Now is the time to buy used cars for stock

The more entrepreneurial motor retailer knows that this is the time of year to carry as much used car stock as possible.

While certain large dealer groups will be attempting to reduce stock to meet cash management levels, the more astute will be filling up during what is traditionally the quietest time of year for sales. Every year, the same models in November/December are £300-£500 less expensive to buy than they are in January/Feb when everyone is looking for stock.

The pattern never changes and that’s why the smart set are stocking up now. Stocking costs are outweighed by the savings on the cars.

Not enough effort and resource is put into stock acquisition in our industry I believe. You may feel the sales department is the most important part of your business – after all, nothing happens until somebody sells something. But I would argue that the used car buying operation is more crucial in any motor retail business today. The old adage that ‘well bought is half sold’ is never truer than in automotive retail.

Stock turn is vital
• Price monitoring against competitors is key to successful sales figures
• Don’t wait until a used car is 60 or 90 days in stock before reducing the price
• Stock turn is vital and with the number of used cars in the marketplace at anyone time, it is not difficult to replace sold cars with fresh goods at fresh prices

The policy of 90 days on retail and then off to auction is out dated and commercially flawed. How many cars are put through the workshop, prepared for retail sale, overpriced, then overage, and then sent to auction for some else to profit from your costs?

A classic mistake in the used car sector has been not enough stock for the size of the business. Too much profit is then required per unit, as the business is not selling enough volume. Screen prices are often too high and too much pressure has then been put onto sales execs to sell extras such as payment protection, paint protection, etc, in ways that sometimes work against the best interest of the customer.

Every day additional bonuses and incentives are put onto over-age cars to entice the execs to sell them. But again, this practice is often contrary to customer needs. They can be steered into a car that is not the best for them, but that the dealership wants to get rid of. This is short-termism. It is also outdated, because as customers become more discerning it’s becoming harder to get away with.

A good, motivated, used car buyer, when they are allowed to demonstrate their skills within a business, really is a major asset that will give you a competitive edge. By far the greater profit stream in any car sales operation is the used car division, and the skill sets needed to make this department work cannot be under-estimated.

If you are selling all-makes used cars and you do not have an active buying function within your dealership, and are relying on part-exchanges to generate your retail stock, you are simply limiting your model range and profitability.

 by Ian Allen