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Car Auction Retail Car Lot

With VDP’s A Photo is worth a 1,000 words.

photo-nophoto
Your Car is Dead in the Water if you don’t have photos

Your Dealer Website is a Photo Visual Experience

When it comes to selling cars online, quality photos are the highest return actively I can think of. Would you use a dating website if there were no photos, I think not? Think about it, a web site by its nature is a visual experience, so if you have no visuals of the car, you are quite literally dead in the water.

How Many Photo’s is too Many?

Today customers expect photos and lots of them. Now you can see some dealers adding 50 or 60 photos to their online showroom. While that may seam like a lot and it is, some cars need that many pics to off show all the options. Your customers may not look at all of them but for the few extra minutes it will take you why not have them there.  At a bare minimum, I recommend 15  as this will allow you to show off most features but if you want to truly represent the car you will need 24-30 because it will give your customer a good virtual tour of the car.

Use a Photo Template for Your Photographers.

Along with the number of photos you take,  having a consistent look is important. Start by putting together a templet showing how you want the layout to flow. First photo, second photo, third photo… It’s all most like building a burger at a fast food restaurant, step one is… step two is… and so on.

Don’t Skimp on the Camera.

Now that you have picked the layout the next thing to do is get a good digital camera. There are hundreds of cameras to choose from, make sure you get one that lets you change the pixels, a common size is 1024×768. While you don’t need a $3000 Nikon -, I would tell you to get a better than average one. Remember you are going to take a lot of pictures with it and you don’t want to be buying a cheap camera every month. Plus the photos that come from a good camera look a whole lot nicer. We use a Nikon COOLPIX L810 16.1 MP Digital Camera with 26x Zoom , at the $170 price point, has all the features and durability without a huge learning curve.

Shop Your Site as if You are a Customer.

As you can see from looking at other dealers websites everyone has found some kind of flow or process to add photos to their cars. A best practice is to have someone in the dealership look at the website each day just like the customers do. Remember this is your digital showroom and it needs to stand tall. Bad photos, dirty cars, crumpled up white paper mats, other dealers plate frames are all little things that can drive customers away. You would never put cars like that inside the building where 20 people a day will see it, why would you want them online where 20,000 will see them.

Best Practice, a Photo Booth.

Taking good photos of the cars you intend to sell will increase your leads and keep customers coming back to your website. Keep your photo area or booth clean and free from clutter, set up good lighting and use a proper camera. Remember the car is the star, have it fill the frame and take your time.

Categories
Car Auction Retail Car Lot Wholesale Lot

Where Can Dealers Find Cars for under $10,000

Find the Best Cars at $10,000 or less

Buying cars under 10000One of the hardest tasks for car dealers is the stock quality used cars for under $10,000. If you have ever been given this assignment by your owner or GM you understand the pain this can cause you. I wish I had any easy solution for this but I guess if it was easy everyone would do it. The good news is that cars under $10,000 are often searched 100 times more than any other priced car. That means if you can nail this you will open the floodgates to new leads.

So where do you start looking for cars under $10,000. The most common answer is “head to the auction”. Although going to the auction to stock your used car lot is a necessary evil it can’t be your only go to move. This is where we separate the people that make things happen from the ones that watch things happen and even more from the ones that say “what just happened”.

Finding new avenues like your service drive can pay big dividends when you are sourcing for cars under $10,000. The best way to work the service department is to add a sales team right in the service lane. However if you don’t have the right staff for that or if you’re just not ready to make that commitment you need to get some help from your service department. Once you get service on board that having a customer trade their car over repairing it makes more sense, since they will most likely do the repairs anyway everyone wins.

Another way to obtain less expensive used cars for your retail lot is from private sellers. What is interesting about this approach is it can be used for both obtaining inventory and generating new leads, if someone is selling their car they may be looking to replace it. Similar to using your service drive this works best if you have staff dedicated to contacting these customers.

This process can be very time consuming, you may have to comb through lot’s of cars before you find one that fits your used car stocking profile. Even with all the work that needs to go into buying from a private seller, getting two or three of these cars a week could be a big win for some dealers.

