The Art of the Trade-in Walkaround – Setting Realistic Expectations with Customers.


Most customers looking to trade in a car bring to the dealership unrealistic expectations about the value of their trade-in.

Experts believe the Automotive Sales Consultant is the best person at the dealership to manage the customers’ expectations of the value of their trade. And, sales consultants can best help customers arrive at a more realistic number – one fair and acceptable to both customer and dealer -- by conducting a Trade-In Walkaround.

A former colleague of mine and a nationally recognized automotive consultant, John Beagan, taught me early in my career that most customers come in for a trade-in with three numbers in mind:
• What they’re hoping to get.
• A figure they are willing to do business at.
• A number they won’t take any less than.
Customers arrive at these numbers in a couple of ways:
• From the amount they still owe on the vehicle.
• From Internet websites such as the National Automobile Dealers Association; Kelley Blue Book, AutoTrader.com and Cars.com.
• From dealership eCommerce web sites.
• From walking around dealership lots.

However, none of these sources provides all the information customers should take into account when estimating the value of their trade-in.

First, the amount they still owe the financing institution on the car is not a reliable gauge. Very often the market value of a vehicle depreciates faster than the decline in the remaining principal due on the car.

Second, when a customer gets their trade-in numbers from Internet websites such as the National Automobile Dealers Association, Kelley Blue Book, AutoTrader.com and Cars.com, from dealer eCommerce sites, or from walking around dealer lots, they see a range of numbers and always pick the highest value. Depending on the condition and mileage of their own car, that number may not reflect the car’s actual value.

Third, customers often overlook the added cost of the work required by the dealership to make the car ready for the re-sale market.

They are unaware of reconditioning costs which may include: Fixing mechanical problems, or fixing body damage -- to name a few examples: bumper repair, windshield repair, paint touch up, paintless dent removal, headlight restoration, interior repair, wheel rim repair and much more.

Customers may also not take into account the expense incurred by the dealership in assuming the risk of guaranteeing the vehicle for a 30-or 90-day or one-year warranty period, once it is re-sold.

Also to be factored in is a small percentage of the overhead expense of running the dealership.

Yet it is critical to the customer and the sales consultant that they arrive at a price that is satisfactory and fair to both, so a deal on a new car can be made. Too many new car sales fall apart late in the sales process due to the fact that customers aren’t willing to accept the amount the dealership puts on their trade.

The Trade-in Walkaround is an effective way to bring customer expectation more in line with true market values and it should be introduced early on in the Sales Process.

Even before the customer enters the dealership, sales managers should make sure that their sales consultant team is well-versed in how to conduct an effective Walkaround.

In many respects, a Walkaround is similar to a real estate agent showing a prospective home buyer new property – pointing out the good points, as well as the things that need repair and leading the customer to an appreciation of the true market value.

The Best Sales Managers model how to complete a Trade-in Walkaround with their sales consultants -- including tips on what to do and say through a wide range of potential customer reactions. Handling the customers’ trade is actually similar to the new vehicle sales process, because what sales consultants essentially need to do is sell the customers’ trade-in number back to them.

Role-playing with the sales manager or other sales consultants is the single best way for sales consultants to learn how to present the customer with trade-in information and deal with customer concerns and questions.

Good Sales Managers also make sure their sales consultants know how to properly fill out a Trade-in Appraisal Form.

The Trade-in Walkaround’s should always be conducted before the dealership’s Used Car Manger does a formal appraisal and after the sales consultant knows the customer wants the new vehicle he/she has been shown. (Since accurate appraisals take time, an appraisal of the customer’s trade-in should not be used as a tool to see whether the customer is a serious buyer or not.)
First, Give the Customer an Overview
Before beginning the Walkaround with the customer, The Best sales consultant always present an overview of the Walkaround, explain its benefit to the customer, and then ask the customer’s permission to begin.

It’s important to limit the Walkaround to 10 minutes or less. Taking too long or being overly critical of the trade-in car will offend most customers.

Right away, the best sales consultant will introduce the dealership’s Appraisal Form as a tool to guide documentation of the car’s condition and repairs needed that the Sales Consultant and customer will notice during the Trade-in Walkaround.

The best sales consultant start with looking under the hood area. Comparing the customer’s vehicle to the new vehicle they’ve been shown increases the customer’s chance of buying.

