How to Fine-Tune Your Used Vehicle Depts to Spot ... - DealersEdge

How to Fine-Tune Your Used Vehicle Depts 

to Spot Weaknesses and Supercharge 

Results! 

How Dealers, GMs, would-be GMs and Controllers - As well as 

Sales Managers themselves - can measure performance in your 

used vehicle departments to highlight areas needing improvement 

and to formulate corrective action plans! 

With 

Steve Nickelsen, CEO of Nickelsen Partners 

Moderated by 

Mike Bowers, Executive Editor of DealersEdge

Steve Nickelsen, Nickelsen Partners 

Steve Nickelsen, CEO of Nickelsen Partners LLC, has focused on improving 

dealership net profit for the past 25 years. In his personal consulting to dealers and 

as leader of other consultants, he has worked with more than 8,000 dealers, general 

managers, and sales managers to improve their businesses, and he has trained 

more than 20,000 automotive salespeople. His clients include some of the most 

profitable automotive organizations in North America, as well as some with among 

the highest customer satisfaction and retention. 

He is a frequent speaker for companies and conventions related to the automotive 

industry, and he has been the highest-rated speaker at NADA. In addition to 

working directly with car dealers, he has worked with OEMs and importers to help 

them improve the sales, profitability, effectiveness, and satisfaction of their dealer 

bodies. 

Examples of his work include: 

For a group of domestic-brand dealerships, helping them rise from average to outstanding sales 

performance (including making their largest store the #12 Chevrolet store in the U.S. in sales) by 

coaching the dealer and his management team 

For a dealer with both import and domestic stores, enabling the dealer to achieve greater profitability -- 

and happiness -- by helping him define and implement consistent, effective processes for major 

dealership activities, particularly the vehicle selling process, thereby creating an earned confidence that 

the operations were stable and under control. 

For a Canadian importer, helping them achieve month-over-month sales growth in an otherwise 

declining market, by creating and conducting a series of targeted performance workshops. 

For a distributor of Toyota vehicles, helping them grow their market share by more than 15% over two 

years, through work with the distributor and directly with their dealers.

How to Fine-Tune Your Used 

Vehicle Departments to Spot 

Weaknesses and 

Supercharge Results! 

A DealersEdge ® WebCast 

with Steve Nickelsen 

CEO and Founder 

of Nickelsen Solutions LLC 

Thursday, May 3rd 

1 p.m. Eastern

Your presenter… 

Steve Nickelsen, CEO and Founder 

NickelsenSolutions 

Providing you with the tools to lead. 

Page 2

You Will Learn: 

•What are the "new" 

measurements in Used Car 

Departments? 

•How to determine your market's 

real used vehicle potential. 

•How to structure your used 

inventory for maximum net profit. 

•How to attract more on-line 

prospects to your used 

inventory. 


Page 3

You Will Learn: 

•How to find used cars to sell in this 

economy. 

•The 3 keys to inventory "pricing" and 

"re-pricing“ 

•How to increase turns to drive 

dealership net profits 

•How to take control of reconditioning 

costs and time 

•How to teach ol' dogs new tricks! 

•How to keep used car customers 

returning for maintenance. 


Page 4

Getting the most from this Webinar… 


Page 5

Don’t let anyone say “It’s different here - 

without providing the “data” 


Page 6

The results from executing on processes 

from today’s Webinar could lead to 

growing your 

pre-owned department 

not by 5%, but by 50% or more. 


Page 7

Remember how the shoppers 

shop… 


Page 8

If 10 people visit a dealership – this is 

their path… 

The Internet 

The Dealership 

Showroom 


Page 9


their path… 

The Internet 


Showroom 


Page 10


their path… 

The Internet 


Showroom 


Page 11


their path… 

The Internet 


Showroom 


Page 12


their path… 

The Internet 


Showroom 


Page 13

So, if 40% of your leads are starting 

with a call or lead, have you shifted 

appropriate resources to maximizing 

your efficiency in these two areas? 


Page 14

Do you know how many leads and calls 

came in yesterday? 

Has someone verified efficiency? 

How many appointments were 

scheduled? 

How many showed up? 


Page 15

And the transparency caused by the 

Internet has created the new 

“Velocity” 

strategy. 


Page 16

What Is “Velocity”? 

$1MM inventory (100 units) 

$400 F&I GP + $200 internal 

parts and service GP: 


Page 17


• If I can sell a $10,000 car with a 

$3,000 gross in 60 days, I earn 

$3,000 gross profit in 2 months on 

that $10,000 investment. 


$2,000 gross in 30 days, I earn that 

$2,000 gross twice in two months, 

on that same $10,000 investment. 



$1,500 gross three times in two 

months, on that same $10,000 

investment. 

50 sales 




$180,000/month GP 


Page 18














investment. 

50 sales 

100 sales 




$180,000/month GP 

$260,000/month GP 


Page 19














investment. 

50 sales 

100 sales 

150 sales 




$180,000/month GP 

$260,000/month GP 

$315,000/month GP 


Page 20














investment. 

50 sales 

100 sales 

150 sales 




$180,000/month GP 

$260,000/month GP 

$315,000/month GP 


Page 21

The 5 most common mistakes… 

1. The metrics are not monitored 

- Appointments made, confirmed, 

show and buy 

2. Phone calls are not “scored” – 

someone needs to listen to every 

call. SmartSheet is a good tool. 

3. E-mail responses are slow and too 

automated – and they contain 

misspellings and grammar errors. 

4. We don’t match behaviors to the 

function. 

5. We don’t coordinate templates with 

“live” interaction. 


Page 22

What are the "new" measurements in 

Used Car Departments? 

• TOTAL gross from the sale 

• Front gross 

• F&I 

• Service – mechanical and 

detail 

• Plus some trades 

• Plus market share increase 

• Plus futures – service, 

parts and body shop 


Page 23

How to determine your market's real 

used vehicle potential. 

• Forget history! 

• Few things will limit you more than 

“we’ve never done that before” 

• The Limiter 

• Your “lid” – John Maxwell’s book 

• How many does the “best” used car 

retailer do? 

• Things to consider 

• Current practices and tools: 

traditional, top 35%, or top 5%? 

• Population within 20-30 minutes? 

• Knowledgeable competition? 

• Available capital? 


Page 24



A good financial 

pro forma will 

help you 

determine if it is 

“worth it”. 


Page 25




Page 26



Many retailers do more than you’d think 

• Texas Direct Auto.com in 

Stafford, Texas 

• Blue Knob Auto in 

Duncansville, PA 

• Tom Ahl Auto Group, Lima, 

Ohio 

• Woodhouse Auto Group in 

Nebraska 

• Tom Kelley AG in Ft. Wayne 


Page 27



Blue Knob Auto Sales 

Duncansville, PA 

What’s on the Internet 

■ 630 used vehicles 

■ 12% over 60 days old 

■ 91% average price to market 

■ 132 market days supply 

Strategy and Ideas 

■ Sells 500+ a month 

■ Pure used cars – no new franchise 

■ Huge selection, focus on recent models 

■ One-price, very low prices, no-haggle selling 


Page 28



Blue Knob Auto’s Strategy Is Internally Consistent 

• Mission Statement (from their website) 

– Blue Knob Auto Sales’ goal is to provide 

quality used vehicles at affordable prices 

to our customers. 

– We strive to make the sales experience as 

professional and stress free as possible. 

– Our "one price" strategy will maximize our 

sales potential and enable Blue Knob Auto 

Sales to be an industry leader in our 

marketplace. 


