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NADA insight: six ways to increase your used car performance

Mandy Servet, of Manheim, puts forward six ways to increase a dealer’s used car performance, in insight gained from the recent NADA convention.

The margins achieved from used cars have become smaller over the past 10 years, she said. This is as customers have become more knowledgeable and demand more transparency from the dealer.

Servet challenged that when times are good for dealers it should be an easier time to review, challenge and change processes.

This is because people are more open to new ideas when times are good and morale is high.

Consumers spend 14 hours 44 minutes shopping for a car

With 59% of it online

They visit an average of 5.2 sites

77% that did visit a dealer group site also visited a third party site

70% of car buyers did not know what vehicle they wanted when they started shopping

71% of those that did then went on to purchase the vehicle they intended to buy.

Servet challenged that online retailing is the new front line of retail and that speed can protect profitability.

Your speed to market will increase your stock turn which will in turn increase your profitability.

Used car department activity (Source: Manheim Vehicle Solutions study)



Servet identified six ways to increase your used car performance.

1. Use stocking tools to identify in demand vehicles. Buying vehicles at auctions is becoming more of an art every day. You must know the desirable makes, models, colours etc.

2. Use online channels to buy vehicles – why do staff have to take a day out the dealership to go to auctions. Could this not be carried out from the dealership online?

3. Use condition reports and purchase protection to prevent arbitration

4. Speed of time it takes to get the cars reconditioned – the average in the US is 7-10 days, however the top 20% performers achieve this in three days

5. Get the vehicles online with pictures immediately otherwise you lose valuable time. In the US the average time to get a vehicle online is 12.5 days. The top 20% achieve this in four days.

6. Tweak/review your transportation and logistics model.

Key learning points

• Used car performance is under pressure from better informed consumers

• Look to review and change your processes when times are good. Don’t be complacent.

• Speed is everything. The quicker to market will increase your stock turn and help increase profitability.

> BDO attended the latest National Automobile Dealers' Association in the US and brought back insight on a number of topics, including the above.

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