If they find a defect while examining the car, sales consultants often don’t have to say anything to help set expectations for the customer. Sometimes a questioning look, a nod of the head, or doing something twice like starting and restarting the vehicle will be enough to help bring the customers’ expectations of what their vehicle is worth in line with its true market value. This is often more courteous than making a negative comment.

However, sales consultants should show the customer the items being noted on the Appraisal Form without being overly critical of the vehicle. Getting the customer’s agreement on these items that need to be corrected is important. Doing this will make the customers aware that the vehicle may not be in as great a condition or worth quite as much as they originally thought.

At most dealerships, after the sales consultant has conducted the Trade-In Walkaround, the Used Car Manager looks at the customer’s vehicle, road tests it and comes up with a formal appraisal. If the sales consultant has conducted an effective Walkaround, the Used Car Manager’s formal appraisal will not be a surprise to the customer.

Conducting a fair and efficient Trade-in Walkaround is the best way to keep more deals on track, increase sales and profitability for dealerships, and satisfy customers that they are getting the fair market value for their trade-in.

Chris Saraceno is Vice President/Partner of Kelly Auto Group and Founder of dealerElite, headquartered in Emmaus PA. He began his 28-year career in the automotive industry as a sales person for Ruhe Oldsmobile in Allentown, PA. He was the founder and president of Teambuilders, Inc. an automotive consulting company, serving many corporate clients, including Saturn and Chrysler. He resides with his family in Allentown, PA, and is a graduate of Kutztown University.

www.chrissaraceno.com

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Comment by Joe Clementi on March 1, 2014 at 2:10pm

Thanks for posting this article Chris!  There have been a lot of very good idea's that have come out of the discussions. 

 

Comment by MANNY LUNA on November 6, 2010 at 5:58am
Comment by MANNY LUNA on November 1, 2010 at 11:40pm
Working on the Usage Value close will have it up ASAP!


The secret to the Usage Value coming tonight!
Can anyone share with us your best Idea on how to use this powerful close?
When you learn the powerful technique you should never have any problems with trade difference with a customer! . coming tonight!
Can anyone share with us your best Idea on how to use this powerful close?
When you learn the powerful technique you should never have any problems with trade difference with a customer! .
Comment by MANNY LUNA on November 1, 2010 at 8:14am
The secret to the Usage Value coming tonight!
Can anyone share with us your best Idea on how to use this powerful close?
When you learn the powerful technique you should never have any problems with trade difference with a customer!
Comment by MANNY LUNA on October 31, 2010 at 1:34pm
Bobby, I never held the customers keys, If I can't earn their business! I don't deserve their business!
And allways kill them with kindness!!!!!!
Comment by MANNY LUNA on October 28, 2010 at 2:09pm

Comment by Rafael Pabon on October 27, 2010 at 11:27pm
I was trained as part of the sales process to ask the customer if we would be buying their car as part of their new car purchase. If they responded yes, we would prepare a worksheet together where I would ask how long they have had the vehicle, were there any issues we should be aware of? Motor? Transmission shift smooth? Brakes? Tires? etc... It would get the client thinking about their car. I would then ask them if they would mind giving me a demo of their car.

We would go outside together and they would walk around the car with me. I would touch paint blemishes, dings, etc. They would always say, oh yeah, I forgot about that, it happened in a Wal-Mart parking lot. Starting the car, any noises, I would ask, what is that noise? Well sometimes it does (fill in issue here). I would ask the client as we went along, what do you think that would cost to fix? Have you gotten any estimates? Do you have any guesses? Shop rates are what, $80 an hour (or when I started more like $45). We would take a drive around the building or the block, depending on which dealership we were in. That would bring up the occasional issue as well.

Then when we sat down I would ask them, what were you anticipating selling your car to us for? They would tell me. I would ask, where did you get that figure from? We would work from there. That's a retail price you are thinking of, with a dealer having fully reconditioned the car, paying the carrying and advertising expenses, facility overhead, as well as any warranty offered. Since you are selling it to us as is, and have not made all the repairs, which you calculated at $2,400, what do you think you could live with?

