Well, this seems to be the topic of articles that you read with all the quasi new wave used car writers and speculators in the market place today, who seem to find most of their automotive talent and experience somewhere out there in the Internet without the focus of the reality of the “blacktop.”
The typical response to my question “Where do you think they have gone?” is: “Cash for Clunkers took them out of the market place.” Wrong answer. Cash for Clunkers took out used cars that you weren’t going to keep anyway. The only people affected by Cash for Clunkers were the independents. They sell used cars that you don’t want and in doing so make more gross on them than you do on the nice ones.
Let’s give this situation a reality check. These nice cars didn’t dry up overnight. You have seen this coming for the last three to four years and I have been telling you this as well. You’ve hired people to manage your software program, tell you how to price your cars and tell you where to buy them. You’ve taken the free market swing away from your pre-owned manager who is supposed to be trained in a competitive market. That is the person that should know the value of used cars and how to price them, so that they are taken out of the market place, which allows you to sell new cars. That’s the purpose of the pre-owned department. Nice used cars are still out there. There is no shortage of pre-owned sales of nice cars, ladies and gentlemen. There is a shortage of new car dealers who will trade for them and then sell them. Private individuals are now the number one pre-owned sales force in the U.S. and Canada selling the “good used cars.” Dealers have steadily lost that margin of sales over the last few years.
Private individuals do following three things better than we do:
1) They get their car ready to go.
2) They do a knowledgeable, enthusiastic product presentation (Storybook).
3) They are not afraid to ask for what they think their car is worth.
Private individuals advertise and display the same places you do. They have the same Internet capability of marketing a vehicle that you have. They take the time to prepare their car for sale and prepare a story to tell about their vehicle when a potential buyer wants to look at it.
How educated are your sales personnel on cars that your managers are buying in “cyberland” that are priced based on someone’s formula or percentages? These prices are based on numbers gathered by people who don’t do any better job of retailing pre-owned than you do. When you throw a bunch of guys in a bucket who can’t do anything right then shake it to get a number, your grosses are bound to drop. The longer you keep mixing bad in a bucket the longer the paint is going to be a dull color.
If private individuals are dominating today’s market place, maybe we should look at what they are doing. Have you have done an auto-bio? You should have done one a year ago. A good auto-bio will help you build a good “Storybook.” Also we all need to get back to the basics.
I have gone back on the road to revitalize “back to basics” at the request of dealers who are tired of watching their pre-owned grosses constantly drop and hearing their people complain about not being able to get the right pre-owned cars. They’re out there. You are just not getting them!