There’s a lot of talk these days about the “Velocity Method” of selling used cars and trucks.
There are some that would define Velocity as: “A method of giving your cars away so as to impact your gross to a point of a substandard amount that will make you want to throw up your hands, beat yourself over the head, and barf.”
My definition for the word Velocity: the whipping boy of the auto industry that can be blamed when we use software pricing tools as the Bible, don’t use our brains and don’t use the tool as it was intended in the first place. Software is a tool. It’s not a genie in a bottle.
I’ve come to believe that the disconnect with the Velocity method of selling vehicles is the thinking that you have to give everything away. That’s just not true.
While I’m a big fan of pricing your vehicles “to the market,” I also believe that you have to be willing to shoot the moon on certain units for some period of time. Maybe it’s 15 days or maybe it’s 20. You know your inventory, you get to pick.
The problem is you often miss the chance to take a shot at making some big grosses because your vehicles are hung up in recon for the first 10 days of their life-cycle. You make your best grosses in the first 10 days or so. It’s as true today as it was 25 years ago.
It can often be painful when you’re trying to move to the “Velocity Method” because you already have a bunch of stuff over 60. The grosses on those units aren’t going to be pretty. And now you’re trying to speed up things on the fresh pieces and the picture gets double ugly.
If you’re trying to get things sorted out, there’s going to be some serious pain to endure. Sort of like getting a bad tooth pulled. It’s not going to get any better until you deal with it.
As you move forward, think about the choices you have:
1. Hold a high gross profit per unit.
2. Improve your volume with lower grosses.
3. Improve your volume and be smarter about gross.
In today’s market, your best chance is going to be #3. The longer you wait to adapt, the more pain that tooth is going to give you. That’s all I’m gonna say, Tommy Gibbs