Written for January markets but good anytime of year as a general recap on your used vehicle sales approach

Used Cars - for volume and profit

Whilst Jan thro March as a quarter year is the biggest quarter for used car sales, there's still plenty you can do all year round to improve your used vehicle performance - even in otherwise difficult market conditions. Regarding Quarter 1 though - Following immediately behind December, it often starts with the lowest levels of inventory because many businesses, especially plc’s, clear stock in December to smarten up the year end balance sheet. New car sales provide most used car stock and there are only 3 peaks in new car sales in any year – Jan (typically fleet orders so zero part-exchanges), March (for the savvy retail customer but too late to provide stock in quarter 1) and September(for the traditional retail Johnny, maybe preceded by a slight upward blip in August from latent Motability renewals. This sums up as; the biggest quarter of the year, preceded by the lowest opening stocks and precious little new car part-exchange business to top up stocks. In these circumstances, traditionally, used vehicle stocks start to dry up in January and nothing really improves matters until April/May. The dynamics of these market conditions create huge demand for quality retail stock and the auctions have a field day; you can’t buy good retail units for love or money (well into book anyhow) and at the same time as paying right into book for retail, the units you need to trade somehow don’t hit the spot and sell for far less than their intrinsic value. That’s because everyone is after the same thing and meanwhile, you could be under-selling what you do have while your focus is understandably around getting more cars to sell. What should you do about this? Firstly, pre-prep all your retail stock; if anything is good retail stock on the face of it but needs a fortune to get it mechanically sorted – trade it while you can. The other benefit is once your current stock is pre-prepped, it can go out in hours rather than days and you know exactly what prep bills to expect. Service may well be quiet right now so it's a good time to try and strike a deal with your best mate – the service manager. Second; don’t panic into buying any retail unit you get a chance to bid on – add a bit of science and steal a trick from the parts manager. Do a “lost sales analysis” check your otdb sheets, operating system, crm data and ask your salespeople – what are the used cars people are looking for right now that we don’t have enough of or we don’t have at all? How many people are asking for small automatics that we can’t sell because we don’t have any? Who wants a cheap 4x4 because they got snowed in? The last thing you want to do is buy a couple of gems off a trader because he says so – they will be the beauties still sat there in April, when the book first starts to drop and the shine has gone off the auctions – just when your regional reminds you of the 90 day policy and all of a sudden they ain't gleaming quite like they did when you bought them. Remember though – you can’t sell empty spaces on your forecourt but also, you have the wisdom and experience to spot a lemon before you buy it – provided you have the presence of mind to stop and think rather than over-react to all the demand made worse by the empty slots on your display. If you identify used units you actually need to supply current demand – you can easily make your own data base prospecting campaign by contacting current owners of those units knowing you have a double reason to contact them – sell them an alternate unit of course but in the full knowledge that there is good demand out there. After all, if auctions are fetching £500 into book for mini auto’s for instance – far better to pay into book to your own customer for a known part-exchange than an unknown provenance down the auction. If you have such strong demand and not enough stock to meet that demand – have you re-visited your stocks siv to make sure you don’t give one away with too little profit in it? What I mean is, if Mondeo 1.6i is fetching 3 into book – why retail your stock on normal margins if it stands a touch behind? You’d be under selling yourself so do a quick check and maybe re-set some selling prices. Conversely – if you have a long stocker that’s doing well in the auctions right now – maybe best to cut and run and swap it for a new face? If you are lucky enough to operate in a business with a fleet department or even better, a “local business” unit, now’s the time to tap them up – whilst fleet is often just for the numbers and a not for profit organisation, working a 5 day week in 39 hours; they may just land on a small fleet deal with some desirable de-fleet units like say 3 year old 40,000 miler rep cars ripe for the pitch and just what we are looking for. It could be that in the cut throat world of fleet sales, just another £50 a unit on the de-fleet could pull the deal into quarter 1. and bingo – we can go again. After the battering the roads have had with all the bad weather – have you checked in with your local bodyshops and your own if you have one? There could be dozens of choice swappers out there in need of cosmetic damage repairs but with great retail potential. I forget the actual stats but a surprisingly large number of people choose to get rid of a car once they have had a prang in it and they are just waiting for you to call and suggest a swap. Is all your existing retail stock well photographed from lots of angles and imaginatively described on your website? When used stock becomes scarce, it’s not just the dealer who notices – customers too find difficulty in finding what they want and turn even more to t’internet to source their next car. It’s not difficult to look good on the internet, it’s not expensive and its not reflective of the size of your business, so don’t get complacent because Fred in the shed down the road may be dressing his virtual shop window better than you and stealing more than his share just because he/she put more into the shop window than dead wasps. A cheap kids blackboard on an easel in service reception listing models and specs you need to buy for waiting customers, is a simple way of testing whether retail customers visiting service department are in a mood to change. It’s silent and effective and requires no more effort than to look each day at who’s coming in tomorrow and vaguely listing their part-exchange on your chalkboard if it’s a swapper with merit. Finally, motability returns are often cheap this time of year – provided you haven’t been beaten to it. Over a year, Motab aren’t that cheap but at times like this, when overall values are at their highest all year – motab is a great option. Especially as they come guaranteed and ready to go. Quarter 1 is the biggest profit quarter of the entire year and if you fail to get off to a good start, you’ll spend the rest of the year brassed off playing catch up. Whilst all other times of the year represent a slightly smaller opportunity than quarter 1 - there's still a good chance that you can pick up a few ideas here to pep up your used vehicle profits right now. Whatever else happens in your day – remember, when you pack up tonight and go home, you’ll never get a chance to add to this day because it’s gone forever. Make the most of it.