From the December issue of UCD
Like their customers, each dealer has their preferences when it comes to buying cars.
The determination on which cars to buy in the auction lanes and which ones to keep at the lot and sell can be impacted by many factors from profitability, maintenance and customer choice.
During a recent 20 Group meeting, dealers from across the nation shared their thoughts on what they look for in building their inventory and developing their own buy and no-buy lists for their stores. Here are some of their key takeaways.
Know your market
The types of vehicles filling your lot today may not be the same as the dealerships in Florida, Texas or New York.
“It’s about what works for each location and clientele,” said Brad White, 20 Group Moderator and Consultant.
Melissa McCown of Mi Amigos in Houston, Texas, has found success with selling heavy-duty work trucks to laborers, who are consistently among her best-paying customers.
“The customers needing work trucks are paying me before anyone else,” McCown said.
In Miami, Florida, Leceour Charles of Mission Auto has a different market with many immigrant customers, needing sedans.
“You have to look at the market and who you are trying to tailor to and the demographics of your area,” he said. “Where we are it’s a lot of Toyota Corollas. That’s the market we serve.”
Use recon to make profit
In rural Kentucky, Keith Thacker of Autoland has found value in buying Nissans that need new transmissions or engines and repairing the vehicles before selling.
He explains he’s buying many of the vehicles for less than $3,000 and putting the necessary factory parts in for a total cost of $6,000. He pointed out it puts a better and more reliable vehicle on the street for the customer and creates a better-paying customer.
“We’re selling the best car for the ACV we sell and we’re making money on the recon. We end up with a better car than going through the lane and we win by making more money.”
Don’t base choices strictly on personnel
You may find you have people in your shop that may specialize in a particular vehicle but that doesn’t mean you tailor your inventory to that individual’s skillset. If an employee leaves, it may be difficult to find a technician or mechanic who can take over working on a specialized vehicle.
“Employees unfortunately come and go and techs come and go,” said Mike Clark, Jr., of C&C Cars in Pinellas Park, Florida. “You have to stick with the things that are proven to make you money. We buy the same stuff over and over again so our techs know what’s coming in and the known problems to get it fixed and out to the line quicker. I wouldn’t recommend buying a car just because your tech likes it or GM likes it. Let’s look at the data and see what works.”
Be flexible
Trends and markets evolve quicker. Different models may become popular in an area or costs may change, impacting profitability.
Dealers need to stay looking at their wholesale costs, sales prices, reconditioning costs and pay history with customers regularly and adapt their buy and no-buy lists accordingly.
“I look at my buy list constantly,” Thacker said.
