If you are on some kind of turn like 60 days (should be 45 days) have you ever wondered how much money you have lost when you dumped it at the auction when you hit the end of your cycle? The typical used car manager is willing to take a loss at the auction at 60 days to a bunch of vultures, but would not dare sell the car at a loss to a retail customer. Now let me ask you, who do you have the greatest opportunity to recoup your loss with in the long run?
The real bottom line to all of this is you have to push prices down enough to retail them prior to 45 days be it at a profit or not. It doesn’t mean you have to give your car away on day 10 or day 20, but by day 20 you need to start getting in the game.
I want to emphasize this whole idea of retailing, not wholesaling and not going to 60 days. If the prices are managed correctly there is someone’s butt that will fit into the seat. There is a price a car can be retailed at which is a far better choice than taking the car to the auction at the end of the cycle. The stereotypical used car manager does not “get it.” Someone in upper management has to decide to change the course of direction and someone has to be in charge of “Market Pricing.” The reality is you almost need a geek who understands the car business and can sit in front of a computer most of the day and monitor the market.
It is "stupid thinking" to rationalize that if you didn’t sell the car at a loss to a customer that you would sell that same customer a car at a profit. Not so! There are customers who will come to you because of the attractive price point you have a particular car listed at. Thus, you now have a customer in your system for future sales/prospect that you would never have had. To do this you have to take an aggressive approach as the car passes through whatever buckets you set up. Why would you rather lose money at the auction than lose it with a retail buyer?
That’s all I’m gonna say. Tommy Gibbs