Used cars parked

Do Used Car Customers Buy Old Cars? We Have The Answer.

Are you a dealership that automatically wholesales out all trade-ins more than three or four years old? You may want to reconsider. Why? Because you might be ignoring a large sector of the used car buying public.

If you’re like most dealers, you sell significantly more used vehicles than new cars, and the current market conditions are likely to continue that trend. A huge number of off-lease vehicles turning over, combined with a decline in household spending, is driving more interest in used cars among buyers nationwide. Are you paying enough attention to your dealership’s reconditioning and remarketing operation?

What can we learn from the last 600,00 auto loan inquiries? In a recent study by LendingTree, more than 600,000 auto loan queries were studied in over 100 popular metropolitan areas, and they found that the average age of a used car people sought to finance was about five years old. The data set was limited to inquiries submitted in 2019 for cars and light trucks with model years older than 2019.

That may be shocking to most dealers who may not consider a five-year-old car for anything other than the “under nine grand land” which tends to just exist as a small backlot for a handful of cars that are clean enough to resell. 

Geography does matter, though. This trend could be a combination of different economies, regionally and stricter inspections and registration laws. But the spread of those who purchased newer used cars and those who purchased older used cars is pretty scattered.

Residents of Spokane, Washington, purchased the oldest used cars with an average age of at least 7.66 years.

Facts about metros that buy the oldest cars

1.    Spokane, Washington is the metro area that sought financing for the oldest cars, with 7.66 years old on average. 

2.    Wichita, Kansas came in second with car buyers here seeking loans for cars just under seven years old.

3.    Ogden, Utah ranked third nationally for those seeking to buy the oldest cars, with an average age of 6.80.

4.    More southern cities joined the top 10 this year, including Knoxville and Chattanooga, Tennessee, and Greenville, South Carolina.

5.    Across the board, the average age of vehicles for which people are seeking financing has dropped from 6 years in 2018 to 5.34.

6.    Colorado Springs residents finance cars with an average age of 6.63 years old.

Facts about places that buy the newest used cars

1.    San Jose, California buys the newest of the used cars, with an average age of 3.54 years.

2.    Miami, Florida is in second place with an average age of just under four years old. 

3.    Orlando, Florida’s average used car purchase age, is just slightly under five years old.

4.    San Francisco sought loans for cars with an average age of 4.03 years 

5.    Los Angeles and Oxnard California stand at 4.42 and 4.67 years, respectively.

6.    On the East Coast, Washington D.C. to Boston largely sought newer used cars.

7.    New York residents buy used cars with an average age of 4.04 years.

8.    Texas residents financed used vehicles with an average age of 4.14 years old

In cities where buyers preferred newer used cars, the cars average 4.12 years younger than the ones purchased by buyers in the places that buy the oldest used cars. This is an interesting statistic, and one worth watching to identify shifts in markets. 

So what can we learn from this? As more and more car buyers turn to used cars, it could help grow sales to be aware of the ages of cars that people finance in your area. Clean and quality units still exist out there, and it may make sense to have your buyers experiment with different years to see if it holds true in your municipality.

Regardless of the average age of used cars you sell, they all need attention to make them frontline-ready as efficiently as possible. We can help with that. Contact us to learn how we can reduce your costs and increase your margins on used cars.

Used cars on dealer lot

5 Tips For Operating A Successful Used Car Business

Running a business can be both an exciting and challenging time, and used cars are an increasingly popular choice among consumers. According to Auto Remarketing Magazine, over 40 million used cars were sold last year. Despite the challenges of the global pandemic, the used car market in the US continues to be robust, and many are forecasting an increase in sales as consumers avoid public and group transportation. 

So, how do you operate a used car business that’s built for success? Do you have enough space for displaying your cars? Are you near any other dealerships to get more customers? All these and more are things to consider when starting a used car business. The following are five tips for operating a successful used car business: 

1) Find Your Niche 

You’ve decided to sell used cars at your dealership, but do you know exactly which type? Finding your niche will help you stand out among other dealerships in your area and could increase your chance of success. You could have a used vintage dealership, a used luxury dealership, or maybe even specialize in used trucks and SUVs. The possibilities are endless! Do your homework, decide on the type of vehicles you want to offer, and calculate the volumes and margins you will need to turn a profit.

