I’ve always been a big believer in trying to retail everything that has a breath of life left in it. Certainly you have state safety laws to abide by and of course you may have your own standards for safety and reconditioning.
Often dealers draw the conclusion that they don’t want to mess with the older used vehicles because they don’t want to damage their reputation. I’ve never understood that part. The customers buying the older, cheaper units are thrilled to have that vehicle. It’s not going to hurt your reputation.
In case you’re sitting on the fence on a “Budget Center,” ask yourself these simple questions.
1. What about all the parts and service gross that would have been generated on the less expensive cars going through service and reconditioning?
2. What about the fact that you could have put more money in some trades because you intend to retail them vs. wholesale them? How many more car deals do you end up making because you have a better plan?
3. Does the increase in volume from the less expensive units impact the attitude of the sales staff and their ability to earn additional income? Isn’t it true the best time to sell a car is when you just sold a car?
4. What’s the benefit of having someone driving a car, any car, high dollar, low dollar, that they purchased from you?
5. Is there a chance you just sold a car to someone who might never have set foot in your store simply because you had a vehicle at a price point they could afford to pay?
6. Is it possible that this new customer has a friend or relative who might one day come buy something because of the way this new customer was treated during the buying experience?
7. Are the odds in your favor that they may come back for an oil change or other service?
8. Does doing business generate business?
9. What’s the “Return on Investment” on selling these less expensive cars? Relative to the amount of money tied up, aren’t they a far better investment than what you would make with a $25,000 car? How many times in a year can you turn over a $7,000 to $10,000 investment vs. a $25,000 investment?
10. Doesn’t it make sense that if you can sell more cars with less money tied up that it’s a good thing? There really isn’t much of a downside to increasing volume and decreasing investment.
It’s found money, that’s all I’m gonna say, Tommy Gibbs