SearchFour ways to fire up your used car sales
14 May 2021
SHARE
Used car sales have been buoyant of late. The fourth quarter of 2011 was quite good, and there is always some pent-up demand that releases itself in the first two months of any year. That is the market following its normal pattern.
However, one of our biggest challenges in 2012 is going to be to making things happen in months when they normally don’t. So let’s set out some operational disciplines and initiatives for our used car department and monitor them throughout the year.
1. Stock acquisition
Gone are the days when used car buying was handled exclusively by sales or general managers.
There will always be some cars purchased ‘off the street’, but this is only part of the solution and, due to the competition in finding and buying used cars, your dealership will need a dedicated buyer (or, for multi-site operations, a buying team).
If you think this might be expensive, the alternative is far more costly. Being aware of and finding the right stock is now a 24/7 operation and without the right buying disciplines you have no chance of success.
2. Stock offering
Without doubt, the biggest call to action in getting customers onto our websites and into our showrooms will be our used car offering. The two key elements of this will be selection of stock and price.
It may seem like stating the obvious, but cannot be over-emphasised. Customers see model mix and stock turn, as do we, as an indication of dealership success or otherwise.
Try to avoid falling into the trap of offering older cars because quality stock is hard to find. I have seen some dealerships with cars as low as £1,999, and while this might be another unit towards the sales target, the preparation and warranty needed for this type of stock will wipe out any profit.
Get ahead of the market with your seasonal purchases as well. By now, you should be looking to acquire a selection of convertibles and coupé cabs. Demand for 4x4s will reduce, and while some of the smaller 4x4s are possibly a year-round seller the market for larger mid-priced Range Rover type vehicles will fall away. Don’t get caught out, it is already later than you think.
3. Stock turn
Most dealerships should be aiming for an annual stock turn of ten, and management of over-age units is the key to success. If you have a 60- day stocking policy it must be adhered to. Start reviewing screen prices at 30 and 45 days to avoid potential problems, especially with volume models that can be easily replaced.
Nearly new cars less than one year old are particularly price sensitive as there is always a significant amount of stock available. They can be good value compared to new and cost little to prepare for sale – but prices can drop quickly and dramatically.
4. Database marketing
This is still not widely done at dealership level. Use your DMS to run an historic analysis of what are your best selling used cars in terms of volume, profit per unit, days in stock, etc. This can provide an excellent template going forward, and is good information for your buyer about the stock they should be looking for.
Don’t lose sight of this one simple figure
There were seven million used car transactions in 2011, and even if there is no growth this year it is still a huge number.
If your used car target for 2012 is, say, 5,000 units, then the market share you require is less than 0.01% of the UK marketplace. Clearly there is competition out there, but if you bear this figure in mind and pay attention to the four key disciplines, there is no reason why 2012 shouldn’t be a continued success.
Your action plan
•Hire a dedicated used car buyer if you don’t have one already
•Get ahead of the market with your seasonal purchases
•Review screen prices at 30 and 45 days to avoid potential over-age problems
•Use your DMS to identify your best selling cars in volume terms, PPU, etc
Author Ian Allen is an operational specialist in motor retail turnarounds. You can contact Ian at ianallen188@hotmail.com
Read more:
