ENSURE YOUR CERTIFIED PRE-OWNED VEHICLES GET THE STAR TREATMENT THEY DESERVE
It’s been a great year for certified pre-owned (CPO) sales for many dealerships. OEMs are also reporting steady increases in CPO sales.
In a conference call, AutoCanada’s President and Chief Executive Officer, Tom Orysiuk, said he sees great growth in the Canadian used market.
“The used market is something long-term that is going to improve in Canada, and it’s going to be a good opportunity for the entire dealer body,” said Orysiuk. “It will be something that will gradually build over the next couple of years.”
This growth means that managing this side of the business is becoming even more important.
NOT BEING SHY ABOUT CPO
Canadian auto dealer caught up with Brad Dickerson and David Wilke of LGM Financial Services (LGM) to get their take on how dealers can better manage their CPO inventory.
“Vehicles need to be prepared, cleaned, reconditioned and ready to sell as CPO units upfront,” said David Wilke, LGM’s manager, national training. “It may be a used vehicle, but it is seen as a new one for the customer and dealers need to present it as such!”
First impressions count, and this also rings true with cars. “Speaking of first impressions, dealers need to make sure vehicles are seen and identified as such,” said Brad Dickerson, LGM’s manager, OEM relationships. “This includes proper signage across the dealership, accessible information, window tags, window vehicle description and point of sale material,” he said.
“Customers need to be able to identify right away which inventory is certified as CPO and what it entails. We have seen the best successes with CPO when a culture of proper presentation is established in the dealership.”
Vehicles must be prepared, cleaned, reconditioned and ready to sell as CPO units upfront. It may be a used vehicle, but it is seen as a new one for the customer and dealers need to present it as such.
The CPO push has to be throughout the organization and not just in the sales ranks. “Every dealership employee needs to buy into it,” said Wilke. “And it is always best when everything pertaining to the CPO unit is shown right from the start, allowing customers to understand the value that comes with this CPO certification.”
FINDING POTENTIAL UNITS
The presentation of these CPO units is important, but a lot needs to be done before the dealership even has a unit ready on the lot — and this applies to regular used inventory, as well as for CPO. Dealerships need to have a solid sourcing strategy and a fast and efficient way to handle the units once they reach the dealership.
“Call-in trade-ins between stores if you are part of a dealership group,” suggests Wilke. “This will allow you to have an edge and first dibs on quality vehicles that have potential. Whether you are part of a dealer group or not, build relationships with other dealerships in your area; having access first to vehicles of your brand they took on trade-ins will save you the wholesale or auction steps, saving your dealership both time and money.”
Getting great units to build your CPO inventory can pay big dividends, and this might cost a little more. “Whether they come from your neighbouring dealership or a straight trade-in, the little bit extra you offer will be more than compensated by the profit you will make off a good unit,” said Wilke.
WORKING TOGETHER
To maximize your profits, you need to turn the vehicles more quickly, and that means getting the service department to see this as a priority, too.
“We unfortunately see too often in-fights between the service department and the used sales manager,” said Dickerson. “Developing a beneficial relationship between service and sales is mandatory for success in used sales. Service needs to realize that the used department is its best customer and they need to work hand in hand to get units ready for sale promptly. Of course, paying customers are paramount, but overly long waiting times for used units to be ready for sale can’t happen.”
And reconditioning costs also need to be kept in check. Service need to do what’s needed on the vehicle, but they shouldn’t be viewing this as an opportunity to boost service hours and revenues. “Service needs to understand that the list of items to inspect in order to certify a CPO vehicle as such is just that, an inspection list — not a shopping list,” said Wilke.
“Pay plans need to address this situation,” said Wilke. “We see great results where dealer principals have integrated some form of profitability sharing between service and sales for used units, which helps both sides understand the needs of the other.”
To maximize your profits, you need to turn the vehicles more quickly, and that means getting the service department to see this as a priority, too.
AS ALWAYS, TURNOVER IS IMPORTANT
No dealer principal likes to see a high turnover of its employees, but the opposite is true for inventory.
“The priority should be to take care of a unit and get it ready for sale within 48 hours of reaching the dealership,” said Wilke. “This includes cleaning, reconditioning and properly marketing the vehicle on the websites the dealership deals with, not forgetting the manufacturer’s CPO site if your specific brand has one.”
