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Pricing your used car - retail price vs internet price and amount of discount

We market our used cars at a $4,500 gross profit or $1,000 over KBB for the first 30 days (whichever is higher).

The BABY SEAL approach lives!

You know, hope and pray a baby seal saunters up to you and WHAM!! Club him over the head!

Truth be told, I've always thought traffic was overrated. Always preferred to sell 8 units at $3k per unit than 20 at $1500 (but I was never very good at math). The heck with that whole turn-rate baloney.
 
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The BABY SEAL approach lives!

You know, hope and pray a baby seal saunters up to you and WHAM!! Club him over the head!

Truth be told, I've always thought traffic was overrated. Always preferred to sell 8 units at $3k per unit than 20 at $1500 (but I was never very good at math). The heck with that whole turn-rate baloney.
JQ, Hmmmm... 8 at 3k is 24K, 20 at 1.5K is 30K... plus over twice as many opportunities in the F&I office and over twice as many units run thru Fixed Ops for recon.

With those math skills it's a good thing you got out of the dealership :rofl:

oh wait! Now I'm sensing the sarcasm...
 
You need to be "in the game" before discounts of any size even get an opportunity to get asked for or given........visibility, time and activity are the keys to used car pricing and it differs on cars. A common car with lots of competition is going to be margin compressed no matter the age & should be priced accordingly. If you have something people want and don't have plenty to choose from, well then make some money.

If it is a great vehicle and has been online long enough for activity and hasn't had any then check your visibility.....or most probably lack there of.
 
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I grew up in retail OUTSIDE the auto biz. Here's my $0.02
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Big Ticket Retail 101... The Path to a Profitable Sale.
1. Marketing creates Loss leaders that helps produce traffic (regardless of ad medium).
2. Merchandising helps move the store traffic to more profitable choices and/or add-ons.
3. Sales reps work with needs analysis AND merchandising tools to guide the shopper to the sale.
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Works for just about any high ticket item. Cars, Appliances, furniture & bedding, pools & spas, health clubs, etc..
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I have yet to see a dealer that has their merchandising dialed into operations (me included).
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...grrr Damn this DealerRefresh! It keeps making my todo list grow and grow and grow!
 
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I am shocked by the responses here. Have we all forgotten how to make gross profit? We have been steadily increasing profit and volume in used cars for the last 3 years. It is about buying and managing your inventory much more than pricing.

Consider the following:

1. My inventory doesn't rotate through the same 30 days at the same time, meaning I have plenty of opportunity to get people in on a number of cars and switch them to others.

2. The majority of people don't actually know the value of used cars. I see people lay down daily to high gross deals simply because it is our internet price.

3. In fact, having a high gross car gives me WAY more negotiating power when the customer is here. How much of a discount can you show on your car with $500 built in compared to my car with $4,500 built in? When people don't know values, this is much more impressive to closing a deal.

4. IT ISN'T ABOUT PRICE! This was my initial comment. Price is irrelevant more often than not. Price is the easiest objection to overcome. Sell the appointment. Make sure they like the car. "Folks, I promise, if you come in and decide you like the car, I am sure we can make you a great deal. Is the today or tomorrow better for you?"

Don't let the shoppers change the way you sell cars! There are more suckers than shoppers - yet we continue to worry about making the deal with the guy that wants the best price. I KNOW I don't have the best price. Let him go down the street to Whore Motors while I spend my time calling people who I can sell a car to.