Page 29



Texas Direct 

Stafford, TX 

What’s on the Internet 

■ 1,800 used vehicles 

■ 28% over 60 days old 

■ 102% average price to market 

■ 82 market days supply 

Strategy and Ideas 

■ Aim to be 100% Internet and phone for entire sales process 

■ World’s largest eBay Motors dealer 

■ Independent; no new-vehicle franchise 

■ Buy and sell worldwide from Texas location 

■ Streamlined, unconventional approach to stocking, selling, operations 


Page 30



• Company founders who came out of the software business and 

didn’t know – or care – much about the car business when they 

started 

• Most purchases completed on-line or on the phone 

– Very few customers on-site 

– An impressive phone bank to handle customer inquiries 

• A huge inventory, with many of those vehicles sold and being 

prepared for delivery to customers 

• Streamlined processes aimed at getting vehicles bought, prepped, 

sold, and delivered as quickly and cheaply as possible 

– A sophisticated custom-built software system to handle the entire 

operations and selling process 


Page 31



• Be fast 

– “Aging inventory can kill you” 

– “Most people hold their losers and sell their winners…. We try and 

do the opposite.” 

– “Rather than waiting two or three months not to lose $4,000 on a 

mistake that we made, we’ll take that hit right away and try and 

make it up over the next two months with more prudent purchases.” 

– “Of the units we sell, maybe 10% of them are losers.” 

• Always be buying 

– “If you have a lot of inventory you can’t get rid of, dump it on the 

market and buy something that you can sell and make money on.” 


Page 32

The Importance of Training 

• “The first thing that happens 

when we hire on a new porter or 

other employee is show them 

exactly how we want something 

cleaned, how we want things 

moved, how they should 

approach their day, etc. We also 

train all our vendors to use our 

software….” 




Source: Zero to Sixty Million and Beyond: Under the Hood of the World’s 

Largest eBay Motors Dealership, Mike Welch and Rick Williams, page 136. 

Page 33

Applying “Lean” Principles 

• Lean = Toyota operating principles 

– Eliminate waste of all types: waiting, 

inventory, rework, unnecessary motion, etc. 

• Examples at Texas Direct 

– Checking cars in 

• Used to just be dropped in any open spot 

• Special parking zone for new arrivals that also 

serves as cleaning queue 

– Detailing cars 

• Moved car from arrival spot to detailing area, no 

clear priorities 

• Flow is new-arrival zone to detailing to photo 

booth to test-drive area, with each zone flowing 

into the next and with clear priorities managed 

by line leader 




Source: Zero to Sixty Million and Beyond: Under the Hood of the World’s 

Largest eBay Motors Dealership, Mike Welch and Rick Williams, pages 110-116. 

Page 34

How to structure your used inventory for 

maximum net profit. 


• Stock more of what sells fast 

with maximum gross profit 

(remember, that’s TOTAL 

gross contribution) 

• Have a buying discipline 

• Option A – look for 

“deals” 

• Option B – find cars that 

you know work best for 

your lot 

• Need a “tool” to do 

this fast, i.e. vAuto, 

AAX, FirstLook, etc. 

Page 35

How to structure your used inventory for 

maximum net profit. 


Page 36

How to find used cars to sell in this 

economy. 

• On line auctions 

• Focus on profits from F&I, Service and 

getting trades – not on paying close to 

retail. 

• Find lanes or auctions that are NOT 

simulcast 

• Your DMS 

• Start with the hottest year, make and 

model 

• Your service lane 

• Select the cars you want and approach 

the customer 

• Need your car, good time, in equity 

• Here is a sample script… 


Page 37


economy. 

Hello, this is calling from 

. I’m calling to confirm your 

appointment for tomorrow at for 

your . 

I also wanted you to know that we’re in need 

of quality pre-owned for 

our used car lot. 

I can’t make any promises, but some of our 

customers are moving up two or three 

years for little or no increase in payment. 

While you’re here, we’d be happy to give 

you a free, no-obligation vehicle exchange 

proposal. Just let me or your service 

advisor know that you’re interested. 

Again, my name is with 

and my direct line is . 

Thanks! 

Advisor asks if they had any interest in the 

“exchange my ride” program during the 

write-up. 


Page 38


economy. 

Schedule Specific Salespeople to Be in Service in the Morning 


Page 39


economy. 

