Higher gross in less time? Get the “must have” new car price tool

By | DealerSocket Inventory, Pricing | No Comments

There’s a lot of noise going on about software and tools that promise to do your job for you. As great as that sounds–and as good as inventory technology has become–key challenges remain. For almost every dealer, perhaps the biggest challenge is figuring out how to price cars to stay competitive with the online market, while not giving away your gross in the process. Not only that, but how to do it hundreds of times over.

This is where almost every tool in the market falls short. Good inventory is hard to replace, and getting someone in the door on a low price is not always the best strategy to maximize profit. You can’t always make it up on the back-end if you gave it all away to get them in the door. You can avoid this and develop best practices with the right technology that includes three core but basic “must haves”:

Must have balance between competition and profitability

The key is to be able to price really well, to balance for both competitiveness and profitability, and then do it dozens, or even hundreds of times, per day–accurately and compliantly. To do it well, you should factor a day’s supply and incentives as well as market conditions for every VIN you price. The downside of not doing this well for your entire inventory is fewer leads, less traffic and lower grosses. If you price too high, or at MSRP, then people won’t engage, and if you price too low, you’ll give away gross profit that you don’t need to lose.

Must have total integration capability

So what does it take for you to be successful at your store? Constantly turning over your inventory? Constantly maintaining high average grosses? Today, the only way to do all this is to leverage the advance data power of an integrated solution. A good tool should be easy to use and quickly and automatically scale across your entire operation. It should perform repetitive tasks in an instant, optimize every price, and give you more time to do what you want to do, and then to be able to enjoy the rewards of overall better performance.

Must have an interface that’s easy to use

Inventory+ New Car Pricing tool is designed to handle the complexity of pricing and manage the importance of integration in an easy-to-use package. That’s the value of innovation through integration, with the industry’s best market and transaction data and factory integrations powering the software. It’s been developed over years working in partnership with top performing dealers, taking into consideration almost every challenge that dealers confront in the business today. Inventory+ New Car Pricing module can change the way you approach your daily workload. It will help you optimize your pricing, and by tying in with current programs and offers, it will save you a massive amount of time, time that you need to do those things that matter most.

Used Car Week recap: CPO is the hottest sector of the auto industry

By | Automotive News, News | No Comments

The CPO Conference, as part of Used Car Week in Las Vegas, was buzzing with industry executives, analysts and dealers looking to gain insight into how to benefit from and leverage the fastest-growing sector in automotive retail.

How fast is CPO growing? According to Joe Derkos, director of consulting and analytics at J.D. Power and Associates, CPO sales will top 2.3 million units in 2014 for the first time ever—a record-breaking year! All while new vehicle net transaction prices top $30K per unit. For the first half of 2014, used vehicle prices neared $20K as dealers focused more of their business in CPO. The used car industry will top $200 billion in revenue for franchised dealers in 2014.

Needless to say, the future of CPO looks bright: Dealers find these vehicles sell faster and have stronger retention while creating a positive relationship with the consumer. “Everyone is happy: the dealer, the customer, the salesperson” when selling a CPO car, said one excited dealer at the conference.

Sourcing CPO units continues to be a topic of conversation among dealers and remarketers. Tools that help them trade for more certifiable units can be game- changing for dealers in the used car business. Dealers and industry analysts are highly optimistic about the industry in the coming year. There are, however, risk factors that every dealer needs to consider when stocking and merchandising their inventory. Dealers are looking for mobile tools that help them quickly and efficiently evaluate risk and make better decisions.

Break the chains of desktop detainment

By | Appraising, DealerSocket Inventory, Uncategorized | No Comments

Over the past 10 years, automotive dealers have experienced an explosive growth of third-party software vendors, many touting “revolutionary tools” for automotive retail businesses. The problem, however, is that these tools and systems can have unintended consequences: They don’t integrate well, forcing staff to log into multiple systems, and have restricted a dealer’s ability to address what’s most important to their business—people. They have created an ailment apparent in many dealerships today called “desktop detainment,” where staff is tied to their desks completing simple deal-related tasks.

