Dale loves to hear from you…
In addition to being a best-selling author on Used Car Sales in his book Velocity, Dale Pollak is the chairman and founder of vAuto, Inc., a company that provides retail automotive dealerships with a better way to appraise, manage and price their pre-owned vehicle inventory. In addition to serving as vAuto’s spokesperson, Dale is responsible for strategic planning and development.
Prior to vAuto, Pollak served as VP of Sales and Business Strategy at Digital Motorworks, the market leader in data integration and application development for OEMs, mega dealers and third party providers. Pollak helped build the company from inception to its successful acquisition by ADP in 2002.
Pollak received his B.S. in Business Administration from Indiana University and is a graduate of the General Motors Institute of Automotive Development. Pollak also earned a law degree from DePaul University’s College of Law, and is a four-time winner of the American Jurisprudence Award for top performance in his class.
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{ 44 comments }
Hi Dale,
I was so excited about getting Velocity 2.0, that as soon as it was delivered I took the rest of the day off to go home and read it (I've read your first book four times so far). I am new to the car business, which is sometimes an advantage and other times a disadvantage. I am trying to understand the metrics of your methodology, so I have a question. On page 7 you write, “In five short months, he’s cranked volume to 300-plus units per month. He’s turning his 400-car inventory 17 times a year.”
400 cars times 17 turns = 6,800 vehicles sold per year.
6,800 cars divided by 12 months = 566.67 per month.
How did you come up with the 300-plus per month sales volume?
When does the clock start ticking on inventory? When you buy it? When transport delivers it? After it’s finished Recon? When you have it listed on the internet?
Sorry to be naïve.
Mike,
Thanks for the note and enthusiasm for the Velocity book. The numbers that I quoted for Pearson involve wholesale. Having said this let me share my perspective with you about wholesaling cars. First, I believe today that very few vehicles that you’ve reconditioned should be wholesaled. This is because the internet allows you to retail any car on any day if you’re willing to take what the retail market will bear. If you can’t make any money in a period of 45-60 days in the retail market, then it probably means that you own the car for too much money. Further, if you have to wholesale the car to meet an age limitation, then that means that you weren’t willing to do what it takes to move the car.
Now, let’s turn our attention to when wholesaling is advisable. First, there are going to be some vehicles that just aren’t safe or retailable given the dealerships brand profile. Such vehicles can and should be wholesaled immediately. On the opposite end of the spectrum, if you allow a car to be reconditioned and to go the distance to your age limit without a retail sale, then yes, wholesale it. Take the likely loss and happily apply it against the retail gross profit of the department that allowed the error to occur. The negative impact of the loss serves as an important reminder to the department managers about the errors of their ways. To this extent, and for these reasons, wholesale activity is expected, normal and needs to be measured.
Finally, with respect to your question about when the clock starts ticking, the answer is immediately. In the case of Bill Pearson at Finishline Ford, the process of getting the car to the front line begins before he leaves the auction lane from where he purchased the vehicle in question. There is a pit-crew mentality at Finishline Ford and other high velocity dealers about speed to market, both virtual and physical. Hope this helps, and please continue to communicate as you progress on your velocity journey.
Hi Dale,
As you know I have drank the Kool Aid regarding Vauto.
I have my inventory running 16-18 turns.
My cost to market is 74%
My price to marekt is 90%
My recon is at warranty labor rates and warranty times (I'm sure my shop fudges a little on labor hours)
My parts mark up is 40% and I'm trying to get away from all OEM to aftermarket parts especially on higher mile units.
My detail is in house at 169.00 per unit.My detail shop ran a profit last year.If I netted out the “subsidy” of used cars “overpaying” I'd save 47.00 per retail used vehicle.
My reconditioning costs were $225,195 on 388 used or $580.00 per retail used(parts and labor).If my parts and labor split was 50/50 I bought 1294 hours of my shop in labor @ $87.00 per hour.
