As the fog starts to clear from the Great Recession, dealers are sharing some of their lessons learned in the used car space. New car sales grabbed most of the attention last year, but sales of previously owned vehicles and trade-ins are gaining significance for franchised dealers – as two large dealer groups have experienced.
Phil Long Dealerships in Colorado Springs, Colo., has overhauled its used-vehicle department in recent years. Trading used vehicles among the 19 dealerships started up in 2009 – and that reduced used-vehicle inventory from 60 to 30 days. Any car that sat on the lot longer than 60 days has been sent straight to an auction.
Used vehicles have gone in importance – Phil Long is now No. 66 in used-vehicle sales and No. 118 in new vehicle sales in the US. Used vehicles increased 11% in sales last year to 8,529 units sold; through mid-March of this year, used vehicle sales were up around 30% to 1,200 sold.
The recession taught the staff some valuable lessons – cash was think and assets had to be managed better. The cars were fresher, the inventory had more sizzle, and managers were more accountable, according to Mike Cimino, vice president of Phil Long Dealerships.
Germain Motor Co. in Columbus, Ohio, found that retaining best practices developed during the recession helped increase used-vehicle sales last year by 16%, to 8,853.
CEO Steve Germain said he started using a used-vehicle inventory management tool has helped determine what vehicles to stock and how to price them. Creating an efficient used-vehicle operations helps new-vehicle customers get more trade-ins. That was a big part of increasing new vehicle sales 24% last year, Germain said.
Germain Motor Co. is also seeing strong returns in used vehicles sales – the group is ranked No. 36 in used vehicle sales, and No. 83 in new vehicle sales. Changing their way of thinking has shown strong results for the dealer group – the recession made everybody a little bit smarter in maximizing opportunities in fixed operations and used cars, he said. These days, 75% to 80% of Germain Motor Co.’s new vehicle customers have a trade-in.
