1. “We never miss a trade.”
2. “We don’t try to steal trades.”
3. “We put top dollar in every unit we appraise.”
4. “We’re not going to miss a deal at the front door.”
Fundamentally none of these are true. Everyone misses trades.
What’s funny is when you go to the auctions to buy cars you always pay more for them than you would if that car was sitting at your front door.
Stealing trades is one of those things that falls into the “We’ve always done it that way” category.
I believe there are four fundamental causes for trying to steal trades:
1. The fear of the bump. Used Car Managers fear the bump from upper management so they low-ball the trade thinking the bump request is just around the corner. The used car manager is protecting their “territory” by low-balling the trade.
2. Pay plans also tie into stealing the trade. The manager is protecting their own personal pocketbook especially in those cases where the used car manager is only paid on used car gross. Even if they are paid on total gross it still creates “trade stealing.” Gotta make some gross someplace.
3. Aged inventory. We need to steal the trades to make up for the sins we have on the lot right now. As long as you allowed aged inventory to exist you’re going to have people trying to steal trades.
4. The old adage that you “make the money,” when you buy or trade the unit. That’s only partially true. You “make the money” when you sell the unit and you make the most when money when you sell it fast.
Here’s the fix:
1. Put solid disciplines in to eliminate aged inventory. (My Life Cycle Management Process.)
2. Put top dollar on every trade. I said top dollar on every trade. No bumps. Pretend it’s your last bid as if you were at an auction. Step up from jump-street.
3. Change the pay plans. Paying on gross profit becomes more archaic every day. Becoming a one price dealer has worked out pretty well. Didn’t you learn anything from the Pandemic?
4. Stay focused on improving your look to book. Review every vehicle that was appraised from the previous day that you didn’t get. A phone call to a customer from a manager will do wonders for your business.
When you stop stealing trades and customer acquisitions, you improve the quality of your used car inventory.
When you improve the quality of your used car inventory you sell more used cars and make more gross profit.
When you sell more used cars you become more confident that you can put top dollar on trades.
When you put top dollar on trades you sell more new and used cars.
Stop stealing trades. That’s all I’m gonna say. Tommy Gibbs