I’ve always lived facing sunward, seeking opportunity even as storm clouds gather — or, as now, when they cast dark shadows across the globe. The pundits say we face an uncertain future, but isn’t that the world in which car dealers and those of us who support your business have lived in ever since there were cars to sell and dealers to support?
Once this storm has passed, most of us will get back to business. Meanwhile, there’s much to do before reopening your showroom doors and selling used cars again in volume:
1. Work Your Data
A silver lining in the COVID-19 social and economic shutdown is the refocusing time it provided. Someone once advised, “Don’t waste your pain,” but instead, use it to get better. In this situation, that means scrutinizing your numbers — your inventory acquisition, pricing and wholesale data — and letting the picture emerge. Likewise, what do your look-to-book ratios tell you? How effectively does your ratio refill your lot with the vehicles your market desires? Get a precise summation of your reconditioning efficiency.
2. Build Inventory Turn
Start building toward a 30-day inventory turn now. Your risk and depreciation rates are too great not to buy the right cars (practicing a just-in-time strategy) and get them ready for sale in just a just few days. Given that the optimum retail window, once cars are on the lot, is now 21 days, you cannot tolerate recon practices that take 10 or more days to get cars ready to sell.
Coming out of the COVID-19 shadow is going to be challenging enough without dealing with over-aged cars — particularly in a weak wholesale market. Remember, buyers are still out there looking for cars, though mostly from home, which means they’re looking for bargains. This period offers a unique window to cater to the opportunistic side of these consumers.
This window also offers an opportunity to replace vehicles you’ll take a hit on. But make no mistake: As soon as things get moving forward, there’s going to be a scarcity of inventory on your lot.
But as you replenish — and work toward a new 30-day or 12-times inventory turn — you’ll need to be a bit smarter than the next guy and you’ll need to apply speed-to-sale strategies to recondition incoming cars in just days, not weeks. Dealers who still tolerate undisciplined and unmeasurable recon practices pre-COVID will find themselves in deep trouble once we get going again — unless they embrace these reconditioning disciplines.
Shoot to inventory, say, 100 cars and, by practicing speed-to-sale strategies, retail 120. You’ll need an automated recon workflow system to get you there.
3. Leverage Support
Use these days to heighten your team members’ skill level of the technology tools your dealership uses. Get familiar with the online resources offered by your vendors. Ask their support teams to help you find efficiency and profitability opportunities within those systems’ data.
4. Promise Hope
As CEO, build hope among your team. Take your business and personal conversations to a new level of transparency with your key people. Get their buy-in and championship into your key COVID-19 success messages. Clarify your direction and recovery plans at least weekly — and remind people how important they are now and will be as you move forward. We all want to feel safe and believe that we are rowing in the same direction when the seas get rough.
5. Train Intensively
This is an excellent time to review company goals and benchmarks. Train, train, train — to improve product knowledge, customer engagement skills and hone your team’s use of vendor technologies to squeeze out all their value.
Finally, remember to breathe! We will weather this storm.
