The car business is a game of high stakes. The highest stake is and has always been the used car department.
It doesn’t matter if your trading at the front door or buying at the auction it’s always a gamble. You’re gambling that you paid the right money for the unit.
It’s true you make money when you buy the unit. It’s even truer that you make the money when you sell the unit. You never know what a unit is worth until you sell it. It’s always a gamble.
Used cars are not an exact science. It’s more often than not a wild-ass guess. Some guess better than others, but it’s always a gamble.
Solid leadership and a savvy understanding of the business will mitigate your gamble and give you better odds of winning the game and improving your bottom line.
If you’re the Owner, Dealer or General Manager you should never turn the riskiest part of your business over to a single individual. Your leadership and experience are critical to your thriving and surviving the risky part of your business.
There’s an old Chinese proverb that says: If you must play, decide upon three things at the start:
1. The rules of the game-Upper management set the rules of the game and decide if they are going to demand accountability. Rules without accountability are just stupid. Don’t be stupid.
2. The stakes-The stakes are very high. How much money do you have invested in your used car operation? Most of the time we think about that in terms of the amount of used car inventory we’re carrying.tion? Most of the time we think about that in terms of the amount of used car inventory we’re carrying.
Often in the millions of dollars. Yes, that’s the biggest chunk of the investment, but there’s also a huge investment in time, management development and resources that go into the equation. Don’t be stupid with your investment.
3. The quitting time-At what point do we find a retail buyer at some number? Our first inclination when reading “the time to quit,” is when do we dump the unit in the wholesale market.
Dumping in the wholesale market is always a bad idea. If you want to think about it as dumping, you should be thinking about it as dumping in the retail market.
At some point, the unit should be priced at a price point that makes someone come in and take it off your hands.
All units don’t deserve the same shelf-life. To assign all units the same quitting time is a bad business strategy. Not having a solid strategy and flying by the seat of your pants is just stupid.
I’m being repetitive, but it’s worth repeating that the used car business is a gamble and you need to do everything in your power to increase the odds in your favor.
That’s all I’m gonna say, Tommy Gibbs