If you don’t think you will have the time or staffing to consistently source for these cars, you may want to enlist the help of some local wholesalers buying and selling cars in your market. Most of them will have a steady stream of less expensive cars they buy from new car dealers. It only takes a few good car buyers (wholesalers) to help you get your lots full of those hard to find under $10,000 cars.

 

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Retail Car Lot

What’s Your Strategy for Pricing Used Cars?

Pricing Used Cars

Pricing Used Cars for Your Retail Used Car Lot

Having the right pricing strategy is key to selling used cars in todays markets. Pricing used cars and re-pricing should be strongly based on your market and the online metrics SRP (search results page) and VDP (vehicle detail page) you are getting on your website or other search sites you are advertising with.  It has become a best practice to have every vehicle you select for retail advertised for sale starting at day one with a competitive “go-to market” price. This means competitively pricing your vehicles to the market to achieve quick turn at a fair profit.

VDP conversions

0% – 2%       underperforming vehicles
2.1%- 3.5%  avg. performing vehicles
3.6% +         high performing vehicles

How to pick the right pricing strategy for your store. Different dealers are looking for different results from their used car department. Some dealers are looking to increase market share, while other dealers are all about the money. Whether you are going for volume or gross, having a pricing strategy and using it consistently will help you achieve the results you are going for. Here are two examples;

To achieve a MAX TURN set your targets at:

Days                  Min %         Max %
0-10                 0%                    95%
11-20               0%                    90%
21-30               0%                    85%
31+                  0%                    80%

To achieve the MAX GROSS set your targets at:

Days                         Min%               Max%
0-30                 110%               150%
31-60               100%               125%
61-90                 90%                 100%

Once you have determined if going for max turn (high volume) or max gross (all the money), which will cause you to pass on the occasional deal, it is time to build your pricing strategy. Most strategies are based on the age of the car. As a vehicle ages we move the price down in an attempt to build interest in it. While having pricing targets tied to the age, can and does work you still have to watch the market when it comes to making pricing moves. It’s not just age that causes values of vehicles to drop, although it is a big factor things like MDS (market day supply) and seasonal change will affect the value of your cars.

Market day supply (MDS)

0-40      days, fast moving

41-80    days, average

81-100  days, slow moving

101+     days, very slow moving

 

The most important part of having a pricing strategy or implementing any procedure is laying out your expectations and then holding people accountable to the task. Setting a strategy for a used car manager to follow can be tricky, from time to time they may have to veer off the strategy if the data they are looking at tells them to price a car different from the targets. You may have set your targets to price all fresh cars at 110% to market, but if the market day supply is 150 you will never sell that car for 10% over the market average price. You may not even sell it at 100%. Or maybe you have a 30 day old car and your target is set at 85% to market (15% discount) but you are getting an avalanche of internet traffic (4.5% VDP) you may want to holdout on moving the price down to 85%. Try moving it a few hundred dollars and watch the traffic. Don’t give up gross if you don’t have to.

 

So you have picked your pricing strategy and set your targets now its time to outline your plan. If you need a little jump start here is a 70 day and out pricing plan.

Vehicles are looked at for re-pricing as they age. No vehicle should go longer than 7 days without a price change and should be changed by the Used Car Manager. It’s always a good idea to have the GM, as well as the other managers in your store participate in the pricing conversation. Set up a bullpen so you and your employees can look over fresh inventory before putting cars out on the lot. Have the go to market price at the bullpen so you can discuss it with the team.

0-15 day

The re-pricing of cars 0-15 day old should be done at 7 and 14 days. You will need to monitor the vehicle’s online performance with SRP and VDP metrics. Vehicles with a low conversion percentage or with low SRP counts will typically need a larger price adjustment to help them get some interest.

16-30 day

Vehicles are re-priced at 21 and 28 days. Under performing vehicles (0%-2% VDP) or vehicles with a higher days’ supply (over 81) are marked down in price more than vehicles performing at a high level (2.1% VDP or lower day supply). Try to position vehicles in the top 5 price point base on vehicle condition and miles to increase online traffic. Make sure all vehicles have marketable photos and a well written description that differentiates your vehicle from the competitions. Promote any maintenance or  recondition you have performed in that description.

