It made me happy the other day to peruse AutoRemarketing’s Top 100 (Franchised) Used Car Dealers for 2014.

AR top 100 300x166 vAuto Dealers Shine On AutoRemarketing Top 100 ListAs I was going down the list, I kept seeing familiar names—stores where vAuto has played a role in helping dealers take their used vehicle operations to the next level. All told, we counted 43 vAuto customers on the Top 100 list (nearly 50 if you add in dealers who subscribe to vAuto Genius Labs products). We also noted the number of vAuto dealers on the list increased substantially from the publication’s inaugural list last year.

From my work with many of the vAuto dealers who made the Top 100 list, I know the transformation of their used vehicle performance has not been easy. It takes commitment and courage to shed the traditional ways of retailing used vehicles and adopt the turn-and-earn principles of the Velocity Method of Management.

Sometimes, the Velocity journey creates initial pain as dealers work through aged inventory and change their people/processes to achieve a higher level of retailing efficiencies, apply market data/metrics to management decisions and shift to a “total gross mindset.”

But I think each vAuto dealer would agree that the initial pain has been worth the long-term gain.

I’m proud of the successes vAuto dealers continue to achieve, and their hunger to do an even better job on a daily basis. Here’s an example of that hunger from dealer Rick Ricart, whose team earned the No. 2 ranking in this year’s Top 100 list:

“Keeping inventory lean, clean, and profitable has allowed us to grow bigger and faster than ever,” he says. “The only downside? Auto Remarketing has us at #2. We won’t stop and we won’t settle until we are #1 in the country.”

I love it. On behalf of the entire vAuto team, I want to publicly congratulate all of the vAuto dealers on the Top 100 list this year.

 

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Forecast Alert

by dpollak on 07/22/2014 · 2 comments

Nugoose Island 2014 Forecast Alertmerous reports are filtering in from across the country citing geese delivering root beer. Sightings have confirmed that these are not drones, but in fact real geese. Consultation with forecast analysts confirms the fact that there is a 100% chance of root beer delivery from coast to coast. Experts advise all affected populations to immediately ice and consume the shipments with friends, family and coworkers.

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I received a note from a Velocity dealer asking for guidance to trim $100 to $200 from his reconditioning costs, part of a broader effort to increase used vehicle profitability.

1953 Chevrolet Corvette 300x168 Are You Asking The Wrong Question About Used Vehicle Reconditioning?It should be stated that this dealer is a smart operator who’s already wrung significant costs out of his reconditioning processes. He’s reduced mark-ups on parts to roughly 33 percent, and uses lower-cost, aftermarket parts to recondition vehicles that do not meet factory certified pre-owned vehicle program requirements.

Aside from lowering the retail labor rate used for reconditioning work or scrutinizing repair orders (ROs) to eliminate any “padding” by technicians, I didn’t see any sizable opportunity to cut more cost out of the picture.

Then it hit me. Perhaps the dealer, and others who are reexamining reconditioning costs to improve profit margins, may be focusing on the wrong aspect of their used vehicle retailing operation. The real problem, I thought, may well lie with the costs dealers incur to acquire inventory. If they pay too much, there’s really no amount of cost-cutting in reconditioning that’ll improve a vehicle’s profit potential.

In other words, while it’s good for dealers to continually ask, “what is the right amount of money to spend on reconditioning?,” the more important question should always be, “what is the right appraised value of a vehicle, given the likely costs needed to ready the vehicle for retail?”

The latter question is especially important in the current market. Wholesale values remain relatively strong and dealers are hungry to put customers in new vehicles—conditions that make it easy to over-pay for a used vehicle.

I liked how my friend and Velocity dealer Brian Benstock of Paragon Honda, White Plains, N.Y., addressed this challenge in an AutoRemarketing article this week.

“We cannot make the same mistakes that we used to make by overpaying for a car and worrying about that later on down the road,” Benstock says. “You have to buy it right from Day 1. You have to make sure you’ve taken all of the known factors into consideration from Day 1. And, frankly, you’ve got to be more judicious in purchasing the vehicles.”

With this approach, the costs required to recondition a vehicle effectively become a cost of doing business, which dealers can pass on to customers if a) it’s reasonable and b) they understand the hows/whys behind the reconditioning work. As Benstock says in the article, vehicle sellers and buyers “tend to be very understanding” of reconditioning costs if you take the time to explain them.

I complimented the Velocity dealer who contacted me for recognizing that consistent cost efficiencies in reconditioning are essential to profitable used vehicle operations. I also urged him to look a little further up the food chain to his acquisition process, where I suspect he’ll find far more than $100 to $200 in margin opportunity on every car.

 

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Achievement, Ambition and Blind Faith with Brian Benstock of Paragon Honda

07.16.2014

Last Friday I had the privilege of conducting a mid-year review with the management team of Paragon Honda, Paragon Acura and Honda of White Plains, New York. All three of these dealerships are under the management and control of Brian Benstock. My experience with Brian and his management team on both Friday and Saturday were [...]

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3 Ways The “Profit Per Day” Metric For Used Vehicles Falls Short

06.30.2014

Several dealers have asked me recently about the value of measuring the “Profit Per Day” of their used vehicles. As I understand it, the metric is determined by dividing a unit’s front-end gross profit by its days in inventory (e.g., a retail unit that generates $1500 in profit after 30 days would translate to $50 [...]

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AutoSuccess Podcast: 13 Minutes Of Velocity Fundamentals

06.27.2014

AutoSuccess has posted a 13-minute podcast that covers several used vehicle pressure points for dealers and my views on how they should be addressed to maximize sales and profitability. You can download the mp3 or listen to the podcast here—it’s a quick refresh of Velocity fundamentals for interested dealers.  

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A Cause For Concern For Dealers Who Over-Rely On F&I Income

06.23.2014

I’ve been struck by a couple trends emanating from dealer F&I offices: 1. Loans are longer. A recent Automotive News report noted that the average length of a car loan runs 66 months, the highest on record for Experian, which tracks the data. In addition, the report calls 72-month loans the “new normal,” and loans [...]

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A 3-Step Plan To Prepare For The Sales Model of The Future

06.19.2014

I’ve been getting more inquiries lately from dealers asking about the merits of a one-price sales environment at their dealerships. The dealers have seen reports in automotive trade press about groups like Sonic Automotive adopting this non-traditional approach to provide a more efficient, cost-effective and customer-friendly process for selling new and used vehicles. In some [...]

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Growth, Speed and Future-Focused Insights From A “Black Belt” Dealer

06.06.2014

I love it when I have the honor of talking shop with Brian Benstock, general manager and vice president at Paragon Honda and Paragon Acura in New York. As an early adopter of the Velocity Method of Management®, Benstock comes as close as anyone to perfecting the art and science of retailing used vehicles successfully [...]

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A Three-Point Plan To Speed Up Your Sales Processes

06.03.2014

In the past several years, many dealers have come to understand that speed matters in their dealerships. This emphasis on speed has been most profound in used vehicles, where dealers have been aggressively working to sell a greater number of vehicles in less time. In market after market, there are dealers who have doubled their [...]

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