, here’s a 15% coupon for the labor.” I said, “What about parts?” He said, “Nope, the parts department won’t work with us. They are very one way.” Another one of those things that’s hard to change.
Nothing shocking here, but my point is we are always giving our retail customers discounts and coupons. So why not the used car department?
Here’s the way it works:
1. The dealer or GM decides how many coupon sheets (see below) they will issue to the used car manager at the beginning of the month. If you want to get sophisticated about it, then base it on some formula of how many used (or even new) were sold the previous month.
You could do 40 used gets you one sheet. Or 40 new gets you one sheet. There’s all kinds of ways to set this up. You could do for every 10 units over forecast you get an extra sheet for the next month. Whatever formula works for your size store.
2. The sheets are set up for 8 coupons. You could do more or even less.
3. At the top of the sheet, the Dealer/GM will determine the maximum ACV the coupons can be used for. I’m thinking less than $10,000, but you get to choose.
4. Each coupon requires:
A. The stock # of the unit
B. The ACV before coupon/repairs are done.
C. The manager’s signature.
5. I have a template that allows you to change the coupon percentages to suit your taste.
6. How you expense the coupon discounts is up to you, but let me suggest that parts and service handle the discount just like you would with any customer.
7. Is there a slightly negative impact on your percentages in parts and service? Probably.
8. Is there a positive impact on your total gross profit? You betcha!
9. Is there a positive impact on attitude from the used car department? Another you betcha!
10. You will sell more used because you’re keeping some pieces you’ve been letting go down the street. You will sell more new because you will step up on some trades since you now have a way to turn them into retail pieces.
If you want to sell more used cars then do something different. That’s all I’m gonna say, Tommy Gibbs
