Having been in the car business since I was a young kid, I have had the benefit of selling used cars in New Zealand, Australia, Japan, England and The United States. My Father drilled into my 3 brothers and I from the beginning of time that you made your profit when you bought the car. I have found that to be a time tested piece of advice that is still relevant today if you know what to buy.
The latest addition to the revolutionary vAuto system has been the Stocking Tool and I have had the pleasure of seeing some dealers really take a hold and grasp the opportunity that this remarkable piece of technology can offer. If you are able to park ones tender ego in the garage for just a moment and look and what is being revealed, your ego will be able to relax in a cushion of cash that you have been able to make when others are crying the blues.
So, I’m studying the Stocking Tool, making notes and adding cars to the Buy List so I know what to look for. Out and about doing my errands I find a 2003 VW Jetta GLS 1.8T for sale. Looking at my Buy List I see that 2003 Jettas were on the list with a 68 day supply. I gather the VIN and all the equipment info and when I get back to my office I do an appraisal on this exact car with the exact options.
I have found a gem: Total of 85 2003 Jetta’s within 100 miles, only 8 exactly like mine with a 45 day supply. I figure if I can sell this car for $10,500 or less, I will rank 4 out of 8. Anything less, I own the market. I double check the exact model on the Stocking Tool again and see there is 9 available, real close to 8, and 6 have sold in the last 45 days.
So I conclude that this little car has a niche market, not a high volume piece, but very desirable to the right crowd and will actually sell quite fast if priced correctly in the market.
Knowing this my potential profit is going to be based on my buying abilities, I know upfront before I even own it how much profit I will have depending on how good a buyer I am. A little extra time spent in verifying your recon. estimates will saves a ton.
Bottom line, I paid $6000, spent $567 on reconditioning including new windshield, advertised the car for $9978 and was ranked 2 out of 8 and sold the car 5 days later.
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And what if you could buy a vehicle today for about what it’s residual is in 2 years as guaranteed by a lease lender? An interest/profit only lease might have a really cheap payment! You could undercut the market on price and max out the back end, and still make a killing!
I am very curious as to what technology you are using to obtain the info about your inventory?
We use Cybercalc Arbitrage.. of course, we developed it so that stands to reason. We believe that dale is totally correct when it comes to an “efficient market” for pre-owned vehicles. One has to price their inventory to maximize web hits. The only advantage we might still have is by turning a purchase deal into a lease. We can at least make some back end and shorten the trading cycle!
Arbitrage identifies vehicles that can be purchased for a price close to what the future residual will be. Currently, there are over 100 make/models that can be purchased today for LESS than the 24 month residual. I have never seen this in 38 years of watching the pre-owned market. There are historical opportunities for those who know how to play the game!
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