That’s not the intended result of good technology. The right kind of technology enables managers to spend more time engaging customers, mentoring employees and closing more deals. Mobile-capable and integrated tools allow employees to be agile and accomplish their tasks in a fast-paced, ever-changing environment.

Fortunately, there are tools that are integrated in a larger solution that help to create a single and efficient digital workflow. These tools “free” employees from their desktop and empower them to do what is most important for business: engaging customers, coaching employees and closing more deals. That type of focus can maximize growth, enhance customer service, improve transaction speed and increase profitability.

How do I free employees at my dealership?

Let’s start with the appraisal process in the used car department. Typically, most dealers still have the manager responsible for the entire appraisal process. A salesperson comes to the manager first (who is often stuck behind a computer trying to keep up with the many systems they are responsible for managing). The manager gets up, walks outside, does the appraisal, returns to his desk and inputs the appropriate data into the appraisal tool. In many cases, the salesperson never looks at the car or isn’t familiar enough with the vehicle to devalue the trade. With the exception of using technology, instead of pulling a book out of their back pocket, the appraisal process hasn’t really changed.

Now imagine a highly efficient process that empowers a dealer to return to a successful fundamental strategy: the “silent walk-around” on a trade appraisal. The best mobile solutions have allowed some highly successful dealers to influence positive changes to their appraisal process by empowering salespeople with a mobile solution. The resulting process has helped dealers to devalue trade-ins but has had the intended result of speeding up time to market.

The traditional appraisal process (involves only the appraiser)
Average time spent by Used Car Manager: 12 minutes

Average time spent by Used Car Manager: 12 minutes

The next generation appraisal process (engages the salesperson)
Average time spent by Used Car Manager: 5 minutes

Average time spent by Used Car Manager: 5 minutes

The consequences of this next generation appraisal process:

1. Better closing ratios and less haggling on trades via an efficient “silent walk-around” and an informed sales representative.

2. Improves morale in sales department — freeing the sales manager to be more efficient with their time management — reduces turnover and helps to grow future leaders.

3. Speeds up time-to-market by having a fully photographed and optioned vehicle ready for initial online merchandising. Faster time to market always leads to increased sales and profitability.

4. Creates transparency with the consumer and overcomes the appraisal objection.

5. Closes more deals faster and differentiates the dealership from the competition.

6. Empowers a salesperson to sell their own trade when they are better informed about the features, options and condition.

Best-in-class mobility

Think about your software tools. Now ask yourself this question:

“Does my current solution empower my employees to do what they need to do, wherever they are at the moment and whenever they need to accomplish the task?”

The best mobile tools should allow your employees to do all of the above. Imagine a world where managers are no longer detained by their desktop computers, a place where salespeople go back to fundamental successful principles and an environment that empowers your employees to return to engaging customers, coaching and training employees.

Hold technology accountable for results

When implementing changes in your current processes and technology tools, think about what specific and measurable results you want to see from the change. For example, by implementing the above change you should see some or all of the following results:

Increased “win” percentage of trade-in appraisals
Faster listing/syndication of used vehicles to market
Higher closing ratios
Increased sales volume
Increased gross profit on trade-in vehicles
Better compliance with photos, options and descriptions

Change can be painful, but it’s a “good hurt.”

Do you ever get sore after a good workout? Does that mean exercise isn’t worth the positive results of health, well-being and longevity? Successful dealers realize that however initially uncomfortable change might be, positive and thoughtful change to their processes and systems can yield productive results for their business. Great solutions require great partners who allow dealers to do business the way they want to do business. Only better.

The new normal: Managing risk and making profitable decisions in a growing used vehicle supply environment

By | DealerSocket Inventory, Merchandising, Stocking and Sourcing | No Comments

Setting the stage…

After the crash of 2008 and the 40 percent decline in new vehicle sales (SAAR) in 2009 (from 2007 totals), dealers faced new challenges in creating opportunities for profitability in their dealerships. They turned to their used vehicle and service and parts operations for that profitability, and the subsequent “used car boom” in a high vehicle valuation environment has created a series of unique opportunities — along with challenges — for dealers.