31-45 day

Vehicles are re-priced at 35 and 42 days. These cars should be re-bull penned with sales consultants.  Used vehicle managers, inventory managers and sales managers need to review SRP and VDP counts as well as MDS – looking for underperforming and slow moving vehicles. Price changes at 42 days should be moved at or below 90% of the market and should be set in the top 3 price position. (Based on market size)

46-59 day

Vehicles are re-priced at 49 and 56 days. At this point, you should have an exit strategy depending on market days’ supply (MDS) and stocking levels of vehicle class. You may want to keep a vehicle with low VDP conversions if it is of like brand to your franchise, but make strong consideration to be price ranked #1 in your market. Use MMR (Manheim Market Report) to re-price your vehicle based on what this unit will draw at the auction.

60-69 days

Set the retail price at or close to what the car will draw at the auction. Its time to make this car go away and retail at any price usually makes more sense than taking a wholesale loss.

70 days and out

Time to rip the band-aid off and send it to the auction.

 

Hopefully you have been re-pricing and making good stocking decisions so you never have to send another car off to the slaughter.

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Categories
Car Auction Retail Car Lot Wholesale Lot

How to Stock Used Cars Customers Want to Buy.

& How to Stock Used Cars Salespeople Will Sell!

Buying Used Cars For Your Lot is Easy:

Buying used cars is easy
Lots of Rental Cars Out There

Stocking your used car lot is easy, Right? You can load up on as many cars your lot will hold, fill every spot and you could have it done today. The auctions are loaded with all kinds of cars. Sounds pretty good right but only if you like silver, white or tan x-rentals. Just because something is easy doesn’t mean you should do it. Putting cars on your lot just to fill it up can cost you thousands of dollars. Most of us have been in this spot once or twice. So how do you stock up on cars customers want to buy and that salespeople want to sell.

The good news is that with a little hard work and a little smart work you can find the cars you need and keep them rolling in. Much like looking for cars under $10,000 you are going to need some help from your team. Now don’t get me wrong some of these cars are going to have to come from the auction. Whether you buy online or at the local sale, just make sure you look for cars you need. And don’t over pay for them at the sale, if you are going to step up for a car make sure you buy it from a customer in your showroom.

Wholesale-Used-CarsUnderstand Your Used Car Market:

Once you understand your market and the stores history you can start to build a profile of what cars you need. You never want to just go off your history, this will cause you to miss out on selling the customer what they want. If you have never sold a 2008 Toyota Camry in the past, but every customer in your market is searching for one and you follow your history how many 2008 Camry’s are you going to sell? Thats right, ZERO. History is good but you need to watch the market and look for cars customers want to buy. Again its easy to buy the cars you can buy, but that doesn’t mean the customer wants to buy them from you. Its why they are still available at the sale.

So searching for cars the customer wants to buy is half the job. The other half of stocking your lots with the right cars is pleasing your salespeople. Remember they are the ones that have to sell them. If you can’t get the salespeople on board with the cars you are putting on the lot you might as well burn your money. Some salespeople will sell any car you give them, but not everyone is that comfortable with selling used cars. Most of them will walk right around a used car if they don’t feel good about it and can sell a new one instead. You have to get them in front of every used car, this will lift their confidence and sell you more used cars.

The morning bullpen

Bull Pen Cars Lined Up
Used Car Lot Bull Pen Meeting

Now if you’re asking your self how do I get that done, you may want to try bull penning. Running a morning bullpen isn’t that hard but you can’t half-ass it. The last thing you want to do is waist the teams time with nonsense. Its best to have all the work for your bullpen done the night before. You want to have the cars you are going to show lined up, you don’t want to spend time walking the lot. Also you are going to have to do some homework on the cars, start with a list (year, make, model, miles…). If any of the cars are trades have the salesperson that worked the deal talk about the car. It’s a good idea to get them involved. This is a good time to talk about your go-to market price and to find out if the team has any interest in selling these cars.

Now you can’t let the inmates run the prison but you do need their buy in if you want to move some medal. Do your best to have good information about each car, things like service history, carfax, market data and pricing. Let the team help you weed out the bad cars and you will fill your used car lot with cars people want to buy and ones your salespeople want to sell.

Categories
Car Auction Retail Car Lot Wholesale Lot

Should Dealer Groups Have a Centralized Buying Center? 

