High Performance Used Car Operations

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Monday, 22 December 2014 20:39 Written by 
Over 98% of all used car purchases are researched and motivated by the Internet.

This may sound very high when we examine the percentage of e-leads received from various Internet providers, 46-68% of total selling opportunities into a used car operation are from e-leads.

The reality is, that most customers who either phone in or attend in person, will on the yard prior to or after the personal visit, compare your vehicles to others offered for sale on the Internet.

Press advertising is almost redundant!

A customer may appear to respond to an advertisement but in reality they read the advertisement, then compare the price on the Internet and providing your vehicle is proceed realistically, they will be a walk in or phone up. So what percentage of your total monthly sales are currently sold by an e-mail inquiry? How many leads arrive from Carsalesconnect?

Great used car operators are reporting in excess of 46-85% of sales introductions from the Internet and close Internet leads at 20-25% closing ratio or better.

What percentage of sales occur after the customer has checked the price of your vehicle on the Internet and also checked the price of their trade in on the Internet then contacted the dealership?

Buyers are well informed and it is the dealers that are having trouble coming to terms with this Efficient Market.

A New Australian Internet Age Requires New Ways Risk-Return-Equity, are some of the underlying principals that underlie every investment

The name “Velocity” is a US based used car philosophy to address the “one philosophy in the past, one philosophy in the future” of today’s Australian used vehicle Internet based marketplace.

“Velocity” meanwhile, represents the new skills that dealers and used vehicle managers must understand, develop, and deploy to have a realistic opportunity at capturing today’s Internet-enabled buyers.

Today’s customers start their used vehicle shopping online and what they find online defines who they contact and where they might drive to look!

Why the Internet Is so Powerful yet so Disruptive?

The reason the Internet has become such a transformative force in our business is because it has leveled the playing fields between dealers and consumers. It has also opened the door to a wealth of new sales opportunities.

‘A lot of dealers think if they’re on the Internet, they’re in the Internet game. That’s simply not true!

An Efficient Market meets Inefficient Sales Processes

Economists describe a market as “efficient” when there is roughly equal knowledge (between buyers and sellers) of choices and alternatives and, as a result the prices are largely governed by supply demand and price sensitivity.

Is there equal knowledge between buyers at sellers in today’s used vehicle marketplace? Pretty much, in fact some customers know more than dealers when researching their purchase. The Internet is the “great equaliser” that provides consumers with more information about vehicle prices, specifications, colours, options/trim levels, owner histories, wholesale values, and dealers’ reputations than they’ve ever had before.

The key in an Internet-driven marketplace is to make sure your pricing is competitive and, if it’s above market averages….justify why.

”Given these dynamics, demonstrating online value for today’s Internet consumers is absolutely critical to gaining their attention.

The key take-aways:

In an efficient market with its volatility, creates greater risks for dealers and used car managers.

The longer a vehicle stays in a stock, the greater the chance that wholesale value changes, margins reduce and there can be shifts in consumer preference. In fact research indicates that after 32 days in stock a used vehicle sale is unprofitable due to holding costs exceeding gross profit.

The longer a vehicle remains in stock, the longer a dealer’s investment is tied up in a unit that may not be a retail proposition compared to another.

Managing by Numbers utilises "Velocity Philosophy" buying, selling and stocking philosophies!
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Read 3839 times Last modified on Tuesday, 06 October 2015 17:37

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