ProfitTime GPS in Practice: Halfway Through A Dealer’s 90-Day Pricing Alignment Challenge

In late February, sales manager James Skop of Fletch’s Buick GMC Audi in Petoskey, MI, made a bold decision.

The decision followed a conversation with his vAuto Performance Manager, Vinson Treharne, about the alignment of the store’s used vehicle pricing to ProfitTime GPS recommendations. For months, the pricing alignment had been running about 60 percent.

Skop explains: “Vinson showed us our data. We were at 60 percent because, a lot of the time, we weren’t willing to swallow the fact that we had a Bronze vehicle that wouldn’t make $2,000 or $3,000. Other times, we had a Platinum vehicle where ProfitTime GPS said we should be making $5,000 or $6,000 but we wanted to move it quick and make the money. We were selling ourselves short by thousands of dollars.”

To correct the problem, Skop agreed to a 90-Day Pricing Alignment Challenge. He pledged to keep his used vehicle pricing aligned to ProfitTime GPS recommendations at least 85 percent of the time, at all times.

Why not 100 percent alignment? “We can’t go 100 percent,” Skop explains. “We have rust in northern Michigan. So, with some of the cars, I have to price the car to what it is, not what the computer says. You have to know the vehicles better or more than the computer system sometimes.”

Skop makes a great point—if a dealer’s 100 percent aligned to ProfitTime GPS recommendations, I generally agree that they’re not wearing their “car person” hats enough.

Halfway through the 90-day challenge, Skop is pleased with the results he’s seen so far. The store closed the month of March selling two fewer cars than they did in February, while making $38,000 more in front-end gross profit. “That’s just front-end gross,” he says. “The results give me the faith and cold hard numbers to continue what we’re doing.”

I asked Skop to highlight how his 25 percent higher overall alignment with ProfitTime GPS recommendations helped him achieve the better results. No surprise…the improvement came from managing Bronze cars with more urgency and Platinum cars with more patience.

On the Bronze cars: Skop notes the average days to sell fell from 55 days to 50 days during March. Meanwhile, the faster pace of Bronze vehicle sales volume helped the store go from an average $1,000 front-end loss to an average $900 in positive front-end gross profit. “The difference is just swallowing the pill and pricing the Bronze cars right from the get-go,” he says. “We’re not trying to make $3,000 to $4,000, and just slapping the profit on the car. Then, the car depreciates and we’re further in the hole.”

On the Platinum cars: Skop says the average days to sell for Platinum vehicles increased from 18 to 21 days as they accepted a higher share of ProfitTime GPS recommendations. Also, thanks to the faster sales of Bronze cars, they faced less pressure to move Platinum cars quickly. “Your Platinum and Gold vehicles are the ones you’re going to hold out on a little bit longer and make more money,” he says.

In addition to maintaining the daily price alignment discipline Skop has achieved during the first half of the 90-day challenge, he and his team will be turning their attention to vehicle acquisition. The thinking: Now that they’ve figured out how to move Bronze vehicles more quickly, they need to make sure their appraisal and acquisition efforts bring in sufficient inventory to meet their monthly volume targets—even if it means acquiring more Bronze and Silver, rather than Gold and Platinum, cars.

“Typically, when you go to an auction, it can turn into a Bronze vehicle quite quickly,” Skop says. “But what we were seeing is that we were afraid to buy those vehicles because, first of all, the grosses are not as high, which kind of put us into a position of not having enough volume cars. We probably also missed some trades because we were trying to keep too many Golds and Platinums on the lot to make ourselves feel comfortable.”

I’m happy for Skop and his team, and grateful for his willingness to share the early results from his 90-Day Pricing Alignment Challenge. He and his team are out-performing other dealers in their area and they’re doing it at a time the market’s in decline. The early results reflect the combination of the team’s used vehicle pricing discipline and diligence, and the strength of the ProfitTime GPS solution.

Skop and I also agreed to reconnect when his 90-day challenge concludes next month. I’m excited to learn more about his experience and share it here.