Yesterday, I got a call from a reporter doing a story on how dealers are coping with the relatively sudden change in consumer demand for small fuel efficient vehicles. Specifically, the reporter asked me where dealers go to buy the same vehicles that everyone else is looking for.
My response was that there is no magic answer or secret stash of these vehicles to be found. Rather, the answer for dealers attempting to change the configuration of their inventory lies in their ability to identify less obvious vehicles that are in high demand in their market. Obviously everyone knows that Honda Civic’s and Toyota Corolla’s are the “hot items,” and even some more astute managers recognize the Ford Focus and Chevy Cobalt as very strong contenders. Fewer dealers, however, realize that 2007 PT Cruisers are very hot ,as are ‘07 Dodge Calibers, ’05 Saturn IONs, ’02-’04 Chevy Cavaliers and 2005 Dodge Neon’s. Specifically, take a look at the top 20 highest volume compact vehicles in Chicago as of 9:42am, July 3rd. Some of these less obvious vehicles represent the best opportunity to adjust inventories to meet consumer’s new fuel efficient preferences.
Now, I realize that some of you would just as soon suck on razor blades than stock PT Cruiser’s or other “off brands” but you really need to “get over it.” We’re operating in an environment unlike any we’ve ever seen before, and I can assure you that continuing to operate in your own zone of comfort is not a winning strategy. Take comfort in the fact that technology is available that can help you minimize the risk when you moved to vehicle types with which you’re less familiar.
For example, right now my assistant and I are looking at a screen that tells us that in the ’07 PT Cruiser category, the highest volume mover is the Touring SUV having sold 82 vehicles over the last 45 days, but the Touring Convertible has only sold 13 vehicles in that same time period, and the GT SUV and Wagons have sold none. So, with this type of knowledge, it is a relatively safe bet to experiment with some ’07 Touring SUV’s, but you’ll know to stay away from the GT SUV’s and Wagons.
Now, I’m sure that even with this information some of you are still thinking, no way am I going to go out and buy PT Cruisers and put them on my lot. Well, if you’re a high-line luxury dealer, I might agree with you because I don’t think you’d get much natural traffic for these types of vehicles. If, however, you’re most any other type of dealer and still feel this way, then I think that you need to reexamine your own preparedness to succeed in today’s business.
I know that I’ve put a relatively tough challenge to many readers, but I honestly believe we all need to re-think a lot of things and change our ways if we’re going to survive. I am very interested in hearing everyone’s thoughts on this posting. Whether you agree or disagree, let me hear from you. Also, if you want to get this top 20 list for your market, send me an email directly and I’ll get it to you right away (dpollak@vauto.com).
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3 users responded in this post
Dale:
Great post about PT Cruisers. I agree with you but it’s all about getting buy in from your used car sales managers and buyers on this philosophy of using real data to improve our stocking practices. We have been using your tool for some time now and I think it is largely responsible for our profits, our volume and our used inventory turn rate being higher.
With that said, I would love to see the top 20 list for my area. If you could email that to me it would be great. I guess I would be defined as the Allentown, PA metro area or maybe the Philadelphia, PA metro area. It all depends who you listen to.
By the way, trade ins have been our best source of compacts and subcompacts. Being a Honda and Hyundai dealer, I am fortunate because I see a lot more of these cars at the door than other dealers. Having said that, the auctions this past week have been crazy. As usual, I think guys are panic buying paying stupid numbers for Civics, Fits, Elantras, Corollas, etc. If it’s a compact Asian import the numbers are stupid. One year old Fits are doing over sticker and the same is almost true for Civics. There is a lot of opportunity in other areas that we have to find. Incidentally, I was talking to a Ford dealer buddy of mine the other day about used cars and he was telling me how he was worried about the pick ups he has in stock that he is $3000+ wrong in. I felt like telling him to just take the hit on these and go buy replacements at fair market value. People still want trucks and SUV’s especially at the right numbers so dealers have opportunity there. We found that out with Pilot’s in particular.
I look forward to seeing that list. Have a great holiday. If you are ever in my area, it would be great to meet you in person and talk about the business.
Best Wishes,
Andy
Dale,
I agree of course. The numbers don’t lie.
But there is other factors that need to be considered, such as preparadness of the sales floor to handle different line of products, familiarity of service department with these vehicles, etc.
It is interesting you gave the exact date and time that list was produced.
Due to the high volatility of today’s market, I would suggest caution.
It is very possible that PT Cruiser Touring SUV could drastically cool off and drop in price by the time those two truckloads make their way into the dealership, through the service department, detail, the net…
I guess, what I am trying to say is that those numbers talk about NOW, and even the best of us would need considerable amount of time to acquire, recon, train, etc.
Further more, the fact that the above data surprised all of us, only leads me to believe that by the time some believer stocks up on PT Cruisers and has them truly ready for sale, that list of top 20 may look entirely different
George,
Your point evidences a certain practical wisdom. Having said that, however, what’s the alternative? Can we afford to ignore the current market in favor of that which we know from our past? How much longer can we accept the relatively slow process of procuring, reconditioning, setting up and selling times? Isn’t it all about speed and efficiency in terms of the time that it takes to buy a car, put it through the shop and get it over the curb? Perhaps you could criticize my argument as being full of theoretical wisdom, and that might be fair. I think the real answer, however, is somewhere in between. What I mean is that we need to keep a close eye on the current market, move fast and stay light. In the words of Bob Dylan, “Times are a-changing,” and this business is not getting any easier. I really appreciate your perspectives. Thanks. Dale
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