We Buy Cars - CarMax 


Page 40


economy. 

Private sellers – CraigsList, 

AutoTrader, Cars.com, etc. 

1. Your check is good 

2. You’ll have your money 

today 

3. It is a “safe” transaction 

• Don’t let a stranger in 

your home. 

• Other dealers – off brands 


Page 41


economy. 

We Buy Cars - Billboards 


Page 42


economy. 


Page 43


economy. 

A Centralized Sourcing 

Group Includes a Variety 

of Roles 

• These people may be found 

internally or through job 

postings on the Internet 

(e.g., Craigslist). 

• Hourly compensation 

seems to work well. 


Page 44

One Group’s 

Centralized Sourcing 

Department 


economy. 


Page 45


economy. 

One Dealer Group’s Centralization Work Plan 


Page 46


economy. 

Be sure you are aggressive on trade-in’s 

•Most close 30% to 45% of their tradein 

appraisals (“look to book” or 

“appraisal performance”) – but there are 

other strategies. We like 55% or higher. 

•What would you pay for this car at the 

auction? 

•Traditional thinking is that too high 

means you are leaving money on the 

table; too low and you are not offering 

enough; wholesale loss is NOT the only 

measurement. 


Page 47

The 3 keys to inventory "pricing" and "repricing“. 

• To maintain “turn” – what you paid 

for the vehicle has nothing to do 

with how you price it. 

• 70% should sell in 30 days of being 

on the lot 

• Service and recon cycle time should 

be 72 hours for 80% 

• Review pricing at least “weekly” 

• Look for vehicle interest on the 

Internet 

• How many calls and leads have you 

received? 

• How many times has it been 

demonstrated? 


Page 48


• Determine your aging and turn strategy 

• Review individual vehicles at least weekly 

– On the Internet 

– Physically 

– Especially those that should have sold and 

haven't 

• Think of the vehicles as commodities – take the 

emotion out of it 

• At some point, i.e. 30 days, pricing is handled by 

reviewing the data, not emotion 

• Goal – no wholesale disposition 

– Finance and insurance, products 

– Future service, parts and body shop, Market 

share 


Page 49


Initial Pricing: Factors to Consider 

• Target “price to market” 

range 

• Unique vehicle attributes 

– Odometer 

– Condition 

– Equipment 

– Special equipment added 

• Market days supply 

• Whether it is intended to 

be a part of a “set” 


Page 50


Re-pricing 

• Has the market price changed? 

• Have supply and demand 

changed? 

• Are we on track to retail this 

vehicle? 

• What is our standard pricing 

policy for a vehicle we have 

had this long? 

• What was our exit strategy 

price for this vehicle? 


Page 51


Used Cars as Commodities 

$10k 

95% Price to market 

75% Cost to market 

$5k 

$0k 


Page 52

How to increase turns to drive dealership net 

profits. 

• Buy cars that are in demand – or will 

be at the price you ask 

• Price them competitively 

• Buy the right Internet real estate 

• Take a lot of great pictures 

• Descriptions need to be motivational 

to the vehicle – “what’s important to 

the buyer of this vehicle?” 

• Keep the vehicle clean during the “for 

sale” period 

• Loaning out used cars is not free 

• Create aging rules – no more than X% 

over 45 or 60 days 


Page 53


profits – case study #1. 


Page 54




Page 55




Page 56




Page 57




Page 58




Page 59




Page 60




Page 61

Current selling and prospect 

management processes 


Page 62



The “Folder” Helps Build Value in 

the Vehicle 

• CarFax/AutoCheck report 

• Market price comparison 

• “Why buy here?” 

• Internet pricing policy 

• Service record 

• MSRP 


Page 63

The Morning Variable Manager Meeting 

8:30 a.m. is a great start time. 

• Review yesterday’s prospects 

– Rank 1-5, or hot, warm and cold 

– Decide specific follow-up for each 

salesperson 

• Review all “hots” 

– Brainstorm-How we are going to “sell 

units?” 

