Strategic Game Plan for Managing Used Vehicle Inventories

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].

 

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