Over the past few years, in fact, automotive dealers have experienced record high used vehicle values, and for much of the time have dealt with a severely anemic wholesale supply. While this has helped to create record sales and net profits, many dealers have voiced concerns about low used vehicle supply and high prices in the wholesale market. What dealers might not have recognized early on were the benefits that they received from a high valuation market. The “used car boom” gave dealers an automatic risk control for their inventory. In a weakened supply environment, dealers were able to mitigate significant risk via a strong auction market where vehicles depreciated at a much slower pace. Valuations remained strong even after a 45- to 60-day dealer stocking cycle, and dealers were forced to experiment with more trade-in vehicles that in the past they might have wholesaled at auction or online. In other words, dealers would either make a profit or lose less when remarketing a vehicle wholesale after failing to retail. Customers adjusted to higher prices and lower new vehicle incentives that helped to keep late model used vehicle prices strong. The end result? Savvy dealers sold a lot more cars.

Fast forward to Q3 2014…

Welcome to the “New Normal,” where today we see a more normalized seasonal adjustment in used vehicle values. Think about the typical three-year sales cycle. Consider that 2011 was a year when sales were up, thanks to record leasing, low interest rates, an enlightened economy and increased fleet sales to rental companies. Now, all those sales and lease maturities are returning to dealerships, while dealers are selling a record number of new vehicles and trading a record number of vehicles on those purchases.

Take a look at the equations:

A. More inventory + more supply + slow sales growth = lower values

B. Lower values + increased supply = MORE risk

The “New Normal” means that dealers must make better decisions in what they source, what they keep and how much risk they are willing to take on a given vehicle. That requires tools to help mitigate and control current and future risk in their used vehicle inventory. More than any time over the past few years, in fact, dealers will need to scrutinize their approach to stocking, sourcing, appraisal and days supply.

Tools like Inventory+ are rooted in this kind of risk control. Long before the award winning Inventory+ tool was a merchandising, pricing and syndication tool, it was at the very heart of a dealer’s used car department as a way to maximize profitability and minimize risk in a dealer’s inventory. Inventory+’s proprietary recommendation engine powers a dealer’s ability to identify profitability and risk, while at the same time creating efficiency in a dealer’s process to appraise, assess, merchandise, price and syndicate their inventory.

So, as inventories rise, prices will drop and values will continue to decline at a normal pace. The dealers that will win in this “New Normal” world are those that balance risk and profitability by implementing tools like Inventory+.

Dealerships are NOT Created Equal

By | DealerSocket Inventory, Stocking and Sourcing | No Comments

The Need for a Balanced Approach to Used Vehicle Inventory

An interesting conversation has popped up in recent days regarding used vehicle inventory and the wisdom of relying too heavily on “Market Days Supply.” Some highly regarded experts consider it to be the single metric dealership managers should focus on when making decisions about stocking the used car lot. It’s certainly something to consider, but in my experience, geographic location is not the most important elements – not by a long shot.

Here’s why: While dealerships do many things really well, most automotive sales teams are exceptionally good in three key situations:

Selling their Brand
Selling vehicles that they have sold successfully in the past
Selling their trade-ins

Given these fundamental realities of the car business, it makes sense that a dealer’s “like” history and an analysis of vehicle success/failure should be the initial key factor to a competent stocking strategy. It’s simple: Replace what we sell, and in the correct quantity. Advanced Inventory Management Systems, like Inventory+, give a detailed look at data such as this to help us make better decisions when stocking.

So where does that leave Market Days Supply? It’s a metric to use when considering the valuation of a vehicle with no “like” history, or when examining the risk of carrying a specific vehicle. It does not, however, eliminate the importance in analyzing your own inventory first.

Perfect Stock vs. Overstock: Don’t Buy 80 Pounds of Salmon

Think about used car inventory like a specialty fish market. Let’s say you sell 40 pounds of salmon each day. Like clockwork, by the end of each day, you sell out of your stock of 40 pounds of delicious salmon to your satisfied customers. Would you go out and buy 80 pounds of salmon to restock for the next day? No. Your RISK of spoilage and loss of capital would be too high. Instead, you might try 50 pounds and see what happens. You are limiting your risk. If 50 pounds sold out that day, you could increase it slowly to meet the demand.

