Dealers are sacrificing used car profits by failing to properly assess reconditioning work required on part-exchange vehicles. Manheim Auctions, which carried out a survey among its dealer customers, reports a “disappointing level of attention” given to part-exchange appraisals. Alan Cureton, Manheim sales director, believed the problem was two-fold.
“The sales person doing the assessment is often not fully trained to perform a consistent appraisal,” he said. “In addition, sales managers have become too reliant on the appraisal and are not valuing the vehicle themselves.
“Consequently, when the part-exchange is reconditioned, the costs are often higher than expected. This is affecting the used car department's profitability.”
Not only are the costs higher, but the length of time required to complete the work is often longer, which results in a delay before the vehicle appears on the forecourt.
“The dealer may then overprice the vehicle within its local market to try to recoup the higher costs,” said Mr Cureton, “but this usually results in a no-sale, which affects the stock turn.”
Manheim has launched a training seminar to give sales staff the knowledge and experience to carry out professional part-exchange appraisals.
Two “major dealer groups” have signed up to the course, which costs around £85-£100 per delegate. “This money can be saved on one properly completed appraisal,” said Mr Cureton.