An Idiots Guide To Used Car Stock Acquisition!
Hello everyone; as promised this is the second article in the series alluded to in my previous article; The Franchised Dealer Fight For Survival That Not All Will Survive! When I promised that I would expand upon the one discipline vital to the success of all franchised dealers and independent used car businesses; Used Car Stock Acquisition Expertise.
As much as this is a huge (ever evolving) topic and one that is heavily nuanced, depending on the market you are trading in, (therefore impossible to cover on an in-depth basis in one article), there are two critical pieces of advice that I can give everyone reading this article, regardless of the used car market they are operating within.
Never Purchase Cars For What They Are Worth!
Make A Conscious Decision Now To Survive!
There we have it; “The Two Elephants In The Room!” And the two most important things to grasp moving forward; so let’s begin and expand upon the first; Never Purchase Cars For What They Are Worth! The second will be explored in detail in my following article; to be published next week.
In discussing this piece of advice it is important to understand one very important thing; you make your money by locking in profit margins when you are buying, not when you are selling. Selling (although important) is the process of crystallising all your acquisitions expertise and the profit locked in during the acquisitions process. However, and I add the caveat, in order to deliver on this you must have the expertise to know how to put yourself in this position. In reality very few have this this expertise.
Acquiring assets for stock then retail profit, (any asset not just used cars), is a fast-paced, cutthroat and dirty business; and that’s just the customers. I promise everyone reading this that when you involve cars and money, (especially other peoples’ money), you will see the worst of people and behaviour. So think on that before making any decisions on who to employ or to partner with, (in the delivery of your used car stock acquisitions objectives), because this is the world they have got to survive and thrive within on your behalf.
Successful used car stock acquisition requires many skills and a multitude of initiatives, but at the foundation of everything must be the absolute determination to pay as little for stock as possible; in fact it should be the “Raison D’etre” of every used car stock acquisitions professional. From here success then hinges on the experience and expertise required to be able to deliver on this and on scale; this will not happen by accident.
It is the professional ability to create the opportunities funnel required to ensure your business doesn’t have to go to auction houses or outbid We Buy Any Car for used car stock. In fact success in the stock acquisitions world is best defined by observing the masses and doing the opposite. By working hard and continually evolving because any success this year, will not be guaranteed for next year; not unless you are continually at the leading edge of the stock acquisition community.
However, this absolute determination to pay the absolute least amount of money for every car, should not mean that you behave in an unprofessional manner; absolutely not. At its core the business of acquiring used car stock is a people business, not a car business; it is a business of building relationships of trust based on honesty and respect. So if you are incapable of moving within the social circles required and of building relationships of this ilk, in order to acquire used car stock at below market value, then you are in the wrong job.
Do not (as many seem to do) see yourself as an estate agent either, whose job it is to get the maximum value for their client’s asset (in this case their house) because the reverse is true. You are the complete opposite to this; you are investing money into an asset on the basis of a financial return, and where the risk and the reward is all yours. Your absolute goal should be to pay as little for used car stock as possible!
Profit is not a dirty word; if you are stock acquisitions professional you should be remunerated and rewarded for your ability to acquire used car stock at both below market value and on a continuous basis. If you are currently working in an environment where this is not the case then move on; this will not be the business to be working for/or with in the future.
Now I understand that for many of you reading this article, it will present an ethical dilemma; unfortunately for you I don’t understand this point of view so you are going to get no empathy from me. I readily accept that to many of the automotive professionals reading this article, my views will be abhorrent and from a past best forgotten. Luckily I am thick skinned enough not to worry about the “Wilting Wallflowers” out there; this is an article being written for “My Market,” NOT “The Market.”
That said I understand why for many franchised dealers this will cause unease; a feeling that all started with the “Needy” obsession of some manufacturers and franchised dealers to achieve the aim of being “Liked” rather “Trusted” by customers. Something else I do not understand.
This obsession alone drastically changed the type of people employed within franchised dealers and the culture. An important issue that can’t be unwound easily and not to be explored here, but one that was covered in my article;
So in moving on let’s get one thing straight; if your used car stock acquisitions initiatives consist of you running around on a daily basis, looking for used car stock to purchase on a “Hand to Mouth” basis and chasing your 5 star review, then you are going to have to pay more money than anyone else for stock in order to purchase it. This will be many things, profitable will not be one of them!
And just this scenario, is what many (inexperienced used car businesses) have been doing during the last 12 months. Those pumped up and full of hubris, all the hubris peddled by those with no experience of purchasing used car stock for retail profit; auction houses, CAP HPI, Autotrader etc. And of course now you are still gazing upon this loss making used car stock holding, in some cases 6-8 months after it was purchased; along with the loss making grind of retailing this stock holding and releasing the capital employed.
And it all could’ve (and should’ve) been so different! Sadly though for many this has been unavoidable; some franchised dealers have morphed into non standalone businesses now, businesses bereft of the talent required and incapable of building their own successful business model. Overly reliant on 3rd party businesses to help them and/or tell them what to do; with a list of shame that is endless but includes BCA Auctions, Cinch, Carwow, Independent Leasing Companies, We Buy Any Car, Autotrader and many others.
So to those still reading and not wanting to run off for a shower to get clean after 5 minutes in my company, in the form of this article; my advice would be to keep an open mind and be ruthless in the delivery of your ambitions. The fight for survival is underway and will play out over the next 2-3 years; a subject that will be covered in my next article.
In the meantime, if you want to know how prepared you are for what is coming and whether or not your current used car stock acquisition initiatives are going to enable you to survive, you can carry out one simple exercise; print off your used car inventory for the next 2 years!
This inventory should provide clarity on, (and confirmation of), all the used car stock your business has locked into the used car business between now and the end of 2023; if this document and/or information does not exist then your business is way behind the curve and in serious trouble.
See this as confirmation in the clearest possible terms that your business is in danger of failing during the used car markets to come; let me elaborate. With new car and used car markets fragmenting and evolving in different ways to each other, franchised dealers face some difficult challenges, especially when it comes to the professionals required for success. This process alone should tell you in no uncertain terms, that you do not have the used car stock acquisition expertise required for the new and used car markets to come.
For those grasping the seriousness of their current situation, I leave this with you to cogitate, whilst I complete the remaining articles covering this subject. However for 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.
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.
Andrew.
No comments:
Post a Comment