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Looking for help with used cars

fflorey923

Green Pea
Feb 16, 2020
3
0
First Name
Frankie
I took over as GSM 2 years ago and my dealership has struggled big time with used cars. Hoping someone(or several people) can provide some assistance or insight. Here the skinny - we are a luxury dealership in NJ with a high lease penetration (70%+). We do about 65 new every month and currently at the 20-25 used level. Our problem is because of high lease penetration we only get about 10 trade ins a month and of those 10, maybe half are retail worthy (not 250k mile rats). Therefore we have a huge problem sourcing used cars. We get lease returns however to buy those we pay a few thousand more than what we should. Example, a lease return can be sold for $25k and my purchase price to buy the car for inventory is $24,500. Then I have a $500 pack that gets added and we pay door rate with service. Plus to certify the car the certified fee is about $800. That won't work. We buy cars at auction however we are in the same boat there. We look into curb purchases but we need 60+ cars in stock and we may be able to get 1-2 curb purchases a month. We have averaged maybe another 1-2 out of service drive monthly as well. Does anyone have any insight?
Thank you!
 
We used Vehicle Acquisition Network when I was in Arizona, Yvonne & the team did well for us with their method of finding vehicles to purchase. I also did electronic billboards in the past, and included the asking for cars to buy as part of the asking for referrals conversations.

Are you a part of a group?
Do you have loaner vehicles that can be converted to CPO?
Can you negotiate with the OEM to purchase the vehicles for a better rate, by showing them market value?
Any way you can negotiate a better recon rate, to be in the cars better?
 
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Reactions: Alex Snyder
First off :woohoo: this is an amazing problem to have!!!!

With a high lease penetration, you are doing a great service to your customers and helping to recession-proof your store. I can only imagine you all understand the power of high residual leases and how competitive they can be against some less expensive makes. Have you tried conquesting for new car sales? For example, if you sell BMWs (I don't know what you sell) you have Ford, Toyota, and Honda owners who would LOVE to get into a fresh new Bimmer. Move some Camry shoppers into base 3 series. Trust me, the Toyota shopper doesn't believe they can afford a BMW. And those shoppers have trades.
 
Thanks! I will look into VAN. We are a group - 2 total dealerships, the other is a Honda dealership. They do pretty well but they are able to run off of trade ins. We have a limited loaner fleet - 23 units. I get maybe 1 or 2 loaners as CPOs every month. The price we pay from the OEM is their adjusted market value...they cal it the Market Based Purchase Option. We pay $146/hour labor rate and we pay a 35% markup on parts, owner is not willing to adjust that.
 
First off :woohoo: this is an amazing problem to have!!!!

With a high lease penetration, you are doing a great service to your customers and helping to recession-proof your store. I can only imagine you all understand the power of high residual leases and how competitive they can be against some less expensive makes. Have you tried conquesting for new car sales? For example, if you sell BMWs (I don't know what you sell) you have Ford, Toyota, and Honda owners who would LOVE to get into a fresh new Bimmer. Move some Camry shoppers into base 3 series. Trust me, the Toyota shopper doesn't believe they can afford a BMW. And those shoppers have trades.


We sell Acuras. We have conquesting campaigns out there and have done mailers in the past as well. I wasn't involved too much in those campaigns at that time, however maybe I can conquest those customers who own their vehicles rather than those who lease their vehicles. Thank you!
 
We sell Acuras. We have conquesting campaigns out there and have done mailers in the past as well. I wasn't involved too much in those campaigns at that time, however maybe I can conquest those customers who own their vehicles rather than those who lease their vehicles. Thank you!

For sure. Two of our forum sponsors might be worth talking to about finding more action on that front as well: Experian (we will have them on RefreshFriday on the 28th) and Driven Data (RefreshFriday on March 6th). They each have unique ways of targeting that could be useful for you.
 
Working your own database is definitely the way to go. If you have a clean database to market from, and can segment out by equity position, if they no longer own the vehicle and could be in a purchase position, former sales, service only customers, etc and then customizing the message by segment. A targeted email and direct mail campaign strategy, married with a matching digital plan will help you to achieve your goals.