2019 was a good year for used vehicle sales, with total sales rising about 200,000. 2020 could be even better, with the latest research pointing to another big increase. All in all, 2020 could see 500,000 more used vehicles sold compared to 2018.But higher sales volume doesn’t always translate to greater profits. Many dealers retailed more vehicles in 2019 only to find their profits were flat or only rose a little bit in comparison to favorable market conditions. Some dealers are still in decline despite them.
Does any of this describe you?
Looking ahead to 2020, you need to update your processes to focus on greater efficiency so you benefit from the rising tide in used vehicle sales. Now’s the perfect time to focus on that goal.
Your used vehicle department can be a major revenue engine for your dealership. But many dealerships need to adjust their expectations and align their processes to tap their full potential.
Here are four key tips:
1. Be More Alert To The Retail Timeline
It’s harder than it used to be to sell used vehicles at a profit. Cost-to-market percentage is moving faster than it traditionally has. Vehicles no longer have 60 days to move; most vehicles must be sold in 30 days or less to be robust front-end contributors.
This new reality has implications for all elements of your used vehicle department. Acquisition and pricing strategies must reflect speed as a priority. Otherwise, you will still find yourself losing dollars to controllable departmental expenses.
2. Align Stocking Levels To Today’s Retail Timeline
Gone are the days of a used vehicle department stocking thousands of vehicles that might not move for years. That made sense 40 years ago, but also stoked troubling ideas about the industry. Older vehicles are easily perceived as “lemons,” even with a detailed, VIN-based history.
Ideal stocking levels create momentum in your business: You shouldn’t carry more vehicles than you sell. As stocking levels rise, customers find aged inventory less engaging. This saps the used vehicle department’s profits and adds overhead.
3. Focus On Accurate Estimations Of Vehicle Profitability
The future of any used vehicle is written at the moment you acquire it. It’s crucial to use the tools at hand to accurately estimate each vehicle’s profit potential. In today’s market, overpaying for a vehicle usually means writing it off at a loss later. Diligence is the key.
4. Look For (And Create!) Opportunities For Greater Efficiency
Many dealerships are still letting money go out the door in one way or another when it comes to used vehicles. In particular, the used car reconditioning process remains a black box. Not only is it full of costly delays, the best ways to modernize it remain mysterious.
But today’s customers demand comprehensive used car reconditioning.
What to do?
The ReconTRAC® site for each dealer is custom built with pre-set workflows, free recall lookups, free CARFAX, a smart- inspection tool with pre-set services & pricing, a line item approval feature and fully automatic workflows that help push vehicles through in a ‘hot potato’ style fashion. ReconTRAC sends their experts to the dealer to first go over their current process and fine tunes that process before implementing the customized ReconTRAC workflow and dispatching of jobs.
The ReconTRAC® apps are free, and allow the user to access just about every feature the desktop version has, along with some extra goodies, such as a Vin Scanner that can be used to create a new work order, find out where a car is or simply allow a user to log into their job.
The ReconTRAC® program not only tracks the process, it fixes it.
The ReconTRAC® program is a unique and powerful solution for medium to larger sized automotive dealerships, used car dealerships, 3rd party reconditioning companies and reconditioning centers.
To find out more about ReconTRAC, just contact us today.