Shared Used Car Inventory! Who should get the lead?

[Anthony G.]

I need a differing opinion. Our group shares inventory with all stores in each market. The group site the lead goes to the store the inventory is at. On the individual site, it goes to that store.

I'm struggling to find a reason to continue sharing inventory. Close rates, appointments, Phone calls, and site traffic tell me just to stop doing it.
Am I missing the obvious?

 

[ChrisR]

I need a differing opinion. Our group shares inventory with all stores in each market. The group site the lead goes to the store the inventory is at. On the individual site, it goes to that store.

I'm struggling to find a reason to continue sharing inventory. Close rates, appointments, Phone calls, and site traffic tell me just to stop doing it.
Am I missing the obvious?

User Experience.

If you can make it as easy as possible for the end user to find a vehicle they want, if they trust dealer A, and don't know the other stores, but see the other inventory on Dealer A's site, wouldn't that make it worth it?

 

[Anthony G.]

User Experience.

If you can make it as easy as possible for the end user to find a vehicle they want, if they trust dealer A, and don't know the other stores, but see the other inventory on Dealer A's site, wouldn't that make it worth it?

I need at least 3 of the 11 General Managers in my market to agree with that. I'm struggling to get a coalition to actually bring it up. I'm looking for the counterpoints as to why I shouldn't do it so I can be prepared for the conversation.

 

[Tallcool1]

I need at least 3 of the 11 General Managers in my market to agree with that. I'm struggling to get a coalition to actually bring it up. I'm looking for the counterpoints as to why I shouldn't do it so I can be prepared for the conversation.

One of the biggest reasons to NOT do it is the animosity that it causes between the dealerships and their management teams.

Even though the stores share common ownership, each store will have a little bit different "personality" because of the management team that is running them. An example would be as an example a Toyota Camry trade in. My store (Store A) doesn't do particularly well with a Camry unless we own that Camry for Average Trade or below. Store B does well with them, and they know that we own them right. Store B gets those leads, and Store A loses the inventory and more importantly the Finance Income that comes with that vehicle. This seems to happen a few times each month, and now Store A resents Store B because of it.

So what does Store A do? They start booking those Camrys at Clean Book and getting the profit right now because they pretty much know that they are going to lose the unit anyway. Now all of a sudden, that Camry doesn't get any action at Store A because it is priced the same as every other Camry in the market. Store B doesn't want it because they have 4 that they own the same. The Camry now hits overage status, it gets wholesaled, and Store A loses money but more importantly the Dealer Group loses money.

Or, Both Store A and Store B get a lead on the same car. Now what? Store B wants it because they do well with Camrys. Store A doesn't want to give it up because there is an active lead in the system on that Camry. Guess who gets caught in the middle? The Customer.

I know the response is that Store A should bid the Camry for what it is worth, but that is the essence of wholesale values in general. That is the reason the we bid up to $20K on a unit, and 5 guys at the auction laugh because we paid way to much for it. 3 days later we have sold that unit and made strong money on it. Next week at the auction, a couple onlookers from the previous week laughingly ask how we are getting along with our overpriced unit from last week......we sold it 2 days later and never even priced it on our website. It isn't so simple when we are talking about multiple stores in the same market with the same ownership.

Eventually, we just stopped sharing inventory between the stores. Each store could buy inventory from one another with no regard for cost. They could pay what they thought it was worth or what the owning dealership wanted for it. It was just too much drama and headache to do it any other way, and ultimately the owner was better off.

Maybe there is something in this that helps.

 

[Dan Sayer]

I need a differing opinion. Our group shares inventory with all stores in each market. The group site the lead goes to the store the inventory is at. On the individual site, it goes to that store.

I'm struggling to find a reason to continue sharing inventory. Close rates, appointments, Phone calls, and site traffic tell me just to stop doing it.
Am I missing the obvious?

What about your Close Rates, appointments, Phone calls, and site traffic tell you to stop?
We share 9 stores' inventory on 18 URLs at the group, market, and store level so it is a tangled web BUT a store has a much larger inventory to pull from than just their own. More opportunity to convert to a hand raiser at each store on units they wouldn't of had an opportunity if not sharing. We do let the shopper select any car and also to select any store they want to deal with on both the group and market level for Used and similar Make New.
Just this morning I told our CMO again, "I wonder what would happen if we siloed everyone back to just their inventory on just their sites". It would make syndication easier. I will say it took stores years, and they are still working on it, to play nice with other stores that get leads on "their" cars. We have a clear corporate policy that covers freedom to move vehicles, New and Used, from store to store for the benefit of the shopper. If they have a problem with that > 30-30 Rule, walk 30 feet out, look 30 feet up, who's name do you see on the sign? Those are his cars! Our stores are spread across 250 miles so transport and driver fees are a consideration of this overall sharing strategy. Every time it has been challenged, usually because some manager got their feelings hurt over them perceiving they lost a deal, it has been voted to keep by the stores overall. Ask your GMs, "Do you want to sell every car or sell every customer?" Whether they answer either way, you're still left with needing more inventory which can be done by pulling from other lots. Other factors like inter-company transfers from an accounting standpoint, CPO transfers (and open recon Parts/ROs), and like I said prior, transporting units just to demo/test drive and that expense and time are counter points. We do balance inventory corporately between stores based on vAuto data to give us the greatest chance to turn quickly while avoiding transport expense.

