Insights From vAuto’s Performance Management Team Meeting
I had the honor and privilege of taking part in vAuto’s annual Performance Managers meeting this week.
The meeting gives the Performance Management team the opportunity to share best practices, compare notes and craft plans to help vAuto dealers sell more new and used cars and make more money in 2015.
I found two insights useful to share, particularly as we all look ahead to the coming year:
1. The need to minimize discounts to maximize margins. It’s clear that dealers from coast to coast follow pricing and sales strategies that are built for negotiating the price of new and used vehicles. The problem: If you’re already offering a fair market price online, your managers and sales associates need to do a better job standing behind your offer.
A Performance Manager shared a story from a secret-shopping trip to one of his dealer clients. On the lot, he was looking at a 2012 Mini Cooper Countryman with an asking price of $16,800. “I asked the sales guy, ‘I saw this car online, but my budget’s only $16,000. Do you think I could get it for that?’ He said, ‘I don’t see why not.’ The guy lopped $800 off the car without blinking!”
This dealership, by the way, has since made such automatic margin give-aways less common. Its average used vehicle discount is now less than $400 and getting smaller.
I think every dealer would agree that in today’s era of margin compression in new and used vehicles, a truly fair market price deserves the opportunity to be good enough for buyers.
2. Lost opportunities in appraisals. Every dealer understands that you really make your margin in used vehicles when you buy them “right.” In today’s market, however, buying them “right” requires a process that’s more customer-involved and –transparent than it used to be.
It wasn’t at all surprising to hear that dealers who had adopted such processes (and the requisite oversight of measuring look-to-book ratios and other metrics) were doing a far better job of acquiring more of the right cars “right” at the curb, which translates to a faster-moving, better-grossing used car department. Similarly, these dealers appear to have fewer complaints about finding inventory and making too-little money on their retail units.
I have to say, it was quite humbling and inspiring to see all of vAuto’s Performance Managers gathered in a single room, wrenching on ways to help dealers become more successful retailers.
I left the meeting with an even deeper appreciation for how much these men and women continue to be an indispensable part of our company and your business.