If I had a reduced labor rate for recon say $50.00 vs the $87.00 I pay the shop, – I'd simply transfer profit – not create it ($37.00 times 1294 hours=$47,878)which would most likely put my shop in the red.The net per unit savings would be $123.00.
So unless I go to pay cuts to my people (which I'm not entertaining),Icould reduce my per retail unit cost of recon by about 123.00 labor and detail of 47.00 = 170.00.Parts savings could perhaps get me to a 200.00 per unit recon savings if I took out all of the profit and ran things super squeaky clean and tight(to maximize used vehicle profit.
Once again this would not be a wind fall – it would be interdepartmental shifting of gross profit. I do have a team that works together well and we don't argue about each department helping each department – I'm very proud of that.
I set my Vauto up for $800.00 recon and $1700.00 gross.I attend 3-4 auctions weekly and am on the road 60% of the time.I know where the market is – when and if it moves.
I also know when at the auction,my model is stopping me from buying the low day supply vehicles that are very nice – you know the easy to wash and sell low mile cream puffs.
At this stage of my development,with inventory turns suggesting I could increase my inventory,I'm at a cross road.
Alternative 1:
Start buying over a wider sales perimeter(with an acquisition specialist) and having the logistics head aches and additional transportation costs-(which may be offset by better buys).I am blessed having 2 of the countries largest cities close to me (Dallas and Houston)so auctions and cars are in good supply(relative to any one else at least).This approach would get me more of the same type of profitable vehicle or better yet ,more of a larger more diversified inventory.I view that as a big plus.
Alternative 2:
Pay up for the cream puffs and know that the gross on these will be less.I know they can bring me trades and F&I backends, but how much is somewhat of an intangible.
I can do this buy adjusting my 1700 gross to zero and add to my recon bogie of $800.00(which is a bit inflated for the supporting departments benefit): the average auction fee paid: $300 ,and my transportation cost(which is less than 100.00 and my vehicles arrive within 24 hours or less).In summary bump recon to $1200.00.My safety valve here would be: never pay more than 97-98% of the market(with 1200 recon built in).
I'm thinking of trying this on 5-10 units.If those units turn as fast as my normal buying pattern,I'm adding some very upscale units with low miles and higher prices to my inventory.I suspect there is some” halo” advantage to having cream puffs mixed in with higher mileage units as well.These incremental units would not cost any more,other than the higher price paid and would simply add to the inventory with the same level of effort currently being expended.
I know that the disciplines your software has taught me are working .The low “price to market” on my inventory, brings me people from out of my market to buy.
My concern is adding theses higher priced units, which are very nice,but do not draw the low price buyer.
I'm OK with the concept of paying more and accepting less gross on these cream puffs.My experience with paying all the money for execptionally nice vehicles (my current definition of most Smart Auction purchases from GMAC) has taught me to price them light in gross from the very get go.The F&I and trades are an additional growth stream.
This is in many ways,the leap of faith in buying into your Vrank concept.No doubt low price sells cars.But does low miles/exceptional condition draw from a far as well?
Perhaps it is not as powerful as low price,but it might be a strong runner up.<smile>
I've seen others take the Nestea plunge into acquisition specialist procurement.I've seen inventory grow too fast at some places,and I've seen missed condition mistakes added to transportaion costs and that has hurt net gross also.
I'm not ducking the concept of acquisition specialists (I do have a Daryl in training right now).I'm more inclined to grow in controlled baby steps and certainly looking tfo grab all the low hanging fruit,before I rewrite our entire procedure book.
Proud of where I am,and acknowledging that I have learned much from your concepts.Looking for some directional advice as I want to grow the unit volume of the operation.
Do I jump into long distance buying or lever the efforts of existing procedures?
I lean towards adding the lower gross units first and then go on to bigger and better acquisition techniques.
Is this a normal transitional process or is my thinking taking me on a tangent?
P.S. If there is a new car deal in the mix-it is a no brainer -stretch to make the deal.My predicament concerns only the optional volountary acquisition.
As always “thank You” for all that you do.
