An Idiots Guide To Used Car Stock Acquisition!,,,, Article 2!,,,,
Welcome to the final article in the recent series of four, all covering the used car market and its number one operational survival challenge; that of successful used car stock acquisition. For those who have missed any of the previous 3 articles in the series, please find links to the articles below on my Used Car Business Development Blog;
Briefly; in the 3 articles listed above I discussed the challenges coming to the automotive sector, the existential threat facing all businesses due to depleted used car vehicle parks along with the ramifications; and then I began to explore the mind-set required of the successful used car stock acquisitions professional.
In this, the 4th and final article in the series I will expand upon the skillset and level of expertise required in the successful used car stock acquisition professional, in order to help those looking to fulfil this role within their business. In many ways this is the most important article, in terms of providing some clarity, because from what I have seen of late, the vast majority of businesses grasping the importance of this role are going to get this appointment wrong.
I have seen many posts on LinkedIn and job adverts for used car managers recently, those looking to combine the role of used car management with that of used car stock acquisition; and what has struck me is how the industry appears to recruiting in the past, when used car markets have moved on and evolved at a pace. Now this is not surprising as those posting and responsible for the employment process have no experience of building successful used car businesses; well not according to their LinkedIn profiles, and understandably this is leading to mistakes. Mistakes that will be very costly.
The most common and fatally flawed mistake being made is that of combining the responsibility of used car stock acquisition into the Used Car Managers role; when they are two very different fulltime roles. Now as much as it is important to staff your business in line with your used car objectives, only those with the most modest of used car retailing ambitions for their used car operation can afford to do this. The very act of which though will then consign their used car business to a downward spiral of sales and profitability.
The reduced used car vehicle parks of 2023 onwards and the competition for them, all explored in the articles above, will fatally expose the fact that the vast majority of independent used car business and franchised dealers are years behind the curve, when it comes to used car stock acquisition. With most seeming incapable of grasping that those who control access to used car stock, will control access to the used car market. The end result being that the vast majority of used car businesses are underprepared (without the professionals required) for the used car markets to come.
To help let me explore the role of the successful used car stock acquisition professional, because it has absolutely nothing in common with the used car managers’ role now. Unfortunately though it is also a role that franchised dealers have no experience of, therefore they are going to find it difficult to know the skills they need to be acquiring; so with this in mind let me help by exploring the skill-sets required.
Firstly, and this important, the successful used car stock acquisition professional is a personality and professional not known to many franchised dealers or independent used car businesses, especially those of the big PLC’s. They are a ruthlessly determined individual that will challenge existing thinking, (in terms of what will be required to be successful), because they know that it is their ability to acquire and secure used car stock holdings in both the volumes and at the prices required, that will ensure used car profitability.
The way they work and the way that they are remunerated will be different to anyone else within the business. In fact, if they are successful they will be the highest paid individual in the business.
They are going to have to build trust within the business that they can do the job, and the business will need to trust them explicitly to deliver; remember at all times that you can’t manage a role you don’t understand. For the majority of the time they will be operating in a way that is alien to a franchised dealer, whilst asking some challenging questions along the way; something that will and should start during the interview process.
In fact the interview process should involve a lot of deeply probing financial and operational questions that you won’t expect and/or necessarily know the answers to; and this will probably result in it being quite an uncomfortable experience; for you.
I will guarantee the majority reading this article that you will find them very challenging professionals, in fact they will probably not fit in with your existing team and you probably won’t like them (personally). But this should be the last thing on your mind, they are a professional operating in a cutthroat sector of the used car market and will be operating accordingly.
Theirs is not a market for niceties, theirs is the market of unrelenting focus and the ability to target and secure profitable used car stock holdings; and it is very likely that what is required here (operationally) will probably leave you spellbound.
The most demonstrative way for me to provide clarity is by outlining some of the questions that any successful and proven used car stock acquisition professional will ask you during an exploration discussion.
The questions below are the very least you can be expected to answer and will include all the important financial, operational and business ethos reassurances required. Successful used car stock acquisition professionals do not board sinking ships!
- What is the budget for the used car stock holding?
- Is there a separate budget for used cars stock acquisition?
- Are any of the budgets protected from ex-demonstrators, pre-registrations and part exchange vehicles?
- Is the budget fixed or flexed via a budgetary cyclical understanding of the used car market? Are there any additional funding sources?
- If yes; how many, during what periods is the funding available and what’s the total amount available?
- Is the sales team split between new and used car sales?
- Is there a standalone used car manager?
- How many used cars did the business retail last year, excluding ex demonstrators.
- What was the average RGP per unit?
- What is the retail used car target for this year?
- On a month by month basis, how many used car are secured and coming into stock over the next 12 months?
- What is the “Ring Fenced” marketing budget for used car stock acquisition initiatives?
- Will this be increased to allow for expanding the initiatives required and that associated with larger used car stock acquisition targets?
- Is there a monthly target for used car stock acquisition?
- What are the used car stock acquisition targets for the next 3 years?
- What is the likely new car allocation during this period?
- What is the split between retail and corporate/third party sales?
- Who makes the decision to stock used cars I have purchased and secured?
- It not wanted for used car stock (there will and should be a surplus) am I in control of routes of disposal and therefore the associated profit margins form all the cars involved?
- In the disposal of this stock I will probably not be adhering to any disposal policies, (“All-Auction” or otherwise), unless I am absolutely convinced that it would return the maximum profit margin for the business. I assume that this will not cause any issues?
- What personnel support resource is aligned to the used car stock acquisition department/professional?
- What is the social media strategy for the business and what social media platforms are incorporated within any strategies?
- As a successful used car stock acquisition professional I will also be utilising my own established social media platform, alongside enhancing and expanding the social media presence associated with the business and used car stock acquisition; I am happy to expand upon what’s involved but assume there will be no problems with the aforementioned.
- Is the business ready for the inevitable fallout surrounding the targeting of the customers bases of fellow businesses within our franchised dealer network?
- How will I be remunerated within the role?
- Before agreeing to take the role, I will need to present my strategy to the board and/or owners of the business. I will do this to gain the assurances required for accepting the role; I assume this will be possible?
- This is a very senior self-managing role so I will need to report to board/owners of the business, and them alone; I assume this is acceptable?
The questions above, regardless of the size of your business are the questions you should want to be asked; if you are not, then trust me the person sitting opposite you is not the professional you require.
Unfortunately you will find the professional with this level of acumen, one who knows what the answers to the questions above should be and therefore what will be required operationally, very hard to find; there are not many of us about.
For those grasping the seriousness of their current situation, those wanting to take immediate action, (now that used car market opportunities are identifying themselves), I will be working with three businesses over the next 12 months to deliver the used car stock acquisition expertise and initiatives required, for those businesses to survive and prosper in the used car market to come.
These will not be arrangements for consultancy; these will be outsourced resource success based arrangements, delivering used car stock acquisition success to those I am working with.
Should you wish to explore synergies and the potential to collaborate in this regard, please do not hesitate to contact me so we can arrange a mutually convenient time for an exploratory call; when we can start by discussing and exploring the answers to the questions above.
Andrew.
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