News Trader Talk

Trader Talk: Programme pilot sees car sales rocket

Time 8:58 am, June 3, 2013

citroen-17In recent months I encouraged you to review the way you run your used car operation. I emphasised the need for you to have a retail focus; to understand the changes in consumer behaviour; to have a strong online and mobile presence; to use market data; to consider the relevant metrics for success; to take care when dealing with part exchange vehicles and to review your sourcing and pricing strategy.

The market is constantly evolving and to meet this challenge you need to start thinking of yourselves more as retailers.

You need to study local retail demand to understand which cars to buy and need to know the retail price to determine how much to pay for these cars.

Using the right market data in the right way will enable you to identify what’s hot and what’s not at any given point in any month. The data include metrics to track consumer supply and demand, measure stock turn and identify the potential gross profit margin.

I have been contacted by many dealers asking for evidence to support my recommendations and am more than happy to share this. Reminding you of those facts and stats will demonstrate how you can make significant improvements. More than 100 dealers undertook a pilot scheme to substantiate the benefits of unique software that had transformed the way those dealers were thinking about their used car operations. It 
did so by taking the uncertainty out of used 
car retailing.

The results were impressive. Sales performance of the pilot dealers was three times that of the market average for dealers with 25-plus used vehicles on the forecourt, at 86 cars sold per dealer compared with just 29 over a similar period. Perhaps more importantly, over-age stock was sold at the rate of 14 cars per pilot dealer, compared with the market average of nine.

Pilot dealers also conducted pre-purchase appraisals on more than 200 cars each and 84 per cent were rejected because there was no demand locally. If a car is not desirable it will not sell. Interestingly, nearly 1,000 of these undesirable cars were still sitting on the forecourts of local competitors and were likely to do so for some time. Of the remainder that were appraised as desirable, more than 40 per cent were sold in an average of 21 days after they were first advertised. During the 21 days they were reappraised on average on two occasions to ensure optimum pricing.

The pilot dealers used a software that recommends what stock to buy, where to find it, how much to pay for it and how much to sell it for. It also improves dealers’ stock turn and gross profit potential by offering a dynamic online pricing tool that suggests price movements of dealer stock, aligned to real-time local market demand and required margin levels. It worked for them and it could be working for you.


Tim Peake's avatar

Tim is group strategy director at Trader Media Group, publishers of Auto Trader, the UK's largest car marketplace.

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