How is your team determining the price of your used inventory? Do you treat all your inventory the same? We see many dealers who are pricing to cover costs and managing by profits. In this market managing by profits alone can cost you money and keep you from turning your merchandise. We have to Work the Facts. We have to consider several factors. Do you have the tools in place to monitor your inventory pricing? Where do you win in the market?
Pricing by Desired Profit Margin - Is your team pricing based on making a set profit? Is their focus on covering costs plus a certain profit number? PVR?
Pricing by Cost plus Acquisition and Reconditioning Costs - Is your team pricing based on the cost alone?
Pricing by leaving room to Negotiate - Is your team upping that retail price in case we have to give a discount so we can hold on to a profit?
Re-pricing based on time - Is your team pricing based on time? Are we re-pricing every five
days until we sell the unit?
Our goal is for dealers to sell 65%+ of your vehicles in the first 30 days. Is this your goal as well? If it is, make your initial price based on facts. Review where you sell like vehicles based on year, make, model, and miles per year. Consider the market conditions, availability, and switch lead opportunities based on facts we capture in LotWalk. Pricing to your market can make all the difference in your turns and month end profits. If you are not selling the majority of your sales in the first 30 days you are missing a big opportunity. You cannot treat all of your inventory the same. Do you price late model units ( 2-6 year-old vehicles) the same as 7-10 year-old units? Do we price the auction vehicles higher than the trades? Auction vehicles should have a shorter shelf life of 25-27 days.
The goal of a dealer is to make money, turn these investments quickly, and get another unit. We cannot afford to let these late-model units that we get at auction age with depreciation and holding costs. Use these late models to attract a trade, make finance and service money, and reinvest that money. Stop worrying about the PVR and turn units for a bigger pile of money at the end of the month.
Where does your dealership sell your different years, makes, and models? Every dealership is different. Are you the best end-user for this vehicle? Your pricing tool gives you your position in the market. Are you sure we are comparing the same vehicle? Your third-party site rates your price as Good Deal or Fair Deal. Are you looking at your leads and following up on units in stock? Lotwalk gives you information on where you are selling vehicles, the number of leads, and follow-up gaps in time. Determine your inventory’s exit plan based on your facts. Lotwalk captures in our predictor the facts about where you have been selling these units. We provide metrics by year, make, price buckets, certified, miles per year, % of Price to market, and number of days to sale and track the holding cost on each unit by days. We can list SRP and VDP information as well as views from your website. The market is constantly moving. When sales start trending down with lower shopper counts, continuing our bad habits of holding on to units and managing by profits only just costs us money. Your pricing has to be a result of your metrics, economic factors, and knowing your market. It is either the money, the machine or me and determining which is essential to avoiding a race to the bottom. Let us help you Work your facts. WTF!
-Pam Humphrey
Performance Engineer
Lotpop inc.