Sounds simple doesn’t it, but this statement should resonate with anyone looking for continued growth for their used car operation, because no matter how well you run every other faculty of your business, if you don’t have enough used car stock, you are never going to achieve your used car sales volume objectives. It really is as depressingly simple as that!
Now let me continue by saying that used stock acquisition is such a vital issue and so all-encompassing in the required level of understanding, that it is impossible to cover every aspect of the importance of used car stock acquisition in one post. There is the operational understanding of used car stock acquisition, what I call “The Numbers,” which are critical for budgeting, targeting and the operational understanding of how your used car operation performs.
Then there is the acquiring of the used car stock level required in order to grow your used car operation and these are 2 very different skill-sets, rarely found in just one individual. The ability to roll your sleeves up and acquire the correct profile of used car stock for your business, and in the right volume, is going to be critical to your success. Your used car stock holding is not like your new car allocation, it is not agreed with the manufacturer on a yearly basis and then delivered on a transporter throughout the year.
Proactive and effective used car stock acquisition policies are at the very foundations of your ability to grow your used car business and are the part of your used car operation that is a very cruel and unforgiving mistress. Why? Well the minute you take your eye off the ball, the whole performance of your used car operation is in danger of falling down!
I don’t want to appear as over dramatic but it is true; and I don’t want to get too bogged down in the minutia of “The Numbers” in this post, but in simple terms; if your average stock holding is 75 used cars and you are selling, on average, 40-50 used cars per month, well within that statement there is a mathematical sum. Now if you change the components within that sum and thus the numbers involved, what happens to the answer? Well it changes, and your used car performance will be the same; reduce your average used car stock holding from 75 to 50 used cars and what happens to the 40-50 used cars per month that you have been retailing?
There are many initiatives involved in effective used car stock acquisition and I will focus on just a couple of points for reflection today and for you to take away to your business, but before that and to add gravitas to what I’m saying, let’s discuss “We Buy Any Car” and how the motor industry, as a whole, let them target our established market and then change the way that a part of our business operates.
Just let that statement sink in! What happened was that clever people targeted our market and revolutionised the way a part of our business operated; think of them as the first incarnation of the Purple Bricks model, who are reeking the same havoc in the real estate sector. They realised that the used car vehicle park was a very valuable and profitable commodity so they targeted it in an aggressive manner to make a profit and the industry, as a whole, let it happen.
I go into dealerships every day and hear customers being told that if they don’t like their part exchange offer they can try “We Buy Any Car” or selling it privately! I see dealers sending cars to auction houses on mass, which is fine and can be profitable, but be careful about the profile of stock you are sending to auction houses, who are trying to be used car retailers themselves, so in effect you are in danger of giving your competition a helping hand.
Whatever stock holding you have and acquire during the year is valuable, it is precisely what the founders of “We Buy Any Car” borrowed £millions for, in order to target and acquire, so be very strategic with what you do with this stock holding. It is not an inconvenience, (even trade part exchanges), it is a valuable commodity; now if your dealership is a registered charity, sure give it away, but if you are not?
So operationally how can we ensure we can acquire enough used car stock year on year in order to have the stock holding required, to meet our used car volume aspirations? Well the answer to this questions is both multi-faceted, ( just like marketing there is no “Silver Bullet!”), and depends where you are in your used car growth and development journey, but just like a lot of focuses for used car growth, some of the answers are already within the 4 walls of your business, provided you know where to look.
Proactive and effective used car stock acquisition policies are all about adding new initiatives year on year, as your stock holding demands grow, so there is no single and easy answer to acquiring more stock; so in finishing let me impart 2 pieces of advice to you, for you to mull over.
Firstly; are your used car stock acquisition procedures and practices systemised within the business or in the hands of just one or a few of your employees? If the answer to this question is that they are not systemised within the business, I would respectfully recommend that you change this and become involved with knowing just how this valuable resource is obtained and managed. If you don’t and you look the other way, just think about what happens when the aggressively growing competitor business, in your local conurbation, poaches your used car professionals.
If this happened, are you going to be able to keep running at the same pace, in terms of used car stock acquisition? If not your used car performance will fall off a cliff; it is important to remember that your used car stock holding levels and the rate at which you turn over that stock holding, are directly linked to your used car sales volumes, and just like the sum we spoke about earlier, change the components of the sum and the answer also changes. Not only that, once you are running at a pace with your used car growth, you will staggered at just how long it takes you to get back up to speed again after a dip in performance.
Secondly; remember that your new car allocation of today, is your used car stock holding of the future. This is an easy way to ensure that you obtain a valuable source of used car stock in the future. If you are retailing 500 new cars this year, well that is 500 customers with whom you have built a relationship with good enough, to obtain their new car business.
Never underestimate the importance of this moment in your business relationship with the customer, because at the point of handover they are at their most receptive to your business and you should be leveraging the trust you have built up at this stage. Are you ensuring that every customer that purchases a new car, (or used car for that matter), from your business knows full well that your business wants to buy that car back from them when they are looking to change?,,,,,,,,,,, And that you have the operational procedures within place at the dealership to ensure that it happens?
If this post has resonated with you and you would like to know more about used car business development and growth strategies, rest assured there is help available? The owners of Autoformance have owned and run successful used car operations and been at the forefront of the development of approved used car programmes for a host of manufacturers.
We construct and deliver used car business development programmes for dealer networks, independents and manufacturers. If you would like to know more about our used car business development programmes, then please do not hesitate to contact either Andrew Banning or Malcolm Thomas at ajb@autoformance.com or mgt@autoformance.com
Alternatively please do not hesitate to call us on 0345 057 3177, when it will be our pleasure to help.
For more information about our services please visit our website at www.autoformance.com
Andrew Banning
Used Car Business Development Director
No comments:
Post a Comment