If CarMax does it, and they clearly have a well-oiled process to transfer, why wouldn't we? More leads per VIN = faster turn.

 

[Dan Sayer]

Each store could buy inventory from one another with no regard for cost. They could pay what they thought it was worth or what the owning dealership wanted for it.

Our Used Aging Policy for all stores is pretty clear. Bronze Units greater than 30 Days Age on the 15th must be Sold, Traded to sister store, or Wholesaled before the end of the same month. Trade between stores can only happen once (at MMR 4.0 Condition Grade price). Units with a Cost over $35k have a Max Age of 45 Days. Wholesale Units have a Max Age of 20 Days and all other Units (Gold and Silver) have a Max Age of 60 Days.
In the case of a unit priced below cost and sold by another store, the selling store (to the shopper) automatically makes $500 and the inventory store (the original inventory store) loses the initial pricing loss in addition to the $500. MMR applies only to units traded between stores.

 

[Anthony G.]

What about your Close Rates, appointments, Phone calls, and site traffic tell you to stop?
We share 9 stores' inventory on 18 URLs at the group, market, and store level so it is a tangled web BUT a store has a much larger inventory to pull from than just their own. More opportunity to convert to a hand raiser at each store on units they wouldn't of had an opportunity if not sharing. We do let the shopper select any car and also to select any store they want to deal with on both the group and market level for Used and similar Make New.
Just this morning I told our CMO again, "I wonder what would happen if we siloed everyone back to just their inventory on just their sites". It would make syndication easier. I will say it took stores years, and they are still working on it, to play nice with other stores that get leads on "their" cars. We have a clear corporate policy that covers freedom to move vehicles, New and Used, from store to store for the benefit of the shopper. If they have a problem with that > 30-30 Rule, walk 30 feet out, look 30 feet up, who's name do you see on the sign? Those are his cars! Our stores are spread across 250 miles so transport and driver fees are a consideration of this overall sharing strategy. Every time it has been challenged, usually because some manager got their feelings hurt over them perceiving they lost a deal, it has been voted to keep by the stores overall. Ask your GMs, "Do you want to sell every car or sell every customer?" Whether they answer either way, you're still left with needing more inventory which can be done by pulling from other lots. Other factors like inter-company transfers from an accounting standpoint, CPO transfers (and open recon Parts/ROs), and like I said prior, transporting units just to demo/test drive and that expense and time are counter points. We do balance inventory corporately between stores based on vAuto data to give us the greatest chance to turn quickly while avoiding transport expense.

If CarMax does it, and they clearly have a well-oiled process to transfer, why wouldn't we? More leads per VIN = faster turn.

Thank you!

Our accounting team does a great job with transfer units. We do not do a great job of sharing. I think I should work on a solid policy for trading inventory instead.

 

[Tallcool1]

Our Used Aging Policy for all stores is pretty clear. Bronze Units greater than 30 Days Age on the 15th must be Sold, Traded to sister store, or Wholesaled before the end of the same month. Trade between stores can only happen once (at MMR 4.0 Condition Grade price). Units with a Cost over $35k have a Max Age of 45 Days. Wholesale Units have a Max Age of 20 Days and all other Units (Gold and Silver) have a Max Age of 60 Days.
In the case of a unit priced below cost and sold by another store, the selling store (to the shopper) automatically makes $500 and the inventory store (the original inventory store) loses the initial pricing loss in addition to the $500. MMR applies only to units traded between stores.

This is the key component. A very strict and thorough policy must be in place, and more importantly the 30 foot rule guy MUST personally intervene to make sure everyone understands who he is. @Anthony G. , I believe your last post is a good one. This is probably the place to start.

 

[DrewAment]

I need at least 3 of the 11 General Managers in my market to agree with that. I'm struggling to get a coalition to actually bring it up. I'm looking for the counterpoints as to why I shouldn't do it so I can be prepared for the conversation.

Number one issue if you dig deeper with most GMs/GSMs/etc >>> Need to look at transfer policy (what they pay) between the stores - and how it affects GMs (and other managers) pay.

Inventory sharing is a great way to bulk up inventory and increase leads, and I do it for almost all the groups I work for. However if there is not a clear policy on the ACV and/or cost that the transferring store can buy the vehicle for, they are going in blind and are less likely to actually work the customer. That then filters to the salespeople/BDC -- "oh, that lead is on a vehicle at the other store .. not going to work hard on this one - my manager just gets mad at these types of leads"

 

[Anthony G.]

Number one issue if you dig deeper with most GMs/GSMs/etc >>> Need to look at transfer policy (what they pay) between the stores - and how it affects GMs (and other managers) pay.

Inventory sharing is a great way to bulk up inventory and increase leads, and I do it for almost all the groups I work for. However if there is not a clear policy on the ACV and/or cost that the transferring store can buy the vehicle for, they are going in blind and are less likely to actually work the customer. That then filters to the salespeople/BDC -- "oh, that lead is on a vehicle at the other store .. not going to work hard on this one - my manager just gets mad at these types of leads"

This is the reality, and exactly what I'm working on.