Used Car Sourcing and Predictable Appraisal Accuracy

Used Car Sourcing and Predictable Appraisal Accuracy

Trade-ins remain essential, so when their owners walk through the door, give them the fairest offer you can — and be sure the spread you need isn't diluted by appraisal oversights.

Dealerships in 2024 will continue to face used car sourcing challenges. I recently read an article that netted the issue: “Dealers navigating a used-vehicle market that already allows little room for error are eyeing another obstacle: worsening used-car availability.”

According to BlackBook data:

  • Seven to 10 million fewer new vehicles were sold during 2020-2022 compared to 2016-2019.
  • Few vehicles were leased from 2021 to 2023.
  • Rental and fleet companies did not replenish their new car inventories.

Trade-ins remain essential, so when their owners walk through the door, give them the fairest offer you can — and be sure the spread you need isn’t diluted by appraisal oversights that either cost you potential sale and service customers or erode profit when appraisal recon estimates don’t match their actual costs.

Eliminating wide appraisal variances and slow reconditioning of trades means more kept revenue.

“This profit per vehicle strategy couldn’t have come at a better time,” said Jared Ricart, president of the Ricart Automotive Group, whose used car operation sells 600 to 800 used cars monthly, and with whom we talked recently.

“All used car managers share a big fear — we don’t want to make a mistake,” Ricart added. “The used car market is as volatile as ever, and this transparency into profit per vehicle eliminates appraisal guesswork.

Predictable profit per vehicle is defined as zero sales cost due to little or no disparity between estimated and actual reconditioning costs. “When a dealer acquires a vehicle to make a reasonable profit, I assert that their investment must not be ‘upside down,'” Dennis McGinn, founder and CEO of Rapid Recon, said. “But to get there, appraisals must build from a higher level of vehicle inspection detail than provided by a physical walkaround, a road test and standard VIN scan tools — even when conducted by their most seasoned and skilled appraisers.”

From my perspective of fixed operations, I would add that accurate appraisals eliminate surprises. Surprises add unnecessary stress to fixed and variable relationships. When an appraiser is confident, they got it right, but should a technician find an issue rooted deep in the vehicle, both parties tend to feel that the other is falling short.”

“Profit per vehicle is about accuracy and saving that one vehicle — we appraised it for this number, we estimated this profit, and can we execute that promptly?” said Matt Hubiak, director of preowned operations for the Swickard Auto Group. The group operates 50 franchises and 33 rooftops in Alaska, Washington, Oregon, California and Texas.

Dealers say having better data also helps them develop appraisers’ skills.

“The appraisal delta tells me about my appraisers’ skill set,” said David Long, executive general manager of Hansel Auto Group, which will retail 10,000 vehicles this year, having served the California Bay area for 62 years. He shares group responsibility with Justin Hansel. “For instance, if one of my appraisers at a particular store has a steady appraisal delta of $1,800 and another’s $800, I want to help that first appraiser estimate his reconditioning costs better. And just by the mere fact that we’re measuring it, it’ll find improvement.

“If I have 10 appraisers, every one of them will be weighted best to worst on the delta. The more I can find the center here, narrow this gap, and apply vehicle-specific inspection and repair data, the more we should bring that gap together,” Long said.

More efficient reconditioning narrows another gap.

“Slow recon, meaning more than five days, erodes sale margin quickly as holding costs on those cars pile up daily until the car is sold,” McGinn said. “There should be no room for this needless error in a general manager’s diligence.”

McGinn has authored four books about revolutionary reconditioning. His fifth, ASPIRE to Predictable, discusses strategic reconditioning time-to-line and its contribution to narrowing trade appraisal variances.

You May Also Like

Everyone Has Something to Teach Us

Don’t let pride keep you from learning and expanding your skill sets. Create a “learning zone” where knowledge is freely shared.

Everyone Has Something to Teach Us

By parking our pride, we will build skills at work and life

I feel bad for those who believe themselves superior to those around them in everything they do, because they’re missing amazing opportunities to grow, not just as a professional but as a human being.

Enhancing Accessory Offerings and Car Care Products in Service Centers

By expanding product offerings, identifying top-selling items and leveraging private-label products, dealerships can create value for customers, drive revenue growth and strengthen their competitive position in the automotive industry.

Enhancing Accessory Offerings and Car Care Products in Service Centers
Rislone’s DEF Crystal Clean Helps Get Customers Out of Limp Mode

New product removes damaging crystals from SCR systems and clears P20EE codes.

New Rislone DEF Crystal Clean™ Diesel DEF & SCR Emissions System Cleaner scrubs away crystal contaminants from the selective catalytic reduction (SCR) systems of diesel cars, trucks, and SUVs to cost-effectively restore power and performance.
Ford Dealers, Ford Fund Invest $2 Million To Train Future Auto Techs

The Ford Auto Tech Scholarship will grant 400 need-based awards to current or future students enrolled in post-secondary auto programs.

Ford dealers and Ford Fund, the philanthropic arm of Ford Motor Company, are investing $2 million in scholarship funding in 10 regions to help students pursue careers as automotive technicians.
USO, UTI Partner to Support Service Members’ Career Transitions

A highlight of the collaboration includes networking support with industry leaders to help facilitate training and job placement.

USO, UTI Partner to Support Service Members' Career Transitions

Other Posts

Digital Custom Forms from Rapid Recon Simplifies Dealership Life

Digital documents are more secure and easier for personnel to find, and electronic storage ends paper document handling, physical storage and retrieval personnel.

Reducing Worries for Dealership GMs

No GM wants to be pulled away when something comes off the rails or slammed by unexpected events they thought were being managed by our products.

Reducing Worries for Dealership GMs
Why Dealers Should Care About the Coming Auto Insurance Recovery

The anticipated upswing of the auto insurance market in 2024 — and lower insurance rates that come along with it — should have dealers celebrating.

Why Dealers Should Care About the Coming Auto Insurance Recovery - Polly
Navigating Shrinking Margins: Acquisition Lessons from the Stock Market for Dealers

Initiatives are being developed to ensure that dealers can access the necessary vehicle data without facing prohibitive costs, aiming to make vehicle data more affordable and efficient.

Navigating Shrinking Margins: Acquisition Lessons from the Stock Market for Dealers