Earlier this year, we predicted used auto sales would continue to climb as they have for the past decade and 2019 has, so far, proven this to be true.
While there's been plenty of doom-and-gloom predictions about this trend, this actually proves to be an amazing opportunity for dealerships to capitalize on buyer trends and carve out a huge profit this year!
With that said, we'll dive right into a few tips and tricks you need to know to make more money on your used car sales.
1. Know Your Risks When Acquiring Used Vehicles
Train your sales team to know how to properly assess trade-ins and auction stock. Identifying the retail potential in a vehicle is a true mark of a quality dealership.
Evaluate heavily based on these 3 criteria:
- Depreciation Rate
- Make & Model Value
- Current Market Trends vs. Vehicle Type
2. Be Careful With Auction Acquisitions
Studies show that auction stock doesn't carry the same retail value as new vehicles or trade-ins. Therefore, when you head to the auctions, make sure you're weighing your risks and rewards with each vehicle.
Just because it's a premium brand doesn't mean you'll be able to get a substantial return for it. Evaluate each vehicle closely as a great dealership should, and bid on what you know will flip for a higher profit margin.
3. Minimize Your Average Days In Inventory
You'll likely find the used vehicles you sell after they've been in your inventory for at least 1 month receive a much lower ROI than those selling quickly. A simple study of your used vehicle days-in-inventory (DII) contrasted to the profit made on used sales can tell you that.
My advice is to press sales on used vehicles nearing that 30 day margin and then flip that profit onto other high-potential vehicles to maximize ROI. A good goal is to keep 50-55% of your used vehicle inventory less than 30 days old.
This helps ensure you're making the most money from your used vehicles, and keep a fresh rotation of stock for your buyers.
4. Source More Trade-Ins
The focus of your used vehicle acquisition should be on trade-ins, not auctions. While you can get gems out of both, it's wise to focus on trade-ins since they typically carry a higher retail value than auction vehicles, and, therefore, a higher profit for your dealership.
5. Emphasize Your Transparency
With more and more buyers doing hours of online research prior to visiting your dealership, you need to ensure your sales team emphasizes their transparency with prices.
Odds are, your dealership is transparent with its prices, but buyers are skeptical. They want to be shown that they're getting the prices they've researched. Ensure your online prices line up with your sales team
Focus on these key tips to ensure your 2019 is your best year yet!
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