2) Ready Vehicles 

Selling used cars at a dealership doesn’t mean just slapping an “as-is” sticker on the window. Each one of the vehicles in your inventory should have proper maintenance and thorough inspection. Any repairs that need to be made must be documented and kept on file. You need to invest in an efficient reconditioning process to make your vehicles presentable on the lot. 

3)  Offer Warranties

A lot of people coming to used car dealerships might think the available cars are “what you see is what you get,” and “what you can’t see may come back to bite you.” This is why it’s essential to offer some warranty options for customers. It provides them with a bit of a safety net, you with incremental revenue, and can increase the chance of them purchasing at your dealership. 

4)  Customer Service 

Customer service is part of the car buying experience at a new car dealership, and it can be an important differentiator at your used car dealership. Provide your customers with a CARFAX or AutoCheck.com report or a free vehicle identification number (VIN) report. The more information you can provide about the car’s condition and service history, the better. Providing the honest data will show your customers that you respect their desire to know more about the vehicle and that you’re able to assist them in the process. 

Another way to show excellent customer service is to follow up any sale with a “thank you” email or a phone call. It’s a great way to show that you weren’t helpful to them solely for the purchase of their car. Doubling down on customer service will pay back in referrals and repeat purchasers.

5)  Location, location, location 

Unless you are ready to compete in the growing virtual dealerships arena, all of these tips won’t matter if you don’t choose the right location for your used car dealership. Do you have enough space to display your cars on the lot and have a place to store vehicles if there isn’t any space left? Is there enough office space for you and your team? Is there a service department area for repairs? How close or far away is your dealership to others in the area? It might come as a surprise to you that being closer in proximity to other dealers increases your chance of drawing in more customers.

If your passion for automobiles is strong enough to drive you to help others find the right vehicle for them, running a used car operation can be both fulfilling and rewarding. The tips above will help get you started on your way.

auto reconditioning center entrance

OEMs Prioritize Service Parts, and So Should You

With new vehicle sales well below last year’s numbers, and in anticipation of continued soft new car sales this year, OEMs are pinning their hopes on providing parts to keep their vehicles on the road and promote their brands to customers.

May vehicle sales are about a third below the previous year and, although that is an improvement from April’s trough, it informs models that predict a loss of more than 1.5 million retail sales in 2020. It’s in the OEM’s interest to ensure that the ownership experience for their brands continues to be positive, and that means keeping supplies of service parts flowing through the supply chain.

For repair services and reconditioning operations, this is a cue to examine the efficiency of your parts pipeline and operation. What parts do you keep in your on-hand inventory, and how long does it take to acquire ordered parts? Is there a gap between when a part requirement is identified and when it gets ordered? And how long do vehicles wait for ordered parts to arrive?

AMT‘s reconditioning management systems include parts integration so that as soon as a needed part is identified, the system can either auto-approve or escalate the request for management approval. The approved part can be ordered right within the software from a list of popular suppliers or from your internal inventory. All stakeholders have visibility into parts on order and expected arrival to keep your operation running efficiently and reduce cycle-time. We’ll be adding a Parts Inventory Module in August 2020 to complete your 360-degree view of reconditioning and fixed operations our software provides.

To learn more or schedule a demo, contact us.

Used cars parked

Empathy, Cooperation are Key to Industry Restart

How to restart an industry? Work together as an industry!

New and Pre-owned Sales

Dealers Calling for Inventory

Early signs of a resurgence in used car buying are waking up the industry from its pandemic-induced doldrums. We’ve heard from two large clients in the past few days that auction prices are higher than anticipated as dealers across the country seek to increase their inventories. This flies in the face of earlier reports of a glut of used cars and an avalanche of off-lease vehicles coming down the pipe.

