Many GMs that are newly hired to take over a store face a lot of different challenges, and one they face all too often is the prior manager's used car inventory. If this is you, you may start reviewing the financial statement and notice over 70% of your inventory is over 75 days old. Where do you go from here? How do you fix it?
The first thing you need to do is figure out how much you own these units for. Run a report to compare the cost vs the current wholesale market value. The second thing you need to find out is where is it they came from - auction, trade in, etc. You need to really dissect this information as it will clue you into problems in other areas. If they were auction purchases, what led your buyer to purchase them? If they were trade-ins, did they have the correct ACV at time of trade? Take note also if they came from a wholesaler, and if they did come rom auction you will need to research them. Find out how many units are being acquired from them and what the average gross is on those units to see if they are worth future business.
If vehicles were purchased at auction due to a suggested buy-list from your inventory management tool, you will need to look and see what data they are using to compile this list. Are they looking at your past sales history or just the market data? Many systems do not look at the dealerships' past sales history when making these suggestions (which I feel is an error). Do you want your parts manager placing a parts order based off current quantities at other stores today or on what he has sold in his parts department in the past? Every dealership has a DNA (Dealerships Natural Ability) to sell certain units and not others. Just because the dealership down the road sold a lot of a certain unit does not mean that you will.
Where did the failure happen? If your used car manager was not actively managing the inventory, this falls on them! They should be making pricing changes daily to keep up with the ever-changing market. They should be taking action early for those units that are not getting leads or lot traffic. These units should have been at auction before they hit 60 days. If they failed to do these things then it may be time to part ways! Now with that said, if the UCM was trying to make this happen and the prior GM or the dealer would not allow it then you have another issue. If your inventory management tool has caused this, then it's time to make a change! There are many solutions that use real transactional data to help dealers make stocking decisions.
What do we do with them now? The first thing you need to do is drive every unit. Make sure they do not have any lights on the dash, all tires are proper PSI, and there are no smells inside the unit. Then take them through detail again to get a full detail, not simply a lot wash. Clean cars always sell quicker! Take new photos for your website and 3rd parties (you don't want a photo with snow in the back ground on your website in July). Price them to current market and put a $1,000 bonus on each unit. Set up some custom marketing for each unit, social media, custom landing pages...whatever you need to do to get them in front of buyers.
The second and quickest way to dispose of them is to send them to auction. There is an art to making this work. Call your local auction and let them know you have 50 units you want to sell, and that you need them to run consecutively and you want run numbers between 20-80 in a middle auction lane. Ask the auction to advertise to their customers that every unit will be sold and STICK TO IT. When buyers in the lane see you are selling every unit, more people will start bidding. Once you have sold off these aged units you can then go acquire new units that fit your DNA and make back what you lost on these units at auction!
Remember the saying "Your first loss is your best loss" and this has always held true throughout my time in the business! Don't hang on to units because you "think" they will sell. Make quick decisions on when its time to let a unit go and you will never have this problem again!
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