Bob Furman
Bob,
Thank you for the question and the thorough analysis. Your post is a brilliant display of velocity analysis. It indicates that you've come a long way from that of a traditional dealer in terms of your understanding and approach to making money in the used car business. I'm really proud of you, and my limited contributions to the process.
Now with respect to your question, I think that it doesn't need to be an either/or approach. I think that there is merit in both alternatives. However, I completely agree with the “grow in control” methodology that you've described.
I would appreciate hearing the views of other velocity minded dealers and welcome questions for Bob about his approach and the experiences of his velocity journey.
Dale
Dale and Bob,
We have been on VAuto for about a year, at first we were not trying to be a velocity dealer, just trying to maximize profit in the market, then relying on price to market to sell old aged inventory, This has worked for some time for us but we have recently bought into the advantages of using it from the start,
I am having trouble finding our cost to market on any given car, much less on the inventory as a whole, I am finding cost to wholesale market when looking at water reports.. more on that later,
We have 2 dedicated desk managers (pre owned only) and a dedicated buyer, who is very smart and good at it. The three of us were just discussing stocking “cream puffs” vs. the alternatives, and now I have found this thread; Bob to me it looks like you are running an ideal store. Our philosophy has been for some time now to specialize in cream puffs and ultra low mileage auto's. Which obviously, for all the above reasons, does not work with a velocity store, So I think they are good to have in moderation to attract those buyers willing to pay a premium for them, At Bob's turn rate I wouldn’t see a problem with having some.
I am very interested in this discussion so I suppose this is more of a subscription than a question.
Thank you Dale for all that you do.
Jason
As I mentioned to you on our phone call earlier today we are having great results the velocity model. I would love to steal a few minutes of your time on a teleconference with my management staff to discuss the sourcing infastructure we spoke briefly about. Let me know if this is possible?
I have an Idea. Don't know if it's out there yet but…I have often said it would be awesome if there was a program that told me where I could purchase vehicles, what auction. etc. for under average market value. A system like the stock market. When the market is down it tells me. When a certain vehicle is less than normal at a certian auction it tells me. Vise vera when a market is up it tells me. I could take my aged inventory to that market. etc. Does this exsist or could it be done. 419-217-0973…Thanks, Mike.
Mike,
Thanks so much for the question. I'm on the road at the moment, and I don't have enough time to properly respond. Your question is good, however I think that you're looking for the answer in the wrong place. Soon I would like to write a post that more fully responds to your question with a slightly different approach, one that I think is more on target with the reality of today's market. Please be patient with me, I'll be back to you soon on this question.
Thanks
Dale
More insight for Mike
Mike,
The approach that you’re describing is one that is frequently called arbitrage. The auctions definitely don’t want dealers to arbitrage their vehicles among the various auctions because that is an approach that they themselves want to do. You see, their big customers are large fleets, and they want to get as much as possible for the big fleet companies by performing arbitrage themselves. If they made data available to the buyers to do the same thing, that would negate their ability to arbitrage. So, he/she who has superior knowledge of a market has a distinct advantage.
Now let’s consider a different approach, one where you, the dealer can in fact win using superior knowledge. This approach is one where the dealer can recognize moments in the market where particular vehicles have high demand and a significant spread between wholesale and retail market values. These are typical vehicles, but when identified are surprising. In other words, they tend not to be cars like Honda Accords, or Chevy Trailblazers. The desirability of such vehicles are commonly understood by most wholesale buyers and therefore they draw a lot of money from the wholesale marketplace. The type of vehicle that I’m talking about that might surprise you are vehicles that are a little bit oddball and not so well understood by the wholesale market, something like an ‘08 Kia Rondo. Did you know, for example, that this vehicle has an unusually low day’s supply in Denver and carries one of the largest spreads between wholesale and retail? You see, just like the auctions at the wholesale level, when you have special knowledge of the retail market that’s not generally shared by others, and you can act upon it, that’s true advantage. This is the underpinning of the velocity method of stocking management. Does this make sense?