It seems counterintuitive. The Hertz bankruptcy will result in much of their fleet offered for resale. Several municipalities are reducing their budgets by cancelling orders for new fleet vehicles and shifting to more vehicle-sharing models in order to reduce the size of their fleets. The combination of fleet liquidations and lease returns should mean ample inventory for the used car market. We shouldn’t have a shortage of used cars available to dealerships.

What we may have is a supply chain issue. With social distancing restrictions still in place, many auction lots remain closed or diminished for live auctions. Online auctions are available, but may be inadequate to the task of moving the volumes required. Also, automakers and their finance arms are reportedly trying to slow the off-lease vehicle transactions to avoid flooding the market. KAR Global is buying land to hold vehicles for their better customers. These factors may be keeping wholesale prices high and putting a squeeze on dealerships trying to make up for 3 months of scant business. 

While the recent uptick in used car sales is a hopeful and promising sign, it’s too soon to call recovery. The economic impact of millions of Americans unemployed is yet to be fully understood. Previous down economies have increased used car sales at the expense of new, and franchise dealers are trying to expand their used inventories, partly because of manufacturing delays, and partly in anticipation of reduced interest in new cars.

This appears to be just another peak in what promises to continue to be a bumpy road to recovery.

Hertz, Thrifty and Dollar rental car logos

The Hertz Effect on Vehicle Sales

With the bankruptcy of Hertz Global Holdings, Inc., there will soon be an extraordinary volume of vehicles on offer, creating a bulge in a pipeline already constricted by the global pandemic. Hertz, down to their last billion dollars, will need to accelerate the rotation of their inventory as a cash resource to replace missing revenue from their operations.  Reported volume estimates predict vehicle counts in the hundreds of thousands.

In order to expedite this process, Hertz will be unable to move this volume through its branded sales operations, and will need to dispose of most of their vehicles through other means. Auctions would be the traditional mechanism, but ADESA and Manheim and many smaller auction houses are still at reduced capacity due to health and safety restrictions in many geographies. Hertz, or the court, will need to orchestrate direct sales to dealerships in order to liquidate as quickly and efficiently as possible.

This is an opportunity to acquire late-model vehicles with low reconditioning needs. Assets that you can prep for sale at low cost and in little time. In his recent article giving good advice on how to approach this as a dealership, Jason Unrau cautions:

“Dealers should be prepared to move quickly on rental vehicles that come to market. Snatching up batches of a particular make and model, or vehicle style, could be a great way to position a dealership in their locale. Cars bought from rental agencies tend to have extremely low reconditioning costs and offer an easy way to sell used cars at a higher volume.” 

I see this as another opportunity for our industry to “do well by doing good”. Hertz is an iconic brand family that has been set on its heels by unexpected forces. They are far from the only pandemic casualty we will see, particularly in the travel and hospitality sector, but they are the largest so far. The automotive industry has an opportunity to help them recover by purchasing these assets and infusing Hertz with the capital they’ll need to continue operations while they figure out what a post-covid Hertz looks like.  

While the reconditioning of these and other rental cars is normally less complex, they still must follow your process and be fully prepped for resale. If you aren’t using software to manage the work in your fixed ops or reconditioning department, the money you save in lower repair requirements may be lost on inefficiency in doing the work that is done. ReconMonitor™ is a software solution that keeps you in command and control of your recon operation. From acquisition through the entire process to frontline-ready, the software keeps technicians and teams on task and removes the bottlenecks that cost you valuable time and money. If you are ready to reduce your operation’s vehicle turn times and maximize your profits, you should contact us.

Dealership happy customers

5 Tips From Shark Tank’s Robert Herjavec To Improve Sales At Your Dealership

Robert Herjavec

When a person comes to your dealership, they’re in the market for a car. Whether they make a purchase is an entirely different story. As a result, you may find selling your inventory takes a lot longer than it should. 

According to Shark Tank’s Robert Herjavec, selling can be “easier than most people think.” Whether you’re a seasoned dealer or are in your first year, there’s always room for improvement. 

