The big question to ask in retailing today is how match-fit are you in your dealership?

This new market – or the return to the old markets – will be the real test. So it is timely to remind sales staff and managers what it took to move vehicles and make money during “normal” times.

Wayne Pearson

Before the pandemic, successful used car habits included:

1) Keeping the average buy price around $15,000 for volume and $25,000 for luxury.

2) Holding no more than 45 days stock, with a strict 60-day policy (avoiding deck-chairing in a group which will ramp up as prices drop).

3) Managing each unit closely online weekly. If each unit isn’t achieving:

• At least five views; check where you appear in the search rankings. If you aren’t on page 1, reprice
• At least five leads; check your photos, check your online competition, reshoot, reprice
• At least two appointments – check your team and their phone appointing
• At least sale; check the car, drive it yourself. Why didn’t they buy it?

4) Stock 50 per cent of the new brands you sell on site and 50 per cent of the direct competitors. Eliminate all the oddballs. Managers drive cars. Get rid of cabriolets, euros over $60k, high km gems. You will die with them in this market.

5) Your first loss is your best loss. Price up to 125 per cent of the market from days one to seven online. Drop to 100 per cent on day seven. Drop to 75 per cent on day 21 or from Day 22 your vehicles should be priced to clear. Age will punish you dearly in a falling market. Getting doors opened and velocity of turn will be paramount.

6) Repayments are king; stratify your yard on repayments $100 per week, $200 per week, $300 per week so you can walk your customers quickly up and down the yard based on ability to pay.

7) Early intro’ to Finance and Insurance at test drive forms is critical. It is all about repayments now, so some pre-investigation and doing some homework while the customer drives the car is game planning 101.

8) Walk, drive valuations with the customer are critical. You should be trying to buy every car for $500 less than you did yesterday, every $500 you can get off through talking down the value is paramount. This can only happen if you highlight the car’s deficiencies to their own eyes. More time spent here will save the profitability in a lot of deals.

9) Have strict reconditioning policies. Anything over $1500 has to be approved by the DP (retail or wholesale decision). Extra costs and time out-of-market in reconditioning will destroy price as values tumble. Eliminate science projects. If it has more than small dents, touch-ups and possibly tyres, consider wholesaling it.

10) AutoGrab your stock each week, identify where you sit in the market and more importantly where it went this week. It’s a tool that didn’t exist 20 years ago that could save you plenty.

11) Start all your stock matrices again. The party’s over. Don’t buy your current losses back.

Take-away: Used car success is in the buying, after that it’s the process.

Wayne Pearson is a consultant with Pitcher Partners Sydney.

By Neil Dowling