Data, Efficiency, and Process Will Be Key to Used Vehicle Acquisition in 2021
Part I - Supply, Uncertainty, Data, Efficiency, and Expenses
While Martin Luther King Jr. Day is statistically the best time to buy a used car, four of the other top 10 times to buy a used car, according to studies by iSeeCars, are in December and January, two days of which lie between Christmas Eve and New Year’s Day.
The question is...will this year’s Covid economy prove any different?
For dealers - franchise and independent, the used car market is effectively a stock market. The money you put down on a used vehicle, no matter where it comes from, is like a deposit slip.
And in today’s wholesale market, you can’t, according to David Long from Hansel Auto Group, “underpay for the wrong car or overpay for the right one.”
“It’s just about using the data to make good decisions,” says Long, “and if you do then you will come out on top.”
How does David and his team come out on top?
For him, it's all about efficiency, he says. There was a time when David’s dealer group would carry 800 used cars and they were plentiful and would buy them and turn them to operate thee business with great return and low margins.
“Today that's just not the case,” Long states. It's so difficult to get vehicles at auction, he says, that they have been forced to get hyper focused on their vehicle acquisition strategy through private parties, trade efficiency, and through owner-based marketing.
“We have found that even though our inventory levels are low, our profit levels are as high as they’ve ever been,” explains Long, “and I really believe that's because of the pivot we’ve made and realizing how difficult it is to buy a car, price it below the market, and be profitable.”
Supply has almost undisputedly been the greater obstacle for many dealers this half of the year. Between the Covid economy and the national elections there remains a lot of uncertainty. And as Jeff Dantzler explains the last thing you want to do is be in a supply issue with uncertainty.
Mr. Dantzler is the General Manager of Manly Automotive Group in California.
“Just like I was talking about buyers and their psychology, we need to pay attention to our own psychology,” Dantzler says, “and not get ahead of ourselves and think ‘hey we're selling everything we're buying so just go out there and buy buy buy’ and not look at things like the data and being conservative enough.”
Dantzler goes on to say, “Let’s not forget that if we need cars and they are there then guess what, we buy them.”
This is the end of Part I in a two-part series. Come back next week for the second part...
Part II - Wholesale Danger Zones and Your Sales-to-Service Ratio
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