Here are 5 tips straight from the entrepreneur himself on how you can improve sales at your dealership: 

  1. You’re not just selling a car. You’re selling yourself: If a customer shows up and doesn’t like you, they aren’t going to want to do business with you. Dealers are notorious for being overly pushing, trying to sell anything on four wheels. Be the dealer you would want to buy a car from, and you’ll be more effective in building that trust with your customers. 
  2. Listen: The highest-performing salespeople in any business listen just as much as they speak, if not more. Customers can tell when someone is genuinely interested in what they have to say, versus someone who’s just nodding their head and eager for the commission they’d make off the sale. The more you actively listen to their wants and needs, the quicker you can help them find a car and have a faster deal. 
  3. Know your customers: It’s essential to know every customer has their own wants and needs, including sticking to their set budget. Dealers often make the mistake of trying to sell the car that’s out of someone’s price range, and as a result, end up without a sale. Be realistic and fulfill your client’s needs by helping them find a car that sticks to their budget. You’ll both be more satisfied in the end.
  4. Discover what’s important to them: Part of knowing your customers is discovering what’s important to them when making their car purchase. What will the car be used for? What features of a vehicle are important to them? This shows you’re paying attention and want to help meet those needs. The more you understand their needs, the better you will be able to promote a vehicle that can meet them. 
  5. Keep it simple: Less is more when it comes to selling cars since you don’t want to overwhelm them with information to sound knowledgeable. According to Robert, “the mark of true knowledge in anything is how well you can explain to the average person.” Focus on the key points, listen, and guide how your customers will feel. Once you do that, you’ll have no problem improving sales at your dealership. 

While 2020 is the start of a new decade, automotive pundits were predicting another decline in auto sales even before the strong economy faltered. It can never hurt to get into the habit of huddling up with your sales team and reviewing sales tips from expert salespeople, like Robert Herjavec.

Credentials

What is Your Strongest Credential?

The dictionary defines a credential as, “anything that provides the basis for confidence, belief, credit, etc.”  In business, we use credentials as a shortcut in persuading customers or partners to trust us enough to do business with us. The credentials, “MD”, “PhD”, and “JD” convey that the holders have mastered the knowledge required to obtain them, and that alone can give a client confidence in their abilities. Technical certifications, diplomas, testimonials, accolades, licenses and franchises are also in this broad category of credentials.

Whether you have letters following your name or not, everyone has credentials. What are the ones you choose to share in your business? In other words, what qualification, achievement, personal quality, or aspect of your background do you use to indicate that you are suitable for business?

A credential, plain and simple, promotes trust and confidence. It can be anything. For detailers or cosmetic repair technicians, their best credential could be before and after photos of their work, a mechanic may have ASE certification or OEM endorsements. Dealers have their own designations, like 20-group or association membership. Your years in business alone is as valid a credential as any to elicit confidence and overcome doubt. 

Think about your other credentials, too. When I was shopping for a car, I noticed the salesman had pictures of his wife and 3 children on his desk. He didn’t remark about the photo, and neither did I, but when he described the safety features of the car I was considering, knowing that he had children made him more credible to me when discussing safety. For all I know, it might have been a stock photo that came with the frame, but in that moment, it was his credential – the connection point that told me he was believable.

We all have a drawer full of credentials that we might share. Climbed a mountain? You have fortitude and determination, Single parent? You’ve got organizational and time management skills. Backstage pass? You know somebody. Fly fisher? You have patience and value detail. Played sports in school? You understand the value of teamwork and shared goals. The list is as endless as our life experiences.

So when you are trying to persuade a customer or partner, reach deep into your drawer and find the right credentials for the occasion. Find the thing of yours that connects you to the other’s needs, and gives them the confidence to say yes. 


Want to learn more about AMT’s credentials? Click here.

Open for business neon

Re-creating Your “New” Business

No matter how many years or how many generations your business has been in existence, you are starting a new business. Changes in our economy and society related to the pandemic have reset nearly everything from employment to operational practices to consumer priorities. Your business will need to adapt in order to survive. Now is the time to reinvent your business to operate in the new environment.

