For those of you who read my recent post; Used Car Growth and Einstein’s Definition of Insanity and have franchise partners who have subsequently booked one of our Strategic Budgeting Review Consultancy Days, one of the subjects we will be discussing with them during the day will be opening Used Car Stock Levels and Used Car Stock Profiling.
I am often asked about this subject and whether it is “The Answer” to growing your used car business and once again I remind everyone that yes, this is a very important element of your strategic planning, for your dealer network, but there is no single answer or “Silver Bullet” to the question of how we grow used car operations, rather that it is a continual focus on all the operational areas affecting the performance of the business, and understanding that they are all inextricably linked.
Take improving used car stock turn rates, which are of paramount importance to the overall profitability of your dealer network, (and thus a separate post in their own right); they may not see it at first glance but the difference in the utilisation of funds employed to their used car stock holding, between having an average stock turn rate of 60 days per unit, compared to 45 days per unit, is vast; businesses need less money invested in stock, pay less interest etc. etc. etc.
And stock profiling and planning the opening used car stock levels is one of the key strategic areas of used car performance, which as businesses grow, becomes more and more important as the business evolves; thus the attention we shall pay to this area of the business during our day on site.
I can’t possibly cover the whole issue of stock profiling in one post; for one, everyone’s perspective and immediate requirement will be different, but regardless of where a business is in its used car growth journey, some principles always remain the same. The first is that, like all used car operations, it has one key choice to make when deciding to invest in a used car stock holding; Do we want our used car operation to be driven by market demand or do we want to try and drive the market via the stock holding we have?
There is a subtle but very important difference between these two statements; on the Do we want our used car operation to be driven by market demand side of the argument, the business is listening to what customers are asking for and then investing in used car stock accordingly, knowing full well that there should be an immediate demand for the stock holding it is investing in. However on the Do we want to try and drive the market via the stock holding we have side of the argument, the business is effectively saying that it will invest in any unplanned profile of used car stock holding and then look to try and find customers for that stock holding.
Now that is a significantly more difficult business model to run, thus my comments in my recent post; How Much Is A Used Car Worth? Only As Much As Someone Is Prepared To Pay, where I questioned the rush to all non-petrol/diesel production models that some manufacturers are committing to, before assessing whether there will be the demand for this volume of non-petrol/diesel stock when it enters the most cruel of markets; the used car market?
Anyway, back to used car stock profiling, and one tip I can offer everyone reading this post; it was piece of advice given to me many years ago when I was starting my career as a used car professional and it was this; “The person bearing the bad news, regardless of the circumstances, is always the person you should be listening to first!”
So how do we apply this single piece of advice to growing our used car operation via effective stock profiling? Well his premise was that for sure, it is lovely to speak to all the people who had purchased a used car from you, as an exercise in self adulation it has no bounds, but as much as this feedback is important, it is not as important as the feedback from the customers who didn’t by a used car from you!
The first morning of every week he called every one of these customers, to ascertain why they didn’t purchase a used car from his business; was it that they didn’t have the car they wanted and if so what was the car they wanted? Only then did he ring all the customers who did purchase from them, to see whether they had purchased the car they wanted and if not, what they had first enquired for?
Now, as much as this is not the answer to all our stock profiling needs, (we will be covering a lot more during our day on site with the dealers), it is a very important piece of the jigsaw. Those of you who regularly read my used car business development blog, know that I like an analogy between used car operations and selling sweets, and this principle goes to the very heart of this piece of advice; if you owned a sweet shop and successfully sold Mars Bars, but a proportion of your customers came in every day asking for a Crunchie, and you didn’t have them for sale, what would you be buying when you next stocked up?
If this post has resonated with you and you would like to know more about our used car business development consultancy programmes, because you would like to partner with an organisation of professionals who have faced the challenges of fast paced evolutionary markets and know how to develop a successful and profitable used car dealer network programme on your behalf, (in order to keep your new car and total business objectives growing and on track), then we would very much like to hear from you.
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. For an exploratory conversation regarding our services and how we can develop bespoke used car business development and consultancy programmes on your behalf, please do not hesitate to contact one of our Used Car Business Development Directors; Andrew Banning at ajb@autoformance.com or Malcolm Thomas at mgt@autoformance.com
Alternatively please feel free to call us on 0345 057 3177.
For more information about our services please visit our website at www.autoformance.com
Andrew Banning.
Used Car Business Development Director.
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