Market Data – It’s Just Half the Story
Market Data – It’s Just Half the Story
Five Essential Tactics to Hit Your Used-Sales GoalsFebruary 25th, 2014 by MAXdigital
Even though business is better, running a successful dealership has never been more difficult. Today, dealerships are more complex; markets are highly competitive; and hitting healthy margins are more difficult than ever before. Further complicating matters, consumers have become more knowledgeable on the value of vehicles, and far less willing to compromise during the car buying process. The bottom line, managing retail operations has never been more complex and chaotic. But that’s OK. We’re here to help. Used by leading automotive retailers – below are five essential tactics you can perform at your store to gain better visibility and control of your pre-owned sales performance. So what are you waiting for? 1) Analyze appraisals from every day Identify trends in your previous day sales, and devise a plan to replace this inventory with additional pre-owned units. TIPS & RECOMMENDATIONS Look at the Days to Sale, Margin, and Market Days Supply of the car in the market. What is your current stocking position? How did you acquire this car (trade or purchase)? Was this a market performer, or a store performer? Does it make sense to replenish your stock based on current conditions and the results that you saw at your dealership? You may want to consider reaching out to other dealers and put together deals for their aging inventory (that match your core needs). Simply locate cars already in the market that have already been reconditioned and have low Market Days Supply. They may be overpriced or poorly marketed by their current dealer. In addition, check your Custom Inventory Analysis for the segments that make you the most gross and/or that you turn the fastest. 2) Execute your pricing plan by aging buckets Put together a game plan for execution. Which cars do you price? It is easy to look at your aged cars or just the cars you bought/traded for (if multiple people are appraising), but when you are just making daily updates to the prices. Here are a few recommended best practices: 1. Stick to your Aging Policy and re-evaluate based on activity and market criteria. 2. PHYSICALLY pull the keys to each car on the planning tab. Book it out, check market listings, open the car (does it smell like wet dog?), start it, check the tires, do a “walkaround”. If you are doing this everyday, there will only be a handful of cars on the list. TIPS & RECOMMENDATIONS Draw a ‘line in the sand,’ and say “When a car hits XX days, I will re-evaluate its position in the market for pricing and ONLY when it hits this age.” You HAVE to give a car time to adjust to new pricing and have a chance to sell. Be “in the game”. Don’t just look at a report to tell you the cars you are asking above AND below market average, know WHY you fail into each category on EVERY car. 3) Assess Time to Market and Low Online Ad Performance Accelerate your Time to Market and streamline your process from appraisal through recon, and into Online ads. Follow up in your service drive to push cars through recon and get new inventory to market. TIPS & RECOMMENDATIONS Recommended Benchmark: Time to Market should take no more than: 72 Hours. Time to Market will vary based on the dealership. Know YOUR setup and benchmark based on your top performing months and shoot for a 20% improvement each month. 4) Assess core inventory stocking levels Plan for next week by identifying the best place to source these cars at auction. TIPS & RECOMMENDATIONS Use your Inventory Manager to see which of your top volume, gross and turn cars you are under stocked in. Over/Under Stocking Guide and see what you need to source. Find them at local auction. Drill down past the make/model (Are there certain years, trims, or price bands you excel at?) 5) Analyze immediate wholesale P/L How close to $0 on the positive side did you get? How many deals did you save/miss by being too aggressive/ conservative on my numbers? TIPS & RECOMMENDATIONS Manage the managers involved. Don’t knee-jerk and start giving $500/car more on every opportunity. Analyze the numbers and create an individual action plan for the people that are affecting the data the most. Your most expensive investment is PEOPLE – use this data to help you manage them.