Dale
Makes perfect sense…kinda like the guy who has a special sense for a market or a stock can make call when one vehicle will spike or a stock will drop…I have this gift…I want the software to go along with it…
Mike,
Thanks. Let me know if there is anything that I can personally do for you.
Dale
Can I buy your new book on CD? If so where?
David
OKC
David, thanks. I've asked my publisher to make my book available in digital format. I'll work on getting a date when it will be available and respond to you.
Thanks,
Dale
The Internet and Dealership Fixed Ops
written for WARDS by David Ruggles
Pre-owned sales should be driven by a high rate of inventory turn rather than being based on gross profit per retail transaction says Dale Pollak, CEO of vAuto and the author of the hot selling book “Velocity, From the Front Line to the Bottom Line.” Pollak conducted sold out workshops at the NADA convention this year. The vAuto booth was packed every time I tried to get near it. Pollak’s “velocity” concept is based on the fact that the Internet has changed the way people shop for pre-owned vehicles. When doing an online search, consumers get to a point when they are looking at too many vehicles for them to conveniently digest. They will then select a sorting parameter and in the vast majority of situations they select “Sort Lowest Price First.” Anyone who has ever purchased a pre-owned vehicle online, used Priceline.com, Hotels.com, or the search and sort feature on most online shopping sites knows this process. Pollak maintains, as do his advocates, that it is essential to make sure one’s inventory is priced in such a way as to show up in the first pages of the search, if not the first page. If a unit is priced substantially higher than the lowest priced vehicle of its type, consumers will probably never see it in a multi-page search hierarchy. The monitor of the consumers’ computer is the dealer’s display lot in this new internet driven era. If dealers and their inventory do not show up well on the web they will never see the consumer at their physical location. With dealers in the position of having to compete against their competition in an online scenario, downward pressure has been placed on transactional gross profit. It is truly the market at work and this new trend doesn’t favor auto dealers' traditional business model.
Dealers who use available technology like Pollak's vAuto will gauge their own pricing against their competitors before arriving at a posting price for their own inventory. They have found they can more than make up for the lost gross profit per unit by achieving a high turn rate. This practice also increases the number of F&I “turns” and trade ins taken. Practitioners of the “velocity” model experience astounding inventory turn rates and more than make up for the lower average gross profit per vehicle with overall departmental gross and net profit.
But this column is not about Dale Pollak or vAuto. Their theories are being proven every day in the market place. Dealers who aren’t on board with the theory are getting their butts kicked every day by those who are. This column has to do with the fact that since the pre-owned business is no longer based on a “cost plus” model and is driven by the fact that online traffic on inventory is generated based on pricing that will maximize the number of “hits”, there is a new reality in how dealers charge themselves for internal reconditioning.
In the late 1970’s, state and federal law mandated that auto manufacturers compensate dealers based on their retail customer pay rate for warranty work. Dealers, including myself, rushed to increase their “door rate” to capitalize. It was thought that discounted “menu pricing” would prevent consumers from fleeing to lower priced independents. We can look back with the clear vision of retrospect to see what happened. The increase in warranty reimbursement more than offset any loss of customer pay revenue in the beginning. Fixed Ops became the cash cow of the dealerships. But over time, new vehicles were built to increasingly higher standards and the warranty reimbursement vehicle dropped, along with the recent drop in total volume of new vehicles. Pricing cover was created for the proliferation of independent competitors in both the parts and service space.
At about the same time, it also became popular for dealerships to charge themselves internal rates for pre-owned inventory based on their new higher retail door rate. Instead of using the warranty compensation time schedule, they used full retail for both parts and labor. Previously, most dealers used an internal formula based on what they might provide any other large volume customer, like perhaps a fleet or municipality customer. Labor based in the range of 67% of retail rate and cost plus 25% on parts was typical. Not only were many dealers charging themselves additional mark up with the hopes of retaining at least that amount when the vehicle was sold, but many vehicle departments were forced to do everything “in house.” I’ll leave it to the reader to decide whether or not the retail recon concept has worked out overall. It certainly doesn’t make sense to do internal work at “cost.” It makes no sense to send work outside the dealership if the job can be done competitively “in house.” It is obviously a question of balance, and the debate is over where the balance point lies.
