Used-Vehicle Sales Are Becoming More And More Essential For Dealerships


Maintaining your profit margins as a car dealership isn’t easy. You’re often subject to shifts in the market that are out of your hands. One month people are buying fuel-efficient sedans, the next gas prices are low and SUVs are king. The same concept can be applied to recent trends with new and used vehicles. How you react to these shifts will determine whether you sink or swim.
Here’s why used vehicle sales are becoming more essential to operating a profitable dealership and how you can capitalize on these recent trends:

New-Vehicle Sales Continue To Decline
Consumers continue to lose interest in buying new cars. Not only are there less new cars being sold, the margins on them continue to be razor thin. Despite these issues, spending on vehicles overall remains strong. The reason for this, experts say, is that a rising number of used vehicles are entering the market. These used vehicles are coming from lease turn-ins, and this number is expected to continue growing until 2020.

This isn’t great news for manufacturers, but it presents dealers with a fantastic opportunity. Dealerships who want to increase their profitability must be poised to capitalize on this influx of used vehicles. But the process, as you know, is more complicated than driving some used cars out onto the lot. These cars must be reconditioned before they can hit the market.

The True Costs Of Reconditioning
Reconditioning involves upfront costs, and those are worth looking at when optimizing your process, but there are other ways that you’re losing money that may be less obvious. When discussing the reconditioning process too few dealerships take into account the opportunity costs. Each day that a used car isn’t out on the lot is a day where you’re losing money. Optimizing your reconditioning speed is a vital part of being a profitable used car dealership.

Another major issue is the impression that poor reconditioning leaves on your customers. When buying used vehicles consumers are ever vigilant to avoid buying a dud, or a car that’s more trouble than it’s worth. A dealership who garners a reputation as selling poorly reconditioned products will quickly find themselves ostracized by potential customers, especially in the era of Yelp and endless online research.

Streamlining Your Used Car Reconditioning Process
Streamlining your used car reconditioning process is one of the most important things you can do as a dealership. You turn your vehicles around faster and your profit margins are higher. It’s a simple equation but it can be frustrating to get it right. In order to streamline your process you need be able to track it. You need to know where each car is in the process and how long it takes to move through the pipeline. All in real-time. This allows you to find the areas in your process that are slowing you down or eating up inordinate amounts of resources.

Our ReconTRAC software was recently featured in Fixed Ops Magazine, where we discussed the importance of the streamlining the used car reconditioning process. When you’re dealing with hundreds of used cars a month you can’t expect to do it efficiently without a little help.

ReconTRAC provides low-cost tracking with real-time reporting that allows you to track and optimize your entire reconditioning process, removing the mystery and helping you find what’s working and what’s not.