Hi Johnny,
We have 4 cars in the used stock and 29 trucks. We are a truck market big time.
December had an inventory of 29 trucks and value of $997,258. During that month our sales were 14 units and $802,004 . Those 200,000 mile trucks that are not retailable end up going to an auction.
During the month we wholesaled 3 cars and 6 trucks .
With every unit we retail we hold back $100 on each sale for what we call a bruise account. If a unit gets over 60 days old it gets an inventory cost reduction from the bruise account and marked down to cost. The salesman gets a fixed commission which makes them show the unit vs avoid the unit and it becomes a relative value on the market.
My current used car manager is my long time used car manager from the Chevy store I ran for 25 years. He was trained by myself and believes in turning an inventory faster with competitively priced vehicles. When he worked for me, I was on the road buying vehicles at auctions. We turned our inventory 13 to 14 times a year.
Markets are now very different and big inventories turning fast are harder to buy.
That being said he is the second most profitable department ytd in the store - second to the Parts department. The Chrysler financial statement is unique in that a parts sale through the service department does not share the mark up made (like the GM statement does). It is somewhat overstated in bottom line for parts profits. IMO.
None the less, it looks like we do not have a big problem of aged , now overpriced used vehicles.
My bet is it will show up to be a much bigger problem for those reatil stores with overwhelming used inventories. CarMax, Carvana come to mind as the poster children for used car losses due to the shift in pricing.
THANK GOD!
Particularly pleased to say "It reflects in the superior training I gave me key employees who we've retained from some 7 years ago when I sold out my ownership of the chevy store. My used car manager left when I no longer ran it. I then talked him into joining the one store I still had 25% ownership in.
Like almost all businesses, employees well trained are the key to a prosperous business.
I have truly been blessed to have honest partners who allowed me to learn the right way to grow clientele and do business the fair and friendly way.
There were stores out there that had better profits, but very few grew their sales numbers and volume like my stores did.
The growth in unit volume and the hallmark of my stores was repeat business, made selling cars long hours but fun selling to the same great people for decades. We would sell to a person and follow-up asking if he has a neighbor in the market and it actually worked.
At 90 days I'd call my customer to make sure no warranty work was needed. If needed I'd drop off my demo and take their car in for service. I'd tell them I speak "Garagise" with my techs. As an owner it got fixed right the first time most always. If there were no problems, I'd tell them I was mad at them as they had NOT YET sent me a customer with a smile in my voice. After the second or third purchase they looked forward to my "I'm MAD AT YOU" call.
Relationship selling on a durable good, is often your customer helping a friend find a friendly place to buy from.
Buying a used or new car should be fun and yet it is dreaded by most.
I tried to make that different for those I served.
Sadly my advancement into an owner status took me away from a lot of selling to new customers.
I loved having the BIG JOB, but had a whole lot more fun selling to my clientele.
To this day I'm very proud I came from the ranks of "a wholesale factory rep" with a service background that "made it" in the retail sales world.
I did, because I loved the product and not the bureaucracy of the business.
The retail world is where it was at for me.
My love of the product showed and people had confidence in my product knowledge and honesty in matching their needs with a vehicle's capability - particularly important in the truck market!
I found selling easy. Listen to the customer, match his needs and ask for the business.
NOTHING HAPPENS IN THIS WORLD TILL SOMEBODY SELLS SOMETHING! It is a honorable profession!
Sadly the internet has changed some of that!
That change ran a lot of people out of business - they never knew what hit them.
Fortunately I saw that evolution in the used car business early on and embraced it with V-Auto software and a brilliant person named Dale Pollak. A legally blind son of a Chicago Cadillac dealer who wrote an innovative enabling software that was bought up by Auto Trader: prnewswire.com
As the leader of my NADA 20 Group I called dale and asked if he would include our entire 20 group membership into his training and software program implementation. He cut us all a deal and we all took the plunge. Only about half of us embraced the technology as old school dealers "YOU have to make 4,000 on every deal" prevailed with many.
Those of us who embraced V-auto made the same or more money, doubled our sales and owner base, supported our shop with twice as much reconditioning and never had a used car writedown. It was more profitable in the holistic view beyond a doubt.
I rant because I still miss the satisfaction of helping people with their transportation needs and the many great customers I met.
It's a young man's job, and alas with age, I lost the fire in my belly of 6 days a week and 75 hours. It was time to move on.
So now I still trade on my computer, but it is stocks and not cars.
So much easier!
Sorry for the rant and Thanks for asking! <smile>
Bob |
