Are franchise dealers sourcing used vehicles these days from a decreasing pool of the right cars? If so, where can dealers go to better source the right kind of vehicles for their dealerships?
In a recent industry article, author Jim Leman spells out three ways that dealers can help ensure wholesale sourcing dependability:
- Stop stocking up
- Pinpoint your best sellers
- Leverage digital sources
In the article, Leman explains that dealers who have sharpened their trade appraisal skills and strategies are treating trades differently these days. Many times, he says, dealers are loosening on trade to ensure they acquire the vehicle to generate downstream revenue from recon parts as well as from labor and the vehicle’s retail resale that drives F&I profits and ongoing service dollars.
Savvy dealers are utilizing any and all of these strategies to keep their inventory flowing — but many franchise dealers, Leman states, are sourcing from a decreasing pool of the right kinds of cars.
In a recent conversation with retired auto exec Gary Wade about sourcing wholesale vehicles this Spring, Wade shares with us his insights on the article and this time of year. Here is a preview...
“I think dealers really have to be a little cautious right now,” explains Wade. “One, did they carry too much inventory into February and March, expecting a stronger February-March used retail car sales, and then having some aged inventory sitting around that could bite out the profit margins pretty substantially because it’s getting time.”
Wade also points out that rental cars and commodity cars are always available, especially coming off of this time of year.
“Don't get caught up in those,” he says, “as they compete with your new cars so dramatically price wise.”
Wade suggests that everything everyone is looking for is that 3 year and older lower miles vehicle that is worth its weight in gold. A 4-5 year old unit with 65-85k miles that they can retail in a $10-12 grand price range.
If you're looking to go after those units in the future then really need to trim down right now.
About this Video
This video represents only a few highlights from the original conversation that took place in April 2019 as part of the monthly Used Car Marketing Webcast Series brought to you by Vehicle Acquisition Network.
If you're interested in participating in the webcast series, either as a panelist or an attendee, follow this link to register with the series.