An Example of Used Car Management Done Right in the 21st Century

September 29, 2009

Take a look at this memo written by an extremely enlightened Used Car Director at a highly sophisticated velocity-managed enterprise group. This memo sent to the GMs of their various stores exemplifies best practice management of what I call “Pixel” (virtual) Management. Today, it is not enough to just manage the traditional used vehicle metrics- you must also coordinate and manage the virtual side of the business as well.

Dale Pollak introduced a grading system to help evaluate online efficiency including “SPR’s per Vehicle”. There are many factors that drive SPR’s. Four of the factors that drive SPR’s are:

1. Screen Real Estate – quality of your online package

2. Price – are you priced to the market

3. Appeal – do you have the vehicles that customers are looking for?

4. Size of Market – this should be about the same for all Ohio stores

Total SRP’s are divided by your total inventory to compare yourself to others since the size of your inventory will affect the total. This is not a perfect indicator of the success of your online merchandising but I think it warrants watching. In theory if buyers are searching the internet for certain vehicles or types of vehicles, and you have what they want, they should show up in the search. If you don’t have what they want it won’t.

I have added two boxes to end of the report that recaps and your SRP’s per vehicle and your VDP’s. VDP’s, as we have discussed, are the virtual equivalent of a customer actually opening up a vehicle. Of course when your vehicle shows up in a search your goal is for someone to open it up. The higher the percentage the better, but if the percentage is high and the phone isn’t ringing or vehicle isn’t getting shown then something is wrong.

Just like you, I am just beginning to see and understand the importance of these metrics as they relate to our online merchandising. Questions that jump out at me as I look at this are:

1. Is it a coincidence that the stores with the most missing photos have some of the lowest VDP’s? Customers are less likely to open the ad if there are no pictures to look at.

2. Store C has much higher SPR’s per vehicle than Store D but lower VDP’s. So do they have the right variety of vehicles but for whatever reason are their particular vehicles or ads not appealing? Pricing is good so could it be miles, colors, equipment?

3. Are the high SPR’s per vehicle and VDP’s at our High Line Store legitimate buyers or curiosity seekers?

4. Store A and Store B have about the same SPR’s per vehicle but Store B has higher VDP’s- so why does Store A still sell more vehicles? Is it something that happens on the phone call or the lot?

I don’t have all the answers, these may not be the right questions and there may be many more but we need to start including these metrics in our evaluation of our inventories. You need to start looking at these metrics on each vehicle as you reevaluate them through the aging process.