The most common yet avoidable mistake is made on Day One: either owning the wrong car or owning the right car for too much money. We all know that cars are depreciating assets with a finite window in which they make you profit. You must know the car you are buying. Walk the car. Review the CARFAX reports. Review your sales history and the market data, both retail and wholesale. There is no substitute for a strong appraisal process. If you take in a trade and it’s not a fit, make that decision on Day One. Don’t pour money into recon and then arrive at that conclusion on Day 45.
Prepare for Oversupply With These Three Steps
With analysts predicting that used vehicle supplies will continue to increase, there are three steps you can take to manage your used-car business when there is an oversupply:
Step 1: Be smart about what vehicles you buy and choose to retail. Don’t just look at mileage, condition, age and history. Pay attention to supply, particularly off lease.
Step 2: Be thorough and attentive in how you merchandise and price your vehicles in the market, particularly if they’re in high supply. Don’t price yourself way out of the market on the high side or the low side. On the high side, consumers will question your integrity. On the low side, they’ll think something is wrong with the vehicles.
Step 3: Stay on top of aged inventory, and move swiftly. Increased supply is not a short-term problem. Look at tightening up your aging policy, instituting one if you don’t have one already or have been lax in enforcing it. The longer you wait to deal with an aged unit, the bigger the wholesale loss.