Pub. 7 2017 Issue 2

11 Why these three questions? They are the key to improving the profitability of your used-vehicle sales. For most dealers, the number of cars being sold is fine in terms of volume. What are the problems? 1. The number of cars that leave the lot. 2. The gross profit for each retail sale. Why are these problems? Since dealers are focusing on easy sales (cars that are new or almost new), they are not maintaining a used vehicle inventory that would draw a broader range of potential buyers. In other words, they are not really in the used car business anymore. How can you counteract the tendency toward focusing too much on the easy sale? • Pay attention to the average cost of inventory. You want it to go down, not up. That will cause you to get lower-cost inventory that is also slightly older than the CPO inventory. Why? You can sell vehicles to a broader range of people. Faster retail sales for less desirable vehicles complements slower retail sales for more desirable (but also more expensive) factory CPO vehicles. One way to determine the supply and demand for specific cars is to calculate Dale Pollak’s market days supply. • Pay close attention to trade-in opportunities. The best appraisers keep the Cost to Market ratio at about 80 percent or less; that helps them achieve look-to-book ratios of 50 percent or more. They also record apprais- als so they have accurate performance data. These two practices help dealerships balance the needs of their new and used departments and it also pushes dealers toward having a more varied inventory. • Maximize gross income by selling used cars quickly. Margins are compressing, the market is volatile, and the retail shelf life for used vehicles is shorter than it used to be. What does Dale Pollak recommend? He thinks dealers should keep at least 55 per cent of used vehicle inventories at less than 30 days of age. How do you calculate the market days supply? This can be done by looking at the number of identical vehicles with the same year, make, model, trim level, and so on, and de- termining what the daily retail sales rate was over 45 days. Dale Pollak recommends having an entire used inventory with a market days supply of 70. That pretty much guarantees a well-balance inventory consisting of a good mix of highly desirable and less desirable vehicles. These three recommendations are not easy to implement, and they won’t result in huge improvements overnight. What they will do, however, is help managers, buyers, and others within used vehicle departments to implement best practices that will develop the discipline and consistency essential to long-term success. In today’s competitivemarket, isn’t that what you reallywant?  BE UNSTOPPABLE WITH FEWER CLICKS AND FEWER STEPS A STREAMLINED FINANCING PROCESS. THAT’S THE POWER OF CUDL. The CUDL platform gives dealers a faster, more e cient financing experience. The interface is intuitive and easy-to-use, delivering more critical data—from pre-approvals to real-time financing decisions and more—with fewer clicks. Plus, our DMS integration now includes an expanded list of DMS and F&I vendors to speed up the customer experience and get you to “yes” faster than ever before. CUDL.com | (877) 744-2835