As good as salmon sales are, you know that you need to expand your business, and a few of your customers tell you that they like tuna. Your employees have also done a good job of keeping track of your missed opportunities, most of which point to tuna as well. So you go out and buy 10 pounds of tuna, and you sell it. The next day you happily replace it and add a bit more. Congratulations! You have now grown your business through a balanced approach to stocking.

But there is a small problem: Your fish market is located between two meat markets, and they sell a pretty large volume of meat. You think that maybe you can get in on the popularity of meat, and you buy 20 pounds for your fish store, stock it and watch the vast majority of your customers ignore the meat and buy fish. The meat gets old and you end up selling it for 25 percent of your original investment.

Too Much of a Good Thing

The fish market story teaches us that too much of a good thing can lead to spoilage and loss – and that relying just on what your market is selling is a dangerous experiment. The responsible approach to growing sales with profitability demands that a product have strong DMS integration, with a detailed view of the dealership, the dealer group and the market view to help determine what vehicles are best to help foster growth – with profitability. The Inventory+ platform does exactly that by giving dealers a 360 degree view of the market – and delivering recommendations on how to balance growth with risk.

Good Selling!

Wholesale Vehicle Acquisition: No FEE Inventory

By | Appraising, DealerSocket Inventory, Merchandising, Pricing, Stocking and Sourcing | No Comments

The wholesale business for your vehicles can be a reliable revenue generator for your dealership.
In our last post, we offered some helpful tips on helping you with wholesale vehicle disposition and getting more eyes on your inventory. Today, we discuss how you can acquire vehicles for no fee using existing resources and a bit of creativity.
When it comes to vehicle acquisition, it all begins in the service line. Your service advisors can be trained to “recognize” popular vehicles for wholesale, and evaluate and appraise vehicles right in the service line. Management can also offer spiffs or bonuses to service personnel who successfully hand-off a customer opportunity that results in a sale to the Sales Department.
The majority of your vehicle acquisition (between 50-60 percent) should come from appraisals and trade-ins, saving your dealership significant costs and fees. To offer a fair trade-in value for both the dealer and consumer, you’ll need the right combination of the latest 360 degree data insight and processes in place, including standard drive and evaluation, and vehicle walk-around procedures.
Another cost-saving way to acquire the vehicles that you need is to canvas your CRM system. By spending an hour or two a week, you can uncover a few hidden trade-in gems from your open leads and existing customer information within the CRM.
To get creative, you can even advertise a free appraisal service in local newspapers, television or radio, and on your website to help drive traffic into your dealership. Or, you can even take this further by hosting off-site “Free Appraisal” events at local malls, credit unions and banks, as well as Classic Car events, among other venues.
As you can see from last week and this week’s posts, by using proven acquisition, disposition, reporting and management strategies and techniques, and a bit of creativity, dealers can transform their wholesale businesses to deliver consistent, long-term bottom-line results.
Please let us know if you think our vehicle disposition and acquisition tips can help your wholesale business performance.

Wholesale Vehicle Disposition: More Eyes = Higher Sale Prices

By | DealerSocket Inventory, Merchandising, Pricing | No Comments

Improving the wholesale performance of your vehicle inventory can be the key to whether or not your dealership thrives in today’s marketplace.

With a little bit of knowledge about your business, the local market and vehicle disposition and acquisition, you can turn your wholesale business into a consistent six-figure revenue generator for your dealership or dealer group.

However, before ever jumping into the wholesale market and you begin disposing and acquiring vehicles, you’ll need to thoroughly understand your dealership’s ability to sell particular vehicles, the local market’s interest in and need for specific vehicles and the dealership’s plan for acquiring and selling the most sought-after and profitable vehicles.

Here, in the first of two posts on wholesale profits, we offer a few tips on getting more eyes on your vehicles for achieving maximum profits for your dealership.