The “retail recon” theory was predicated on that premise that sales people and their managers sell from cost. This premise assumed that a “little extra cost” didn’t make much difference and that consumers would pay based on what the sales staff had the guts to charge and lenders would finance accordingly. The Internet has turned pre-owned vehicles into commodities. Dealers who post uncompetitive asking prices based on their old “cost plus” theories will find themselves on the back pages of the consumers’ Internet search and generate a fraction of the inventory “hits” as their “velocity” competitors. And in today’s environment, getting lenders to advance financing based on what is convenient for the dealer is problematic at best.
The policy put many used car managers in the position of having to recondition based on uncompetitive pricing. As an example, I’ve seen dealers force their pre-owned departments to buy tires at retail from their own parts departments when the same tires were available at half the price from Costco or Sam's Club. Some dealers went as far as to ban the touch up specialists and the “dent doctors,” requiring the work to be done in the body shop. Even sublet tickets have been marked up.
Many used vehicle managers used counter productive methods to deal with some of the impact of the “retail recon” policy on the wholesale side. Some would attempt to “steal” fresh trades to “package” with over age and over the market units to hide losses exacerbated by the extra internal profit that had been penciled onto their inventory. Wholesale buyers didn’t care how much money a dealership had in a unit, it was worth what current market dictated. So how do you measure the lost business from standing down from trades and including potentially high gross profit quick turn units in packages to hide losses?
In my own experience I watched a dealer tell his used car manager he could no longer do paint jobs on older “affordable” price category vehicles with a local MAACO shop. He was forced to do the paint jobs “in house” at a cost $2000. higher than the department had been paying outside. The dealer lived by the adage, “You can’t manage what you can’t measure.” How do you measure what you should have had, could have had, but didn’t get? There were no paint jobs for the dealership’s body shop to do because those vehicles now had to be wholesaled. The dealership lost the 12 – 15 “a month “affordable” price vehicles sales it had previously achieved. “Retail recon” forced other vehicles to be wholesaled instead of reconditioned and retailed. It forced appraisers to look at appraisals in a more conservative way. Fresh sales were lost as well as the trade in and F&I opportunities that would have gone with them. But the internal account on the financial statement looked nice and fat! The service manager got a nice commission check. And the lost opportunities were like they never happened.
Given the current and future pre-owned inventory shortage, many “retailable” vehicles in the “affordable” price category will need to be “made” via reconditioning rather than purchased at wholesale or traded for in near lot ready condition. Will traditional dealers leave those opportunities to competitors whose internal reconditioning structure allows them to “make” these units?
The original “cost plus” theory also included the notion that “fixed op”compensation was generally predicated on a lower percentage than “front end” compensation. “Penciling” gross profit from the sales departments to fixed operations leaves more dollars to fall to the bottom line. Some have mentioned this as one of the factors that has driven more and more sales talent from the auto business.
Will the future bring a more balanced approach to dealer pre-owned reconditioning? Dealers using the “velocity” model don’t want you to change a thing you’re doing!
Being new to the Velocity concept and after reading Dale's latest book, I currently have salesperson payplan that pays based on gross. There are flats that reward based on volume, but Recognizing that the salesperson is selling the market value pricing concept and they do not have the opportunity to control gross so much any more, I am looking for a Velocity based payplan. We were a One Price store back in the 90s so the concepts and pay should be fairly easy transition for us.
dale i am a dealer that has been useing v auto for 2 years it is a great tool that makes me a lot of money. my question is bmw is the hottest car in my market based on auto trader stats. i know the price point i need to sell car at to be competitive. but the wholesale prices are so high i can't make any gross. whay would you do . lenny napoli napoli nissan 2036687797
Lenny,
Thanks so much for the question. For you, stocking BMW's violates two important velocity rules. First, a key strategy for buying hot used cars for the right money is to identify “sleepers”. In other words, cars that are hot in your market, but are not understood as such by every used car operator in town. When your stocking tool provides you with knowledge about hot vehicles and that knowledge is not generally shared among your competitors, that's true advantage. The problem with BMW's is that every used car manager in town is also chasing them, so you're probably not going to have much luck buying them for the right money.
