Look across your pre-owned vehicle lot. Guaranteed there’s at least one vehicle that’s been there too long. Which means there is a chance you are going to take a bath on it… That’s the way it goes when you’re buying dozens of cars, trucks, and SUVs for the pre-owned market.
Used car managers have a tough job to do. It’s not easy to select the right pre-owned vehicles for your market and your store, let alone ensure you’re going to make money on each one.
Since the dawn of the automotive era, gut instinct has been the way to make purchasing decisions. You can make big money—but there’s always the risk of a nightmare car that rots on the lot.
How to Increase Turn and Earn
‘Turn and earn’ is the way to make money in used cars. It’s all about moving units—and quickly. It encompasses two aspects, both equally important: buying cars and getting them noticed. The former is known as provisioning; the latter, merchandising.
How does a dealer improve their ‘turn and earn’? It’s simply about buying cars that will sell fast, and for a good profit. It’s finding a diamond-in-the-rough here and a popular lease return buy-out there. It’s also about knowing how to make the most of desirable cars that face significant competition—often the bread-and-butter units that, because of their competitive sets, probably won’t bring big-dollar gross profits, but are still necessary as retail units to serve a market.
And once a car has been bought, it needs to get listed quickly. But it’s not good enough to just get it listed fast. It has to be accurate and unique, compelling the reader to take notice.
Make no mistake. ‘Turn and earn’ takes time to perfect—and maybe even a bit more.
Take the Guesswork Out of Inventory Management
You can base your decision on your past experiences, but without data and tracking there is bound to be a margin of human error. Lot rot costs dealers thousands in depreciation alone.
Plus, according to 2017 NADA Data, used vehicle gross profits have dropped under 12%, and net profit per car is essentially at the break-even point. Can you imagine being in business only to break even at the end of the sale?
There’s more money to be made in used cars than new, and the NADA stats show it. So why would you be content to with a used-to-new sales ratio of 0.76:1?
If you can find a way to turn your inventory over more frequently, you’ll earn more per unit and sell more cars annually.
The good news? Inventory management doesn’t have to be a guessing game anymore.
Today’s smart dealers use provisioning tools like vAuto’s Provision to identify the right vehicles to buy using live market data. They account for buyer demand and availability and compare activity on your lot to national and regional demand, ensuring you have the best success rate possible in turning your inventory quickly. (And that’s something your gut won’t tell you with any degree of accuracy.)
Ever wondered what you should pay for at auction or on trade, or at what price you should list a car?
Provisioning tools can take away the guesswork and tell you what’s a good buy—and what competitive and profitable pricing looks like.
Buying the right inventory is a good start, but merchandising is just as important. You can have the best-stocked car lot in your neighbourhood, full of cars with great profit margins. But none of that does any good if there’s no one taking notice. Every vehicle in your current inventory needs to be merchandised—that is, put in front of potential buyers’ eyes.
What happens if your inventory doesn’t list well online? The short answer: it takes forever to sell.
That’s why your vehicle description pages must be accurate, descriptive, and captivating—and why you may be interested in another vAuto feature coming later in 2018.
vAuto’s AutoWriter module will create unique and compelling product descriptions for your vehicles—not just template jargon.
Integrated with Provision used car inventory management tools, AutoWriter will make your listings jump off the page.
You can’t afford to make used car inventory decisions on gut instinct alone. But provisioning and merchandising tools like vAuto’s Provision suite will turn guessing games into an educated decision every time.
The end result? You’ll turn your inventory more often, and your used car department will make more per deal.
Try out the Turn Calculator to find out the how much money you’re leaving on the table.
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