• Review yesterday’s incoming phone 

calls 

• Review Internet leads 

• Review deals in finance that are not 

delivered 

• Review today’s appointments 




Page 64



One-on-Ones with Salespeople 

10:00 a.m. Schedule 10 minutes apart 

• Personal update 

•- Yesterday’s prospects 

•- Review all prospects 

•- Today’s appointments 

•- Review individual data 

Goal vs. Actual 

•Sales month to date 

•Discovery 

•Manager “Hi’s” 

•Final manager “T.O.” 


Page 65

Build Value: Why Buy from You? 

• This is the 

result of one 

dealership’s 

brainstorming 

exercise on 

why customers 

should buy 

from them. 




Page 66



• Here is another dealership’s 

“why buy from us” write-up after 

being put into customer-friendly 

appearance. 

• Documents like this can go onto 

table-top displays or posters as 

well as being placed into each 

vehicle packet. 


Page 67



Use CarFax or AutoCheck to Show the truth 

about the vehicle… 

• Keep with every 

vehicle 

• Run on lower priced 

vehicles you find in 

competitive sets 


Page 68

Rethinking Sales Compensation 

• Get selling costs 

under control 

• Realign incentives 

to hold gross on 

competitive 

Internet prices and 

reward process 

compliance 




Page 69

“Internet Value Pricing” Can Be a Marketing 

Position as Well as a Pricing Approach 

• Communicate value to the customer 

• Retain more of the advertised price 

• Use as: 

– Handouts 

– Posters 

– Stand-ups on desks 

• Best if reviewed BEFORE vehicle 

selection 




Page 70

• Groupings 

• Price display 

• Hang tags 

• What’s wrong with this 

vehicle? 

• Loaning used vehicles 

• As-is vehicles 



On-Lot Display and Merchandising 


Page 71

How to take control of reconditioning costs 

and time. 

• Track activities through time 

• A “Google Doc” is a good tool 


Page 72


and time. 


Page 73


and time. 

Do a “Corral Walk” Every Morning to Plan 

Reconditioning for Newly-Acquired Vehicles 

• Have a used-car “corral” on your lot 

• Every morning, walk your managers 

down the vehicles in the corral 

• Decide what to do with each vehicle; 

A, B, C or D 

• Write the decisions on the car 

window 

• Cross off tasks as they are completed 

• Track every vehicle from arrival to 

the front line 


Page 74

How to teach ol' dogs new tricks! 

• Have patience 

• Discuss the time frame and 

your level of commitment 

• Provide “proof” that it works. 

“Others have felt the same 

way…” 

• Show metrics of other 

dealerships 

• Let them talk to others that 

used to be suspect 

• We can give you YouTube 

links 

• Be sure that their pay plan lines 

up with the new metrics 


Page 75

How to keep used car customers 

returning for maintenance. 

• Give the buyer a good tour of service 

• Explain the reasons to use your service 

department – memorize; role play 

• Schedule their first service appointment 

• See that they are reminded of that visit. 

• See that the visit goes well 

• Deliver speed and competitive pricing 

• Pre-pay their maintenance 

• Survey their happiness with your service 

• Use Net Promoter Format with a 

SurveyMonkey.com questionnaire 


Page 76

Getting the most from this Webinar… 

• Create “work plans” 

• Pick out the two or three 

things from these ideas that 

would improve your used car 

department 

– Easy to do 

– Have the most impact 

• Meet weekly to review 

progress 

– Be honest with each other 

– Read Steve Jobs new book 


Page 77

Thanks for listening, and 

congratulations on your desire to 

learn! 

For any additional questions, please email me at: 

steve@nickelsensolutions.com 

or my cell is 330.697.3725 

Steve Nickelsen, CEO and Founder 


Providing you with the tools to lead. 

www.nickelsensolutions.com 

Page 78

How to Fine-Tune Your Used Vehicle Depts to Spot ... - DealersEdge

Create successful ePaper yourself

Delete template?

Save as template?