Growth, Speed and Future-Focused Insights From A “Black Belt” Dealer
I love it when I have the honor of talking shop with Brian Benstock, general manager and vice president at Paragon Honda and Paragon Acura in New York.
As an early adopter of the Velocity Method of Management®, Benstock comes as close as anyone to perfecting the art and science of retailing used vehicles successfully in today’s ever-changing market. He and his team definitely deserve a “Velocity Black Belt,” earning seven consecutive years as the No. 1 certified pre-owned dealer (CPO) for the Honda and Acura brands.
The other day, Benstock shared stats that show his stores are well on their way to achieving the CPO honors for the eighth consecutive year. I took the opportunity to catch up and talk about the business.
“Our results in certified are pretty special, but the real story is that we’re selling 500-plus vehicles a month without adding a single space on the lot,” Benstock says. “We’ve had year after year after year of record growth. We’ve done it by getting more velocity and efficiencies into our used vehicle operations. And what I think makes this a real eyebrow-raiser is that the competition is definitely getting better in our market and outside our market.
“We’re now a very mature certified used car machine and the growth rate is measured in the 5 percent to 7 percent range,” he adds. “For us to continue to have any level of growth has been a quite an accomplishment for the team.”
The Paragon team consistently sells 500-plus used vehicles a month from an inventory of less than 300 units. That performance translates to 18 to 20 annualized inventory turns, and an exceedingly sharp focus on speed in the dealership.
“If we want to continue to dominate, we can’t be weak in any area of our game,” he says. “We’re in acquisition mode seven days a week, 365 days a year. We’ve got to know the time from acquisition to front-line ready and reduce it. We’ve got to make sure we’re adjusting the pricing as necessary every day, it’s no longer every two or three days. It’s got to be an everyday discipline.”
Benstock also shared how, over time, the emphasis on increased speed has spurred changes to the way they segment their inventory. A few years ago the store’s initial inventory “age bucket” ran from 0-30 days; now, it’s 0-seven days.
“Your maximum turn and gross profit opportunities now happen in the first bucket,” he says. “It’s no longer acceptable that it takes three to four days to get a car out of the shop—that’s 50 percent of your first bucket. In fact, it may be time for us to go to a zero to three-day bucket. We’re going to have to keep raising the bar.”
I asked Benstock if he worries about the competition—especially those who might also adopt Velocity principles and give his stores a run for their money.
“There’s no margin for error for us as other people adapt to the new reality of doing business,” he says. “But so much of what has to change in the dealership has nothing to do with technology or tools. It has everything to do with the culture. You can install a tool overnight. The culture takes a little longer to change. We’ve developed a level of expertise that’s going to take other guys a while to get. It’s not going to take seven years like it did for us, but it’s not going to happen overnight.”
As we wrapped up the conversation, I asked Benstock what he viewed as incoming future challenges for his dealerships and the industry.
For his stores, Benstock says their desire to continue their growth will require an even greater emphasis on used vehicles, beyond the success they’ve seen so far with their CPO efforts. “We’re shifting now. We think the advantage will be in the non-certified business as more dealers concentrate on certified,” he says.
For the industry, Benstock sees an emerging challenge as technology plays a larger role in helping dealers manage their businesses, giving less market-astute dealers the ability to compete more favorably with dealers who are already market-smart operators.
“The trend gives me some cause for concern but I think there’s always going to be a way for dealers who are on the edge to see the opportunities and get ahead of the market,” he says. “You’ve just got to be willing to change.”