Centralized Buy Center

Why Centralize your Purchasing?

If you’re serious about reducing the amount of time you spend at the car auction consider a centralized buying center. Central buying or central purchasing, is the practice of relocating the authority and responsibility of a small purchasing team for individualized stores to one location for a whole group. The consolidation of the purchasing function by a large, multi-site organization into a central authority increases efficiency, inventory control, and purchasing power. Central buying is commonly used by multisite automotive retailers, to buy centrally for individual locations. This can be highly effective in controlling inventory levels and improving profitability.

Benefits of a Centralized Buying Center

Centralized buying has the benefits of consolidated purchasing power, standardization of purchases, enhanced professional purchasing skills and easier management of the buying function.

The major responsibilities of a buying center or a trade desk are;

  • Sourcing used cars for purchase both at live physical auctions as well as online.
  • Locating cars to buy from non-auction sites (craigslist, news paper, off the street…).
  • Answering trade calls from sales managers as they work deals.
  • Working with store managers to keep used inventory levels steady.
  • Working with the wholesale manager to move cars to the right locations or to the right auction.

Less Emotional Decision Making = Better Acquisition

Setting up a centralized buying center or a trade desk can make your used car departments run more efficiently. When the emotion is removed from the purchase or trade evaluation it allows the used car manager to focus on the customer, which results in more sales and a higher profit. When you are working a deal, it is easy to become wrapped up in the heat of the moment and push a trade number past the actual cash value (ACV). If the number is delivered from a trade desk or wholesale manager it is more difficult for the consumer to disagree. The same urgency to buy can arrive at the auction. If you are buying cars that you are responsible to retail, somehow you convince yourself it is okay if you pay too much. This is a bad plan if you are trying to make money. This is where the wholesale buyer or trade desk works best. They are given a cap on how much to pay per car and can quickly call back to the store if a new game plan is needed.

This practice of a centralized buying center has been working well for dealers all over the country. Most stand alone dealers will have a buyer or wholesale manager to handle their used car inventory, which does not scale well for larger groups. If you are a multi-franchise dealer group you may want to consider having at least one representative for your different brands (Ford, Chrysler, Imports, GM and High-line).

Staffing a Buy Center:

Staffing the trade desk with two or three individuals that each work with a set of stores or with a specific brand is most beneficial. This gives the buyer better product knowledge and a greater understanding of each market. The team should work together with sales managers as a part of the trade evaluation process, sharing their opinion on what every trade is worth.

Having a solid trade process and a consistent buying plan will keep your lots full of the right cars and improve the bottom line. Remember the more used cars you trade, the less time you will spend at the auction, and the more time you have to sell.

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Car Auction Retail Car Lot Wholesale Lot

How to Sell a Car with an Accident Showing on Carfax™

Carfax Accident Report

“I Just Ran the Carfax™ and it Shows an Accident, What Should I Do?”

Selling a car that has been in an accident can be challenging. If you are selling a car that is showing an accident on a Carfax or some other vehicle history report the first thing you should do is have your service department or body shop look over the car.

Carfax Accident ReportAre All Accidents Reported on Carfax?

Today most accidents are reported automatically by the police that reported to the scene and by the repair shops and insurance companies. It is by no means foolproof though, as many accidents are settled by the victim to keep it off the record.

Spotting Accidents:

Some accidents are harder to spot by just looking over the outside of the vehicle, you may need to put the car up on a lift to see any of the repairs. Accidents can vary from minor paintwork on one panel to full frame repairs. Carfax and other history report do there best to inform the public as much as they can about an accident but at the end of the day they can only report the information they receive.

Can You tell How Severe the Accident Is by Reading the Carfax?

No. In fact many times even a minor fender bender is reported as a full accident. That is why we recommend a full inspection.

How Do I Fix a Carfax?

From time to time you may need to ask Carfax for a data correction if the information showing is incorrect, that can take a few days but it’s good to be able to fix things before you offer a car for sale. It’s not hard to send in a data correction request to Carfax. You just go to http://support.carfax.com/c_datarequest  to get started then just follow the steps.

