By Dale Pollak
There’s a direct correlation between the severity of a sourcing problem at a dealership and the degree to which the used vehicle manager deploys technology and tools to help find and source the vehicles. Likewise, sourcing vehicles is more challenging at dealerships where used vehicle managers fail to regard their inventory management as “provisioning,” or the accounting of market supply, demand and sales dynamics when they opt to acquire vehicles.
Used vehicle managers who take a “provisioning” mentality have a precise vision for the vehicles they should pursue and the wholesale prices they should pay. This gives them a razor-sharp focus as they use technology and tools to efficiently source the vehicles at online and other auctions.
There are three basic questions that provide the foundation for “provisioning:”
- What are the “right” cars for my store? The possibilities here should not be limited by the biases and emotions of a used vehicle manager. If you’re a Ford dealer, there’s no reason not to sell Buicks or Hyundais if they make sense for your market. Today, it’s essential to know every vehicle that makes sense, down to the make, model, trim and options configurations, and pick those that are “right” for you. This means having a firm handle on real-time data on all the vehicles consumers are shopping for and buying in your market area, not just at your dealership.
- What should I pay for the “right” cars? The answer to this question flows from knowing a) the retail price a dealership can reasonably expect to receive for the vehicle; b) the gross profit objective they’d like to meet when they sell to a customer; and, c) the likely costs associated with reconditioning, transportation, time in inventory and other variables. Tradition-minded used vehicle managers typically don’t think this way. Today, however, it’s a necessity for tech-savvy used vehicle managers to view every potential wholesale acquisition from a retail perspective and reverse-engineer the deal to derive an astute wholesale purchase price.
- Where can I get the “right” cars? This is where today’s technology really shines and provides unprecedented assistance to make vehicle sourcing easier. Imagine this: It’s noon and the used vehicle manager’s out to lunch. However, earlier in the day, he/she instructed the store’s inventory management system to find X vehicle at Y price. The system scours the run sheets at online and physical auctions, finds the unit at the “right” condition and price parameters, makes the purchase and initiates transportation to a dealership. When the used vehicle manager returns, the vehicle’s “on the way” and he/she can move on to the next task.
Dale Pollak, founder of vAuto, Inc, can be reached at 630.343.9016, or reach him at [email protected].