The second violation of BMW's is that there are a few makes that carry a high degree of loyalty to the used certified brand. BMW is one such vehicle, where shoppers have a strong preference for buying the item from the breeder. I think you'll have a lot of resistance in the market selling used BMW's if you can't certify them.
I would encourage you to check out previous blog postings regarding these and other strategies to stock hot used cars for the right money. If you use the strategy outlined therein, you can buy hot cars all day long for the right money.
Thoughts?
Dale
Dale I have read both of your books. Since we first talked in late 08. After reading your first book. I changed my operation in 09. Had the best year in 10 years! Not anything like your vauto group!But for a small operation of myself and one part time employee it was good. Feb 2010 was the best month i ever had for total gross in my 27 years. But here is my problem. I bought heavy in mini-vans midsize suv in oct nov.o9 But in late Jan i could see i would run out of the right units. Started trying to replace units on the average these units were up 30-35%. I didnt buy any units in FEB AND MARCH I bought 4 units.And these werent the right units. March was a loser. I stock retail 4-6 thousand dollar units. We run ads wanted to buy in our local papers. sign out front wanted to buy. we also work craigs list. And pay cash for cars on our web site. do you think the wholesale market will stay like this all year? Thanks Karonel
Karonel,
Good to hear from you. As a one-man operation, you continue to inspire me with your velocity management approach. You're living proof that the principles of velocity management apply universally to all, big or small.
Regarding your questions as to whether I think wholesale prices will remain high, the answer in an emphatic yes, for at least the next 18-24 months There are, however strategies to reduce the pain. They will, however, require an investment of time and money, technology and process. Please reference my earlier post entitled: How to buy hot vehicles for the right money all day long.
Karonel, as a hard-working small dealer committed to the velocity method of management, I'll make it very easy for you to gain access to the technology. Call me directly when you get a chance.
Thanks so much.
Dale
Dale What controls which cars are hot? is it gas prices, interst rates, the time of the year? is it a cycles? This is what i dont understand why one year traiblazers are cold and now they hot? Thanks for your time. Karonel
Karonel,
Great question. There has to be literally hundreds and maybe millions of random economic, environmental, media, and similar influencing factors that all play together in cocktail of unpredictability. This is what underpins the absurd nature of stocking strategies based on history, past experience or so called core inventory. If anyone is ever smart enough to answer this question, I challenge them to come forward and provide us all with the analytical answer. Until they do, I will continue to assert that the notion of core is pure rotten rubbish.
Dale
Hello Dale,
Do you have plans to launch an Android “Live market appraising” application?
Michael,
Yes, absolutely. Check back in about 30 days, and I should have a better idea of timing. Thanks for your note.
Dale
Dale, I used to use a rule of thumb regarding an average cost of inventory (say $11,000 – $12,000). I'm running quite a bit higher than that right now, but I am buying low MDS cars with a good cost to market and pricing them aggressively. My average cost of sale is higher due to a lack of availability of the lower price cars. Does this average cost of sales guideline thinking jive with velocity management?
Hi Dale, my name is Brian Tafler and I own and manage a Honda dealership in Toronto, Ontario. I attended your seminar at NADA in February and bought your book Velocity 2.0 for myself and my managers. Since implementing your philosophy we have doubled our monthly used cars sales with a lot more room for growth. Our biggest challenge in Canada is the availability of market data. Any plan to introduce V-Auto in Canada? Thanks, Brian
Brian,
Thanks so much for your note and congratulations on your velocity success. Yes, we're working hard to get to Canada very soon. Send me an email in about 60 days and I'll give you an update.
