The reason you have to get serious about used cars is because of the letters many dealers received in 2009 that terminated their new car franchises. Dealers have allowed themselves to be at the mercy of the new car manufacturer in good times and bad.
Think about it: We don’t get to make decisions on what’s being produced by the factory. How did we let the viability of the family business become dependent on the new car franchises? We should have learned our lesson over the past years. All franchises go up and down. We know that, because in many cases we collect new car franchises to hedge our bets.
Many of the dealers who received those letters of termination in 2009 decided to turn those beautiful vacant facilities they were stuck with into a used car operation. Most of them have failed miserably. Why? It’s pretty simple. It’s because they had always treated their used car franchise like the red-headed stepchild and didn’t take the time to learn the used car business.
They had become so dependent on their new car franchises all those years that they just couldn’t make the switch. They tried and tried but most have failed. Now they are stuck with properties they will either lose in foreclosure or sell at a bargain basement price in order to unload the debt and taxes.
Dealers should never allow themselves to be put in that position again. Take care of the new car franchise but don’t allow your survival to be dependent on that alone.
The upside to “getting it” as in getting in the used car business is it makes you stronger in all departments. When the used car business is rocking it feeds all the other departments. If you are strong in used cars you can step up on new car trades. The more new cars you sell the more parts and service business you generate. If used cars are turning and burning you are running more internal tickets through the service department.
Used cars are the biggest no brainer since the invention of the wheel. So, you have a choice either to develop it as your best franchise or risk your entire investment on one day getting that letter that says, “Sorry, we’ve decided to terminate your franchise, thanks for all the new cars you’ve sold for us over the years, but we don’t need you anymore.”
That’s all I’m gonna say, Tommy Gibbs