What probably hasn’t changed: 

  1. The quality of your products and services.
  2. Your commitment to your customers, employees, and stakeholders.

What has changed:

  1. Everything else

Our society is interconnected, so when one element changes, it affects related elements across the society. High fuel prices led to subcompact cars. Lower fuel prices and greater vehicle efficiency brought on increased purchase of trucks and SUVs. Stay-at-home restrictions resulted in record sales of personal grooming products, jigsaw puzzles, and computer audio/video equipment, and effectively paused fashion and apparel sales.

Setting up your post-pandemic business plan (you need one) requires the same considerations as with any new start-up. The four P’s, product, price, place, and promotion, are still the foundation for your plan. Chances are, at least one of these variables will be different moving forward. Is your product still relevant? Is the demand and perceived product value changed and can you adjust price as a result? How will your product be consumed now? Do you need to modify the way you deliver your product to your customers? How many other people do you need to help you deliver? Finally, what changes should you make to your advertising and promotion in order to engage or reengage your buyers in the marketplace?

The answers to these questions and others will inform your way forward, but your need to assess and develop will continue. Markets and businesses may reopen more gradually than anyone would like. Volumes and budgets will be smaller, and consumer confidence will be tentative until employment and payroll numbers stabilize again.

If you run an existing business, you may benefit from your experience with other hard economic times and take the lessons learned from them to plan your own recovery. Regardless of prior events, this sudden national and global shift is more extreme that anything we have seen in our lifetimes, It is an opportunity to reinvent ourselves and our businesses in response. Every one of the four P’s is on the table for examination.

I would add another two P’s to that list, too. Examine your process and the productivity it generates. You may find opportunities to improve efficiency in your process, either by making changes or by better enforcing the processes you have in place. Management software by AutoMobile Technologies could be the right solution for running your automotive repair and reconditioning operations, and now as you reimagine and redefine your business, it’s the right time to enhance your command and control of the operation. Contact AMT and let us show you how we can help.

Hand handcuff banknote dollar handcuffed money

Credit First: Missing Link in Dealership Digital Sales

Craig Sims, Vice President of Equifax Automotive Services, once said, “In the ideal world of the future, customers will be able to shop for and find the right vehicle for them, with the right payment, well before they walk into the dealership, and that is a big challenge.” 

More and more customers are going directly to their bank or credit union for financing on their car instead of the dealer because they’re getting a better deal that way. Often, dealerships will have a vehicle price listed online that hardly ever reflects the actual price that a customer signs. This can cause customers to walk out of your dealership doors without a purchase, especially when they feel they’ve been misled by information online. But what if there was a way to increase digital dealership sales that benefited both the customer and the dealer? 

The missing link here is to establish a credit-first strategy on dealership websites that would accurately reflect what the customer would pay, based on their affordability criteria. This would include their monthly budget, down payment amount, credit criteria, and trade-in equity. It’s unique to each customer and gives them a personal experience with the dealership instead of feeling like a dealership wants their money. 

“This credit-first strategy,” said Sims, “helps dealers deliver a more personalized shopping experience.” 

By establishing a credit-first website, it makes the ideal world of the future that Sims spoke about a little more realistic. They can view what cars are available based on their budget and feel excited about the car buying process. It also creates “browser curiosity,” even for the consumers who aren’t actively looking for a new car. The ability to have the dealership work with a customer on the financing with a unique credit-first strategy is a quick way to entice and collect information about even those who are “just looking.” 

It’s a convenience that is long overdue, especially since we are now more than ever in need of real digital solutions. According to Marcus Sheridan, over 70% of customers decide if they want to purchase with a business online before they ever initiate any form of communication. Considering the auto industry has plenty of data and systems out there for dealers, OEMs, and lenders, it’s time that something is created to improve the process for the customer. 

So if you want to be ahead of your competition and increase your digital sales, establish an online credit-first strategy for your customers.