To start, you’ll need to work closely with your auction partner to review and compare past performances with industry and market data. This will help you identify areas that need improvement and to set realistic goals. When reviewing these reports provided by your auction partner, for example, you’ll need to look at several key performance indicators including:

Retention Percentage (95 or better)
Auction/Region/Like Dealers
Conversion Rates (80 or better)
Average Badge Count in Lane (1 to 1 ratio)
On-Line Attendance (4 to 1)
Unique Bidder (2.5 per)
Average Number of Bids (5 per)

Once you get into the auction lane, it is all about presenting the highest quality vehicles possible, positioning “absolute seller” vehicles strategically within your presentation line-up and not presenting any “Reruns” or previously shown vehicles.

In addition, to get more eyes on and generate interest in your vehicles, you’ll need to merchandise the vehicle online three to four days prior to the auction sale to give potential buyers at least 24-48 hours of pre-sale viewing. You’ll also need to present online a comprehensive condition report either from the auction provider, a third-party or yourself, as well as six-to-eight exterior and two-to-four interior pictures.

Finally, on disposition, you’ll need to take a 360 degree view of your inventory and the market to report on and analyze your sales and market data in order to capitalize on your inventory and market demand for the long-term. For example, reviewing Weekly Buyer Reports for your dealership and the local market in Sales Meetings is a must and will help you make adjustments to tactics for disposing of vehicles efficiently and profitably.

Please join us for the second part of our discussion on Wholesale Profits – the Vehicle Acquisition – here next week.

The Best Kept Secret to Inventory Success: The Individualized Vehicle Plan

By | Automotive News, DealerSocket Inventory, News | No Comments

Inventory Management – A Short History

In the early days, as dealers, we were taught that all vehicles in inventory should be stocked, bucketed, spiffed and priced, and when it hits the ripe old age of 60 or 90 days old, the vehicle should be sent to auction or sold cheap only to have the same process repeated over and over again.

The problem? We took wholesale losses and didn’t grow our volume quickly enough in our fast moving high probability sales, as we were weighted down with the “wrong stuff” or unsellable vehicles.

Some industry experts would tell you that you should price your vehicles in “the bottom three,” creating a “race to the bottom.” But this simplistic approach leaves three critical questions unanswered:

1. How do you create the opportunities to take advantage of high-profit situation or scenarios?

2. Does every vehicle have a reasonable probability of sale on every lot, for every dealer?

3. If the probability of a vehicle sale does vary from lot to lot, shouldn’t the vehicle pricing reflect the probability of a sale?

It’s 2014, and those of us who lived through the Used Car Crash of 2008 know what happens when we have the “wrong stuff” in our inventory. We were educated that having the right amount of the “right stuff” leads to profitability and growth in our dealership while, at the same time, we also learned that regardless of how “cheap” you price, not every vehicle will sell on every lot.

The Best Dealers have a Plan

I have had the honor and privilege to work with some of the most profitable and highest volume dealers in the country. From Domestic to Import to Luxury, they all have something in common. These A+ dealers create an “out” strategy for each vehicle that they stock at the time. They limit their risk, price their vehicles uniquely according to probability of sale, and don’t get emotionally attached to their inventory. How do we GROW sales and profit while reducing risk? The answer is IVP.

The “Individualized Vehicle Plan” or IVP looks at your inventory differently. With an IVP, you categorize each vehicle in your inventory in one of five distinct categories.

In Brand – Commodity / Off Rental
In Brand – Unique / High Content
Off Brand – Commodity
Off Brand – Unique / High Content
High ROI – Cash Car

Each category behaves differently on a dealer’s lot and each should be priced differently. In addition, inventory within these categories should be held for different periods of time.

For example, Category 1 (In Brand – Commodity / Off Rental) vehicles in today’s 2014 marketplace are plentiful. These cars and trucks can typically be bought at volume at a LOWER price today than you paid yesterday. With this in mind, price Category 1 vehicles towards the bottom end of the curve, carry a lower days supply, and turn…turn…turn.

Now, let’s look at a Category 2 (In Brand – Unique) vehicles, such as a Ford F150 Lariat 4×4 with navigation and low miles. If you are going to take risk, this is a great vehicle to do it on. This vehicle is a “money-maker” and should be priced accordingly. Not only does this type of vehicle have a high probability of sale, but it also a high probability of above average profit.

