Every time I do a Twenty Group, Dealer State Association meeting, or anything where a group of dealers are gathered without their managers, I start hearing what used car managers will not do or adhere to, that they want as a policy.
I have some recommendations for that “so vulnerable department” that has never truly been understood, even by me, after 30 years of circling the globe three times and having the privilege of working with over 40,000 dealers and managers that can not actually get a solid handle on anything but the “moment” because the pre-owned business changes more rapidly and can have a market swing quicker than any other commodity on the Chicago exchange from pencils to airplanes.
“The rule is simple, period, point blank: a car does not stay in inventory more than 60 days.”
There are three things that I have found that do not change, they never have and as far as I can tell they never will. These go back as far as the book written in 1927, that I have quoted in many articles called “The Used Car Merchant of the Future.”
- The rule is simple, period, point blank: a car does not stay in inventory more than 60 days. Give your manager adequate time (90 days) to get his or her inventory to a balance where there is nothing over 60. At that time, and at the end of any month when there are vehicles over 60, his or her pay plan will be hit a hundred dollars for each one of those units. If the manager is going to share in the profit, he or she should share in the problem that you as the dealer have told him “not to do.”
- Used car reconditioning. A used car manager can tend to back off properly reconditioning a car for fear of getting ripped off in service. I am a firm believer that a used car department should pay customer pay labor, however, I believe that on any come back, it should be charged right to service gross, not to policy, not to used car adjustment account, not to used car gross but to service gross. It should be repaired and an apology given to the customer for the work not being properly done. If the used car manager was advised to repair items that were not repaired, that puts a different blinder on the mule. However, if it was on the repair order and it is a come back, the service department stands good for it and the pre owned department is not hit under policy nor do they have to apologize for something they already paid to have done.
- Meet weekly – this is as important as anything you can do. Each week you need a dedicated used car meeting where the new inventory and the aging inventory are all walked. The manager goes back through each vehicle that has just come in and discusses all the history on that vehicle. Remember, every used car has a story but if you can’t tell it, you can’t sell it. What good does a used car manager do if he has the knowledge of the vehicle but he is at the auction when someone wants to buy it? You have got an investment of probably a million dollars or more in vehicles that you showed new gross on but truly are not in the bank until they are sold.
Do those three things and I think you will be better for it.
Author: Tim Deese
TIM DEESE is the CEO/ founder of Progressive Basics, Inc. He is a former franchised car dealer who has designed and implemented used car training and marketing for 15 manufacturers in 28 countries. He has spoken at many NADA conventions.