the last frontier for gross: the trade-in! · • make it collaborative — work with customer •...
TRANSCRIPT
Tim Scoutelas, Director, Strategic AccountsMAX Digital
The Last Frontier For Gross: The Trade-In!Find the Trade-In Boosting Approach That’s Right For Your Dealership
These are the voyages of every car
dealer. It’s our life long mission, to
explore profitable new ways. To
seek out revolutionary/cutting edge
new processes and for every
dealer. To boldly go, where no
car dealer has gone before!
Trade-Ins are the Final Frontier for Gross
“Traditional” UCM puts a number on a car without getting out of his seat.
• Uses his gut
• May look at auction data
• May call a wholesaler
• Rarely checks with team
• Slides # to salesperson-
sort of a BIG secret
Today’s used car buyer. Internet savvy, has a vehicle to trade. She turns to the web and trusted third party sites
• Gets 3rd party value
• Checks with a friend
• Knows her payoff
• Watches Jack, go over her
car and give her a number,
she has no idea how he got
to and does not trust
A Little Story About Jack & Jill
Have you heard this story?
How does it end?
New Car Margin Compression
#RealDealerProblems
Used Cars are hard to buy at the auction
I can’t find a good sales person that can sell an appraisal
Customer’s think their cars are worth the moon!!!
So We Need the Trade to be Successful
Tighten up your trade process for new car sales and improve gross
Consider a “We Buy Approach”
Use technology to improve the process and build value and trust.
Customer collaboration = more trades
#RealDealerSolutions
• Industry stats that show the opportunity
• Tested and proven best practices that will ensure you
can source more trades no matter the type
• Sales process or staffing level
• Case studies
• This not just a Pre-Owned opportunity
• How technology can help
Agenda
Trades can be over 50% more profitable
$400 v. $1200 Front End Gross
Trades can turn
3 to 5 days faster.
Did you know?
While there is no single self-sufficiency ratio that’s right for everyone,
carrying too many purchase cars hurts gross profits.
Then why?
Four Group Examples: Percentage of TOP Dealers inventory SOLD and IN STOCK YTD 2019
22 Groups with Used to New Ratios 1 or Higher
0.40 0.60 0.80 1.00 1.20 1.40 1.60 1.80 2.00
Phil Long Dealerships
Bergstrom Automotive
Kenwood Dealer Group Inc.
Boucher Group Inc.
Balise Motor Sales Co.
Performance Automotive Network
Walser Automotive Group
McLarty Automotive‡‡Blaise Alexander Family Dealerships
Sonic Automotive Inc.†Wilde Automotive Group
Crain Automotive Team
Penske Automotive Group Inc.† ‡‡Chapman Automotive Group
Better Baker Auto Group
Bob Moore Auto Group
Mullinax Automotive
Morrie's Automotive Group
Russ Darrow Group Inc.
Cardinale Group
Kunes Country Auto Group
Garber Management Group
† privately held ‡‡ includes data outside USSource: Automotive News Data Center
Used Car Sales are closing the gap with New, particularly in the more expensive luxury and import segments. Where are you getting your cars?
Luxury Mass Market Domestic Import All
2014 0.68 0.76 0.87 0.65 0.75
2015 0.68 0.75 0.86 0.65 0.74
2016 0.77 0.76 0.86 0.67 0.76
2017 0.87 0.75 0.87 0.71 0.77
2018 0.90 0.79 0.88 0.75 0.80
Used Car Sales Are Growing Faster than New
• #RealDealerProblem
• How do we acquire more?
• Trades are profitable
• We don’t carry enough
• Top dealers starting to adjust, but there is more work to do
• Review your trade in process
• Who is putting the number on your trades?
• Single person or Collaborative effort?
• Consider Technology
• Current Staff
• Do you have “Salespeople” or “Customer Advocates”
• #RealDealerProblem
• Consider “We Buy” program
Improve your dealership process & execution
Improve your dealership process & execution
Add processes and programs that fit the customer
• Leverage the knowledge and experience of your team, region, district orcompany
Improve your dealership process & execution
• Introduce Technology into the process to build value & trust
• Consistent execution
• Accountability
• Analytics
• Comfort and autonomy for
millennials
Improve your dealership process & execution
#RealDealerSolutions
Best Practice: Consider rewarding the online shopper
• The power of handing over the
iPad or tablet
• Consistency for training sales team
• Consistent experience for
customers
• Comfort and autonomy for
millennial workforce and customer
base
Best Practices: Tech Makes it Easier
Mutual Evaluation
Best Practices: Tech Makes it Easier
Dealer 1 Dealer 2 Dealer 3 Dealer 4 Dealer 5
• 5 store pilot program run with alldealers using a customer collaborationtool. $293,000 FEG generated via UA.
= No Collaboration
= Yes Collaboration
Best Practices: Collaboration Wins
What if?• You could put yourself in a position to hold gross on EVERY Trade?
• Taking them in for even less or adding gross to your new car deal?
• While creating an environment that is transparent, and builds value?• Today’s dealer has a job to do, part of that job is provide a “fair deal”• Getting the customer involved with the process helps make it “fair”
• At the same time, making the delivery of that valuation easy for bothtoday’s “customer advocate” and the seasoned sales professional?
You would do it right?• Dealers across the country are executing this and holding almost $50K in
gross in under allowance a month. Darrell Waltrip Honda is a greatexample.
Importance of Trade in New and Used Car Sales
• We’ve seen change to collaborative trade drive a 47%
increase in front end gross post launch over prior
months average.
• Trade-in process drove significant customer led
reduction in value. Dealers were reporting most
customers ranked their cars as 80% or below.
• Process very millennial-friendly lowering stress through
transparency for both customers and sales employees.
47%
Best Practices: Impact of Collaboration
• Involve the customer directly
• Take advantage of the test drive for approval
• More co-time, no boring time waiting alone (lessons from Disney)
• Gaining agreement vehicle is less than perfect, typically 80% is key,
but 90% is a win
• Naturally sets low bar and allows team to bring up estimates where
appropriate
Best Practices: A Guided Experience
Best Practices: A Guided Experience
Improve your dealership process & execution
• Consider your staff
Improve your dealership process & execution
Case Study: Centrally LocatedBuy Center Success
Operational Smarts:
• Centrally located bargain lot, cash only, $9,999 and under• Centrally located wholesale lot, group approach at auction• Centralized group “Buying Team” with full visibility• Top dollar offers with higher potential gross (see chart)
Key Stats: • 27 store group - “Buy Center” can offer on any car• Group wide ad campaign• No requirement to buy• BDC sets appointments
Why it works: It’s an outlet for every car at top dollar to the customer.
#RealDealerSolution
• A common goal — Hiring and training alignment
• Documented process — commitment to cash offer
• Staff up — Dedicated & naturally service-oriented
• Focus training on new skills — This is make or break
• Make it collaborative — Work with customer
• Integrate technology — Tablet experience
• Make it quick and easy — get out your stopwatch
• Marketing — Be all in on communication
• Send to auction — or nail a Bargain Lot approach
Buy Center Must Haves
#RealDealerSolution
Stretching on the New Car Deal
Profit Potential: Finding your sweet spot
Credit: Nick Johnson, Luther
Where are you
finding your most profitable inventory?
#RealDealerSolution
Profit Potential: Finding your sweet spot
Carvana & CarMax: Continued Pressure on Trades
The Final Frontier is Yoursboldly go, where no car dealer has gone before!
Questions?
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SPEAKER CONTACT INFO:
Tim Scoutelas, Director, Strategi c Account s [email protected]