In this VAN University best practices webinar, we address the matter of disposition, that is, where and how you will dispose of the inventory you bring in. If you know your disposition strategy beforehand then you can yield more opportunities and more profit. Therefore, you must begin with the end in mind.
When you’re acquiring cars from consumers, there is less room for error. For one, if there is no front-end deal contingent on the customer purchasing a vehicle from you, then this poses several different challenges that must be considered. You can’t just offer up a wholesale value.
Why Not Use Auction or Book Value?
There are three reasons you can’t simply offer up a wholesale value:
1) It’s not a trade
When there is no trade then there is no front-end deal in contingency, which is often a good bargaining chip. With no trade, there is no deal gross or F&I profit.
2) Lower offers have consequences
Holding back on low offers leads to fewer acquisitions which results in fewer units in operation and fewer opportunities to convert to sales and service business.
3) Selective acquisition limits opportunities
Selective acquisition limits opportunities and imposes personal preferences. This can be a turn-off for customers and like holding back, it will lead to fewer acquisitions.
Knowing your market and knowing your retail strategy is essential. You have the best chance driving profit when sold at retail, but if you know that’s not realistic then you want to strategize around dealer-to-dealer trades and auctions. Releasing to a wholesaler should be your last option.
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