IVP Success Stories

With a well-thought out IVP, monthly sales can improve dramatically. Currently, there is the major metro dealer that doubled his sales from 150 to 300 per month by simply taking an IVP approach. He will tell you that it’s all about understanding how each vehicle “fits” into the inventory that has made the difference. He has even added codes for each category into his DMS to further simplify the process.

Another example is a third-generation, small town Ford dealer who struggled for years with growing sales and profitability. “Experts” kept telling him to stock Altimas on his Ford lot, which resulted in significant wholesale losses. Fortunately, using Inventory+, we helped him put in place an IVP process in his dealership. Six months later, the dealer yields a 550 percent increase in variable Net profit on a 200 percent increase in volume. Even better, we are working to apply the IVP concept to new cars as well.

Technology Helps Create a Market-Ready IVP

Technology and data have merged to give dealers decision engines that help the dealer recognize profitability early on in the sales life cycle. Inventory+ and its Profit-Per-Day pricing engine delivers a 3600 market view to empower dealers to both find new profits and mitigate risk, just like IVP. Click here to learn how you can start increasing your Dealer’s Net Profit!

Good Selling!

Get More Views. Get More Leads. Get the Most Out of ebay – Dealer Profile

By | eBay Motors | No Comments

Are you getting the most exposure for your inventory and generating as many quality leads as possible?

Listing on ebay Motors with the help of a trusted partner could be the answer for your dealership.

Many dealers are missing out on the opportunity to get more sales by not listing on ebay® Motors. Potential customers are taking advantage of ebay to find great deals by viewing or actively bidding on the vehicle of their choice.

With an experienced partner like Inventory+ and our dedicated ebay consultants, your dealership can get in front of these buyers better than ever before.

For those dealers who have not tried ebay’s program, they the numbers to prove their effectiveness:

ebay Motors is the number one automotive destination online*
A passenger vehicle is sold every two minutes**
Over 5 million vehicles have sold to date**
ebay has 128 million active users and can expand your exposure

ebay Motors and Inventory+ have helped dealers like Colin Bailey and Chris Slaydon of Vernon Auto Group grow from a small, local dealer to a successful, profitable dealer with an increasing national presence.

Vernon Auto Group—A Texas-Sized ebay Success Story

Vernon Auto Group originally started as a local dealer of used diesel trucks and in five short years has grown and expanded their exposure and reach nationally. With the help of our inventory management tools and ebay Motors, the Texas-based group is now shipping hundreds of new and used vehicles across the country.

“For us, ebay is an exposure tool. We know, without a shadow of doubt, that the more exposure we get on ebay, the more general exposure—and more lead activity—we get from a broader Internet marketplace,” said Colin Bailey, owner and president, Vernon Auto Group, in a recent post on the ebay for Business Blog. “When we list on ebay, it’s only a matter of time before we see those listings showing up in Google search results— often near the top of the page. And I can’t tell you how much that’s worth.”

Using a robust inventory management system, such as Inventory+, makes the listing process quick and easy, regardless of your knowledge level. Once your defaults are set up, sending to and listing on ebay Motors is just a couple of clicks away.

And, with a trusted team of ebay consultants, who are available complimentary as part of the Inventory+ solution, there should be no misgivings about trying it out. Working with an experienced ebay consultant can help you to:

Optimize and set up how your listings will display on ebay to produce successful leads.

Skillfully manage your ebay marketing with custom banners, SEO-optimized listings, template designs and more.

Use ebay Local Market as an effective inventory marketing tool to drive retail traffic to your dealership.

Chris Slaydon, Director of eBusiness for Vernon Auto Group, stated on the ebay blog, “ebay is the place shoppers go at some point in their journey to explore the market, especially when it comes to vehicle purchase. So just listing on ebay gives us outstanding visibility in the general search space. Our advice to other dealers is: don’t get wrapped up in the mindset of ‘ebay is only worthwhile for direct ROI.’ No way. Connect the dots to get the bigger picture, and you’ll see how valuable listing on ebay is to your overall Internet sales, because of the exposure you get on search engines like Google.”

Please share with us how your dealership is using your inventory management tools to capture hot leads and expand your market presence, just like Vernon Auto Group has done through Inventory+ and ebay Motors.