Thanks,
Dale
Brian,
To be clear, the risk associated with and the profit potential inherent in lower priced cars make them generally more attractive investments than higher priced ones. In fact, I would say that low price point and low market day supplies are two relevant considerations in stocking your lot.
Having said this however, it is often difficult to source such vehicles, but they are out there and you should never relent on the initiative to find them.
Thanks for the great question.
Respectfully,
Dale
Good lower priced inventory usually requires substantial reconditioning, which is problematic if you are having to pay retail for internal work, especially if your independent competitors don't..
David – agreed.
Dale
I can tell you first hand that Dale is right, “The auctions don't even like the word “arbitrage!” It goes on but the auctions don't help out with data. You CAN find interesting data on Internet MMR if you know where to look. For example, check 2010 Chevy Suburbans 1500 4wd 5.3 Liter LT. If you filter Northeast only you find a value of $34,532 with an average of about 9000 miles. Now filter to the West coast and find more Suburbans with fewer miles for about a grand less. There isn't enough spread avilable to do the transport and pay fees, but one might keep an eye on these. When they spread gets to about $2500. it's an opportunity. A lot of it has to do with the quantity of like vehicles being turned loose in the same geographic area. Recently there was money to be made buying Town Cars in LA and shipping them to Chicago or Dallas. There has usually been an arbitrage opportunity buying sports cars in the Midwest and shipping them to LA. The return is to buy trucks in LA and ship them to Ft. Worth.
I'm not trying to make a first class “jipper” out of you but this might start you thought process. There have always been opportunities for those who know where to look.
David – thank you.
Dale
Hi Dale my name is Eddie Abelnica I introduced myself over at the Nada in february I own a large independent use car operation in australia I just delivered 150 cars during the past 7 days trading
I would like to thank you I have implemented many of your strategies including fixed prices into my operation over the last 12 months Thanks again Eddie
Hi Dale my name is Eddie Abelnica I introduced myself over at the Nada in february I own a large independent use car operation in australia I just delivered 150 cars during the past 7 days trading
I would like to thank you I have implemented many of your strategies including fixed prices into my operation over the last 12 months Thanks again Eddie
Eddie,
I definitely remember meeting you at the NADA convention in Orlando. Congratulations on your velocity success. I spend a great deal of time telling dealers that the velocity method of management works anywhere and everywhere. Your experience demonstrates that it even works down-under. Nice work and keep the updates coming. Hope to see you in San Francisco.
Dale
Eddie,
I definitely remember meeting you at the NADA convention in Orlando. Congratulations on your velocity success. I spend a great deal of time telling dealers that the velocity method of management works anywhere and everywhere. Your experience demonstrates that it even works down-under. Nice work and keep the updates coming. Hope to see you in San Francisco.
Dale
Dale,
Any up date on the Android V-Auto App?
Dale we use vAuto and love it. We are at Ken Garff Hyundai in SLC, UT and have doubled (almost tripled) our used car sales.
What we really want is the Android app. We all have Verizon and really like the Droid’s better than the iPhone. Do you have a timeline of when we will have that option?
Thanks,
Sam Jarvie
General Manager
Ken Garff Hyundai
Sam,
Congratulations on your performance improvement, and thanks for your note. Right now we’re working diligently on the Android application and I think it’s likely to be out in about 60 days. I completely understand your need, and I want you to know that it is among our highest priorities. Thanks for your request and please continue to let us know what you need.
Dale
Dave,
Thanks for your note. Please see my response on the Android to Sam Jarive below.
Thanks.
Dale
Dale,
Our whole management team has read your books… and are seeing the difficulties of changing years and years of habits. We have been moving in the right direction and have seen an increase in volume over the past year. After meeting with Paul today… my Used Car Manager, Gerry and I sent this email out to our dealership Management team… We see that it is easier to change 100 things 1% rather that trying to change one thing 100%..so we are looking to fine tune… any thoughts would be appreciated!
