Used Vehicles — Changes Made During Recession Paying Off

As the fog starts to clear from the Great Reces­sion, deal­ers are shar­ing some of their lessons learned in the used car space. New car sales grabbed most of the atten­tion last year, but sales of pre­vi­ous­ly owned vehi­cles and trade-ins are gain­ing sig­nif­i­cance for fran­chised deal­ers – .

Phil Long Deal­er­ships in Col­orado Springs, Colo., has over­hauled its used-vehi­cle depart­ment in recent years. Trad­ing used vehi­cles among the 19 deal­er­ships start­ed up in 2009 – and that reduced used-vehi­cle inven­to­ry from 60 to 30 days. Any car that sat on the lot longer than 60 days has been sent straight to an auc­tion.

Used vehi­cles have gone in impor­tance – Phil Long is now No. 66 in used-vehi­cle sales and No. 118 in new vehi­cle sales in the US. Used vehi­cles increased 11% in sales last year to 8,529 units sold; through mid-March of this year, used vehi­cle sales were up around 30% to 1,200 sold.

The reces­sion taught the staff some valu­able lessons – cash was think and assets had to be man­aged bet­ter. The cars were fresh­er, the inven­to­ry had more siz­zle, and man­agers were more account­able, accord­ing to Mike Cimi­no, vice pres­i­dent of Phil Long Deal­er­ships.

The big players - top five used car dealers in 2013

Ger­main Motor Co. in Colum­bus, Ohio, found that retain­ing best prac­tices devel­oped dur­ing the reces­sion helped increase used-vehi­cle sales last year by 16%, to 8,853.

CEO Steve Ger­main said he start­ed using a used-vehi­cle inven­to­ry man­age­ment tool has helped deter­mine what vehi­cles to stock and how to price them. Cre­at­ing an effi­cient used-vehi­cle oper­a­tions helps new-vehi­cle cus­tomers get more trade-ins. That was a big part of increas­ing new vehi­cle sales 24% last year, Ger­main said.

Ger­main Motor Co. is also see­ing strong returns in used vehi­cles sales – the group is ranked No. 36 in used vehi­cle sales, and No. 83 in new vehi­cle sales. Chang­ing their way of think­ing has shown strong results for the deal­er group – the reces­sion made every­body a lit­tle bit smarter in max­i­miz­ing oppor­tu­ni­ties in fixed oper­a­tions and used cars, he said. These days, 75% to 80% of Ger­main Motor Co.’s new vehi­cle cus­tomers have a trade-in.





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