Its a phenomenal tool, and is often where a great deal of the profit is made, or one of the things that makes a deal possible.
Comment by Russell Molter on April 14, 2010 at 5:14pm
I think the "walk around" on the pre-owned car is the best first step,It should be done very efficiently so the custemer knows where he stands with his figures on his trade,when purchasing the new car.
Comment by Vinnie Torrente on April 13, 2010 at 1:26pm
I look forward to the trade-in process, it's a good way to guage the interaction with your staff and the consumer. As a sales manager it's the best opprtunity to build a relationship with the client. It's never good idea to point out the obvious scractches,dings or smell of smoke; a simple touch of the imperfection or the guage of the tire is a big enough deduction in their mind. The consumer has already been on the several third party sites before visiting your dealer. Regardless of the ACV you must always have a smile on. A trade is an opprtunity for "GROSS PROFIT "Theres a butt for every seat" As a highline dealer in California we must maximize on every opprtunity we have to gain a trade. Before the hit figure of the trade it's important that we cross reff MRM,KARPOWER/CARFAX. Never let manheim determine the trade value. Majority of consumers with trades are expecting excellent to fair condition. An objection is always a yes the more objections you have the better chance you have to close the deal. Regardless of the deal profit in-front don't be stubborn and walk a deal over the trade. The finance department will pick something up your service department will gain a customer. If the trade has 150k miles and will pass smog and safety run it through the shop and retail it. If your thinking to wholesale your not thinking like a wholesaler, which will run your car through the auction or retail it for a profit.

After the TRADE has been taken in round up your staff and do walkaround /Mark the car A B C D

All the best
VT
Comment by Terry Gibson on April 13, 2010 at 9:36am
When purchasing or evaluating a used or "pre-owned " trade-in vehicle be it car, SUV, van, truck or even a semi-tractor ring a "walk-around" or initial inspection of the vehicle is the first point of order. Many new or inexperienced vehicle or perspective auto purchasers or even leasers may be intimidated by the process of a walk around initial inspection - they need not be. It's a fairly simple and standard practice. If not take a more experienced individual. At the least take another person along for the same walk around initial inspection process. After all two heads are better than one. What one evaluator may miss the other may catch and after all there is safety in numbers.

The purpose of the walk around inspection of course is to both get a quick as well as accurate idea of the overall condition of the automobile product that is being considered for purchase. When you have completed this preliminary inspection you should be able to better determine or even decide whether it's worth spending more time, and some money for diagnostic tests and work troughs on the vehicle or whether it's better to "forget this one" and move onto the next perspective vehicle that is on sale. You may even save yourself a great amount of heartache and costs from the get go by a simple yet thorough inspection through a trained walk around. You do not need to be a professionally trained mechanic to do this.

Obviously fatal flaws that should eliminate a vehicle for sale from the running include: excessive collision damage or damages, rust or structural damage to the body or frame, an engine or drive train that is "worn out" or on the way out. Other factors or conditions to look for are - an interior that is in poor condition - that is beyond hope with a thorough cleaning and lastly any defects that would be unacceptably expensive to fix or repair.

During the walk-around inspection you should , as a standard matter of course, be looking for these as well as other flaws or inherently apparent defects that should have you take a walk away from this vehicle and on the road for examine the next vehicle on your evaluation lists. Then again, all depending on the seller's attitude, approach and willingness to deal or negotiate fairly these concerns or even risks may not necessarily axe the deal for you. It all depends on the deal and market conditions as they say when it comes to the bottom line. At the end of the day it can be said it all boils down to how much the car will cost you to put into the drivable condition that you wish.

You may wish for a perfectly done up car but may find that all in all that with a low sale price and repairs that at a worst case scenario still will make for a vehicle that meets your standards as well as pricing and cost structures.

Of course if you discover problems that look somewhat less than terminal for the vehicle, but still must be fixed - either for cosmetics, road worthiness and reliability or to meet certain state or provincial safety standards, then note these down in detail. Don't jump at the bit. Consult either by cell phone on the spot or by personal visit to a trained, certified and competent mechanic for an accurate and perhaps even worst case cost as well as time estimate. It may not be a good bargain to you - even if the costs are reasonable but parts are exceptionally hard to come by. If you need a replacement vehicle promptly, then as part of the mix, the time span of acquiring the parts and completing repairs fully may have to be worked into the mix.

A thorough and full walk around any vehicle that you are considering buying or trading may not only save you a lot of potential grief as well as extra costs down the line but just as importantly may allow you to better negotiate a full and even better deal with the seller of the vehicle.

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