Best Practices:

1. Do everything you can to find out about the damage shown on the CarFax and once found be sure the repair has been preformed well. Knowing where the work was done or getting a copy of the repair estimate to show your buyer, will help build the customers confidence in the car.

2. If you are using a storybook to build value in your cars this is a good place to keep that information.

3. Always remember to offer the customer the opportunity to take the car to a third party mechanic or someone they trust to look the car over. This really shows that you stand behind every car you sell. It also gives your sales team the confidence to talk openly about cars with accidents.

Exotic Car Crash Accident Carfax)Do I Need to Adjust the Price when the Carfax™ Shows an Accident?

Pricing cars that have been in an accident can be tricky. It’s important to take the previous repair in to consideration when pricing cars for retail. Just as that same accident will affect a customer’s trade-in value it will influence the retail price you can ask.


Are High End Cars Effected Differently when the Carfax™ is Bad?

Keep in mind that some makes and models can be influenced greater by accidents like BMW or Mercedes-Benz. Having accidents on higher priced highline cars can affect their values by thousands of dollars  Buyers today have the same information that sellers have on what’s for sale in the market. Asking over market value for a car with an accident history will make it much harder for seller to move that car.

Offering cars for sale with accidents can be done without struggles if you are upfront with the buyer and offer to show a history report before they ask. Building value early is critical to making a buyer feel comfortable and will make the transaction go much smoother.   But even before that make sure you don’t offer cars that you’re not comfortable selling.

Categories
Business Development Retail Car Lot

Do Your Salespeople Know Their Inventory?

Have you ever had a customer leave your showroom without buying a car? Of course you have. It happens every day at dealerships all over the country. We know that not everyone shopping is ready to buy today and some customers can even wait months or even a year before they make their buying decision. While some of the reasons customers don’t buy are out of your control, some may have bumps on their credit, others owe more on their trade than it’s worth or maybe you just don’t have the car that fits their needs. Or do you?

If you have customers leaving over selection you may need to ask yourself, do the salespeople know the inventory? It may be time to start training on it and if you are asking how to get that done I would suggest running a used car bullpen. Getting your team in front of the cars they need to sell will help you pick up sales and stop customers from leaving over selection.

So what is a bullpen and how does it work. A bullpen is no more than taking your fresh trades, off lease or auction cars and showing them to your sales team in an organized meeting, before you offer them up for sale. Now that’s the short answer, so lets talk about what makes up a bullpen. Well, the first thing you are going to need are some cars. The next thing you need are your salespeople. This one can be tricky, some of the team, and you know who I mean will think it’s a waste of time. Others will show up just because you told them to and some will get engaged and participate in the exercise. You will have to show them why this is a best practice in todays industry and what it will do for them. Once you have buy in from your team its time to set up your bullpen.

Here are a few tips to pull off a great bullpen.

Start by running the bullpen first thing in the morning, and I would have them twice a week. You want to keep them somewhat short, maybe 4 to 5 minutes per car and depending on the size of your store anywhere from 5 to 10 cars per meeting.

Picking the cars you are going to talk about doesn’t have to be hard. The sales managers should be reviewing all the fresh cars everyday. Using an inventory stock sheet will help to weed out the cars that you can’t sell (Bad cars or junk cars) and whatever is left goes in to your bullpen.

After you have picked the cars for the bullpen put together as much information about each car that you can. If you use pricing software print out the market data and what you think you can sell them for. Make sure you have a history report about the cars and any service that has been done to the them. This is good if the vehicle was a trade or lease turn in. It’s always a good idea to have the salesperson that took the car in on trade to tell the team about it and the customer. Having a good story goes a long way when it comes to selling used cars.

Organizing and running the bullpen can be done by a few different people.  Having the used car manager or an inventory manager run the bullpen makes the most sense. However having anyone on the manager team will work. It is essential to have as much interaction from all the managers on the team to show how important the bullpen is. As well as having the veteran salespeople’s participation will help make the most out of the time. You may even want to invite your service manager to join in, this will give service an idea on how much work may be coming their way. Plus having a service opinion on the cars may help you from putting problem cars on your lot saving you money down the road.

Remember you can stock your lot with all types of cars, but if the salespeople don’t know what’s out there your inventory will sit like boat anchors.