NCM wants to know : Are You Checking Your Used Vehicle Manager’s Thinking ?

This post was originally written by Paul Stowe for the NCM Institute Up to Speed blog. Click here to view the original article.


Mr./Ms. Dealer:

There continues to be a great deal of misconception in sales managers’ thinking about why they’re not able to increase used vehicle volume. Industry metrics confirm that those dealers not performing at a minimum 1-to-1 New-to-Used retail sales ratio are just not participating in the opportunities of the current market.

So why do our managers continue to have these misconceptions? What follows are some common reasons we hear during our dealership consulting engagements. My responses should help you combat these misunderstandings that are prevalent in our industry today, and they’ll also help you have the conversation that will turn this thinking around.

“I need more inventory to sell more cars.”

You might, but first, do you understand and practice an aggressive “turn” mentality? If not, you are five years behind in your skill set. If you have an aging issue right now – why? Should your dealer give you more dollars to invest unwisely? Just a hint… great operators do believe a 30-day (or faster) turn is attainable. Our Benchmark metrics validate that a 45-day turn is very common, regardless of franchise. Do you understand that if you turn your inventory more efficiently, your volume will increase?

“I cannot find the ‘right cars’ and when I do, they are too expensive.”

Come on! The vehicles are out there! You might have to work every day to source them. What makes you think you are smarter than the market which dictates the cost and sales price of inventory? What is your acquisition plan? What do you buy each week to inventory?

“If I price to market, my grosses are too low.”

This is so common. Question: Have you ever put more money into a trade to make a new car deal? If so, of course you reduced the new car gross – right? If not, what have you just done to the integrity of your pricing model and your used unit gross potential? (Most OEM incentive money is being paid on new car sales. Why in the world would you destroy your acquisition disciplines, bumping used trade-in inventory values and not reduce new car gross to its true transaction value?)

A new car deal is a new car deal, albeit an OEM incentivized transaction. A used vehicle trade acquisition is an investment decision. Buy it right or understand the impact on potential grosses, salability, and aging of your used vehicle dollar investment; in other words, your true return on investment of your dollars, Mr./Ms. Dealer.

Have the conversation.

Understand and clear the air on these misconceptions, if they apply. Ask your manager to give you a plan to increase used unit volume profitably beginning right now. Get it in writing. There is too much missed profit opportunity, let alone the impact of adding new customers to your owner base.

Views: 143

Tags: Paul, Stowe, associates, general, management, ncm, ncmi, owned, pre, used, More…vehicle, vehicles


You need to be a member of DealerELITE.net to add comments!

Join DealerELITE.net

Comment by Doug Davis on July 17, 2014 at 12:35pm

Gary, You would think after decades you wouldn't see the same issues.

Look at many dealerships websites and as many as a third of their inventory is without pictures, prices or descriptions. A vehicle is not "at market" until all three of these are met.  After months of fighting with the Used Car Director about a high days to market, the GM insisted that he maintain a 72 hour days to market.  He did this for 60 days and had two record months.  Slacked for a month and sales dropped. Next month another record.  It cost nothing.

How many Used Car Managers price their vehicles above market and at 45 days panic and drop their price before having to send it to auction?

Gross profit is only a gauge. At the end of the month, departmental net profit is what is important.

Blog Posts

Don’t Creep Out Your Shoppers

Posted by Joseph Little on November 25, 2015 at 5:00pm 0 Comments

How to Track Consumer Behavior and Leverage What You Learn

If your dealership is able to take advantage of the right tools, you can easily tell which consumers are in the car-buying market and what vehicles they’re searching for. This…


This Week in Social Media

Posted by Joseph Little on November 25, 2015 at 3:07pm 0 Comments

Social Media News for the Week of November 23

Brand-New Google+ …


Are You a Hoarder?

Posted by Rob Gehring on November 25, 2015 at 2:24pm 0 Comments

Are You a Hoarder?


This is the time of year dealerships are…


In this Age of Extreme Political Correctness, Should Businesses Care?

Posted by sara callahan on November 25, 2015 at 8:00am 0 Comments

If you’re on any social media platform, there’s no…


Planning For the Ultimate Racing Experience

Posted by Simon Hopes on November 25, 2015 at 5:36am 0 Comments

Are you a fan of hot cars, but can’t afford to buy one? V8 race cars are consistently ranked as some of the fastest vehicles in the industry. Not only are such cars powerful, but they are also often revered for their performance on the track.…



dE Sponsor

© 2015   Created by DealerELITE.   Powered by

Badges  |  Report an Issue  |  Terms of Service