Gas prices went to over $4.00 a gallon last July…and we all know the rest of the story. Many dealers went into a panic mode of dumping SUVs and pickup trucks. (Even after I told them not to.) Then they went out and purchased lots of smaller cars. Sometime thereafter gas prices dropped below $1.68 a gallon and many dealers have now stocked up and are doing quite well with used SUVs and pickups. The worm is about to turn again, and the worm is going to suck some more blood out of you if you aren’t paying attention.
The key is to control the worm and at the same time improve grosses (actually total gross.) You have to work in a very short window with your inventory. You cannot keep vehicles 30 days and beyond and actually be selling in “today’s market.” It does not mean you have to give your cars and trucks away, nor does it mean you have to dump them in the wholesale market. You can still shoot the moon if you want to on a given unit, but you have to make price adjustments much, much quicker than you ever have. The days of carrying units 60 plus days are over. I said it’s over. You need to get over it and stop all the silly excuses you keep coming up with.
Many of you are crying that you can’t find inventory so why should you reduce the price on what you currently have? Lord, help me, but if I have to explain all of that then you need to sell the farm grandpa.
There is inventory out there somewhere and there is inventory you can buy and make money on. But, you have to be creative and look for it almost 24/7. It won’t happen going to a couple of auctions a week and/or looking online a few hours a day. Your current used car manager does not have the time or the patience to get the inventory you need in order to maximize your potential. It goes much deeper than just looking. It’s about doing the research about what is selling, then finding the right stuff and turning it quickly. Yes, you may pay what you consider to be “too much,” and yes, your grosses might suffer a tick, but you will sell a lot more units and your ROI goes way up. There is nothing better than putting units in the street for your dealership.
So let’s review the warning.
Gas prices are going up.
Don’t get caught with your pants down.
Work with a short window.
Work harder at finding the right inventory. (Someone other than the used car manager.)
Work harder at turning it faster.
You’ve been warned, that’s all I’m gonna say, Tommy Gibbs