Since the return back to work in June, car dealers are enjoying high levels of used car activity attracting enquiries from existing customers as well as new customers, some of whom are looking for mobility in order to avoid public transport. Add to this the customers who have decided not to go on holiday this year, but to spend their saved holiday money on a car upgrade and you have a buoyant used car market.
Whilst this is good news for dealers it places them under pressure to replenish stocks promptly and get them to market as quickly as possible. Prices are inevitably rising for prime retail cars and as a consequence, limiting available margins.
There is also a widespread concern that once the pent up demand is met used car enquiries will start to dry up and dealers could find themselves with ageing, overpriced stock. It is therefore imperative that dealers manage stocks as efficiently as possible in order to drive the fastest possible stock turn.
Do you know what you used car prep time really is?
A key fact to establish is your current stock turn. What is your average number of days in stock? Most dealer management systems can provide this information readily and many dealers will be happy with an average of around 45 days. Given that most will operate an overage policy of 90 days this would seem reasonable. However, the used cars that achieve the highest retained margins are sold within 20 days. Everyone knows that the longer the car sits in stock the greater the level of depreciation and therefore the smaller the retained margin. Whilst the 45-day average turn may be acceptable, it is less than optimal.
So how could you optimise your average stock turn?
Dealers who are accepting of their 45-day turn may not consider how long it takes to bring an acquired stock car to market. From the point of purchase the clock is ticking. The new stock car needs to be assessed for reconditioning work including workshop, bodyshop and smart repair. After the work is completed it needs valeting and photographing before being uploaded onto your website where it finally has visibility. How long does this process take in your business? Our experience tells us that many dealers do not know, and their best guess tends to be wildly inaccurate. Sales Managers can be accepting of delays in the workshop where Service Managers are prioritising retail work and saving sales work until the retail work dries up. Valeting is often stretched when a call to your contractor could provide additional temporary resource through busy periods. Some dealers wait a week before new stock is photographed.
How does this translate into making more profit from your used car sales?
Clearly, if these bottlenecks were identified and processes changed to address the issues the days to market would reduce significantly. If a dealer was achieving a 7-day turnaround from 20 days it represents a 65% improvement. That means the car is visible faster, sells faster and sells for a more optimal profit. Furthermore, it frees up capital faster allowing you to buy more stock which means greater unit sales, workshop sales, add on products and finance.
Of course, the ability to identify these areas of inefficiency demands management time and effort but what if there were a system which allowed the manager to monitor the progress of his stock prior to display? Each area of the process analysed remotely from their desktop? A simple telephone call to establish the problem and the solution? Dealers don’t need to go to “prep” school to find the answer, they need a simple, cost-effective software installation that tracks every element of a car’s preparation.
If you would like to know more about how MotorVise can optimise your used car prep time and substantially improve your profitability please call us now, or visit our Vehicle Progressor pages.