Here’s the email
“Had a great Go To Meeting with Paul Hudnall with V-auto…
We have a lot of things going for us….
Our turn is over 22… We currently have 85 cars in inventory… our average investment is under 13700 and we are in good shape as far as water goes…
We currently are on track to sell 67 used Cars this month-
It’s now time to take it to the next level…
Here is Gerry and my thoughts on a few things…
We need to throw out the challenge… how do we get at least 1 picture and a price online in 24 hrs on a trade and a P car (for the record… we are good at getting prices online in about 2 days) pictures are taking as many 2 weeks… (and yes.. we understand that the current volume is a bit new to us as a store as well)
Our current process is –
On P cars … Stacey is putting the cars in ADP, the desk is pricing them in Vauto and ADP, and eDealerServices is here twice a week to take pictures of the inventory. Service rotates the cars through the teams, and Prep cleans them as they are assigned… (we need to develop a priority system here)
Trades- do not go as smooth… generally they are not entered into ADP until after the deal has been billed, however, they are in Vauto usually right away (as we can place them in there from the desk) Once the desk feels the deal has cleared.. we do place it in for service… however… without the deal being billed.. it does not come across on the list for eDealer to take a pic of.
The first 7 days is really where we have the potential to make a profit on the car… and admittedly, as it is… we know that because it is taking so much time to get the cars cleaned, serviced, and pictures, we are really pricing the cars in the second bucket.. trying to drive traffic on line and to the lot on price… but in reality, unless we have a picture to go with it.. we are getting 0% conversion… even with a fantastic price….
Any ideas on how we can develop a consistent process to get at least ONE picture and a price online?
Next question-
We have to preface this question that the guys (and gals) have been doing a GREAT job and we have really made strides especially given the recent increase in volume.
How do we get a car Cleaned and Serviced in 72 hours?
I know we have to balance a lot…. Time off… parts availability… the pure flow of inventory (if our goal is to sell 100 used cars a month…we need to trade/buy service, and detail 100 cars a month) not to mention the little things that plague us… lost keys… cars not here… sold and need the rush job… ( I am sure that list goes on)
Currently we have 78 in stock.. 26 are missing pictures… so digitally we really only have 50 cars to convert from… (Dustin- we have always said the more we have online the more we will sell online)… Home net says we have 85 in inventory and 23 are missing pictures… (again.. we know that we recently bought a lot, however; we really want that inventory flow to be the norm and not the exception.
Our average car sells in 24 days… only about two weeks after we have a digital car, cleaned, priced, and on the web… we could really cut this down a few days… increasing our turn… increasing the volume of sales, increasing the serviced and cleaned cars, etc….
We are interested in everyones thoughts… maybe we can brainstorm a bit at the managers meeting?
We can even get some emails flowing!
Remember-
Buy cars- Trade Cars- Fix Cars- Clean Cars-”
Dale,
Why do you not factor in price or payment ranges when assessing your stocking strategy.
Rocky,
Thanks so much for your question. You are right, price point and ultimately payments are significant stocking considerations. Discussing appropriate vehicle price points is something that vAuto Performance Managers routinely do when conducting meetings with our clients.
It is difficult, however to speak of any given price point as a target for the broad industry. Obviously the appropriate price point and consequential payments will vary according to the market and dealership brand profile. I think the only universal statement of truth regarding price points is that lower is better. Such vehicles tend to turn faster and present less depreciation.
Please let me know if I’ve addressed your concern.
Dale
Dale,
Thanks for answering my question, and I agree that price and payment are important considerations. I was wondering why your tool and others do not seem to generate reports that identify these price and payment points and trends.
Rocky
Rocky,
Again, thank you. Frankly I haven’t heard this request before, so I’m really curious as to whether other Velocity dealers would find it a value. Alternatively, how do other dealers (if at all) manage price and payment points? Rocky, how would you propose to track/manage vehicle inventory based on payments? Presumably there would have to be assumptions made about down payment, term and rate, is that correct?
Dale
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