Copyright 2016 Used Car University, all rights reserved

Transcription

1

2 Sourcing Winning SF Inventory 5 Keys to Success Shawn Foster

3 5 Keys to Success 1. Understand your data 2. Determine your needs 3. Know your lenders 4. Develop a strategy 5. Use discipline Copyright 2016 Used Car University, all rights reserved

4 What Can You Sell? Historical data What is selling from the dealership Reconditioning abilities What can you get done effectively? Customer demographics. What is the makeup of the customer in your store? Credit, income, market demands? Copyright 2016 Used Car University, all rights reserved

5 Sample Dealer Demographics Score # Bureaus % of Bureaus # Delivered % of Burs. in range delivered Zero Score Military Open Chap 7 Prime (661+) Total Copyright 2016 Used Car University, all rights reserved

6 Opportunities Stand Out Score # Bureaus % of Bureaus # Delivered % of Burs. in range delivered Zero Score Military* Open Chap 7* Prime (661+) Total Copyright 2016 Used Car University, all rights reserved

7 Opportunities Stand Out Score # Bureaus % of Bureaus # Delivered Available Inventory (units) Zero Score 45 9% % % % % Military 34 4% 5 3* Open Chap % 0 6* Prime (661+) % Total % Copyright 2016 Used Car University, all rights reserved

8 Subprime Credit Tiers (example based on SF company data) Special Finance Tiers Tier 4 Tier 3 Tier 2 Tier 1 Finance Companies CAC/Westlake GO / UAC Santander/ GLS / ACA Chase/Wells Exeter / CPS GM Financial Capital One GM Financial Capital One Ally / Chase Wells Fargo Santander Credit Score, Income & Other Customer Traits Low and hard to prove income Missing docs $2,500 - $3,000 Short job or residence $3,500 - $4, $4,500 - $5,000 General Term and APR Range 45 months 25% APR 62 months 21% APR 66 months 16% APR 69 months 11% APR Monthly Payment Average $300 - $330 $375 $425 $400 - $450 $450+ Copyright 2016 Used Car University, all rights reserved

9 The Problems Unicorns High reconditioning Everyone wants them Usually trades, not purchases

10 What are They? ACV usually less than 10K 4-9 model years old Typically serves the bottom tier programs

11 Used Vehicle Inventory by Tiers Tier/ Niche % of Stock Units Max. Age Max. ACV Max. Miles Avg. Monthly Payment No Score 9% 4 9 $11,000 90,000 $359 Tier 4 42% 17 9 $11, ,000 $400 Tier 3 15% 7 6 $12,800 80,000 $407 Tier 2 27% 13 5 $14,000 75,000 $403 Tier 1 16% 8 4 $15,000 50,000 $397 Open Ch 7(part of T3) Military (part of T3) 4% 3 5 $12,500 70,000 $419 4% 3 6 $13,500 75,000 $403

12 Pre-Owned Subprime Inventory and Where to Buy it Tier Vehicles Source T1 (best non-prime credit) Current year used (like-invoice), near luxury, well equipped, upper end rental units, off-lease units. Physical & online auctions, off-brand franchise dealers vehicles. T2 1 3 year old rental cars, less expensive current year (like-invoice), off-lease, fleet returns (PHH, ARI). Physical & online auctions (fleet & lease lanes), GSA, rental car companies, off-brand franchise dealer vehicles, street purchases. T3 T4 (worst sub-prime credit) Less expensive rental cars & fleet returns, new (or late model) trade-ins. Older, higher mileage units most often taken in trade, inexpensive rental cars. Physical auctions (fleet & lease lanes), GSA, CarMax, rental car companies, off-brand franchise dealer vehicles, street purchases. Units taken as trade-ins, street purchases, franchise dealers, CarMax and GSA. Copyright 2016 Used Car University, all rights reserved

13 What Should I Buy? Everything Cars with slightly higher mileage Rental cars Lease turn ins, Repos Private Owners

14 Higher Mileage Units Understand where the finance company limits are and use discipline. Many subprime finance companies are going 66+ months on vehicles under 70,000 miles. These units are great payment cars.

15 Rental Units With the average amount to finance in Tier 3 at $16,798, rental units are a great source for this customer. Newer car with slightly higher mileage

16 Lease Returns and Repos May run later in the sale Often have low floor amounts and are there to go away.

17 Community Public boards Appraisal events Buy events instead of sale events Private Sellers, Estate Sales, Retirement centers Housing complexes Copyright 2016 Used Car University, all rights reserved

18 SmartAuction Manheim/Ove Physical auctions 3 rd party auctions (list some here)?

19 UCM/Inventory Disconnect Using tools vauto/aax/redbumper and MMR. Often does not work lease/repo lanes. Often does not buy units with slightly higher mileage. Does NOT know what the need is. If any of these describe your UCM, your used vehicle profits are lower than they should be.

20 Start looking Start asking Start winning (In the Mirror)

21 In Your Store (Dealership) Employee Programs Signage Dealer Groups Service Drive Data Mining

22 Employees Establish a buying program for the employees referrals. Friends, family, others. $300 - $400 fee attached to vehicle High Gross Deals when sold 30 employees, 1 car per year, $100,000 in found gross profit Copyright 2016 Used Car University, all rights reserved

23 Service Drive Consider putting a salesperson on the drive. Customers with high ticket repairs on older car Offer free appraisals while the car is in the shop. Spiff your service personnel to spot potential customers who may trade.

24 Internet Facebook Craigslist

25 Cars That Can Be Financed Understand your finance company demographics Use a spreadsheet to isolate opportunities Learn the deal killers or knock out cars Behind NADA Clean Trade (target is $500 or more after service on the lot) Copyright 2016 Used Car University, all rights reserved

26 How Can You Make It Easier? Adjustable Inventory Purchasing Guide Mileage Buy for >$1,200 under Trade Pmt Term Buy for >$1,200 to $750 2,100 3,400 4,000 4,600 5,000 5,500 5,900 Avg Book Buy for <$750 under trade ,800 2,500 3,100 3,600 4,200 4,600 Buy For Taxes and Fees K 69.9K 59.9K 49.9K 2,500 4,000 4,600 5,200 5,700 6,300 6,700 Avg Book Tax Rate 6.00% 700 2,400 3,200 3,900 4,500 5,100 5,600 Buy For Buy Fee $200 2,900 4,500 5,300 5,900 6,500 7,100 7,500 Avg Book Doc + Warr GP $785 1,200 3,100 3,900 4,700 5,300 6,000 6,500 Buy For Title +Warr Cost $750 3,300 5,100 5,900 6,600 7,200 7,900 8,400 8,900 Avg Book Avg. Recon $550 1,600 3,700 4,600 5,400 6,100 6,900 7,500 8,000 Buy For Avg Bank Fee $175 3,700 5,700 6,500 7,300 7,900 8,600 9,200 9,700 Avg Book Deal Averages 2,100 4,400 5,300 6,200 7,000 7,800 8,400 9,000 Buy For Avg APR 19.95% 4,100 6,200 7,100 8,000 8,700 9,400 10,000 10,600 Avg Book Avg. Down Pmt $1,000 2,600 5,000 6,000 7,000 7,800 8,700 9,400 10,000 Buy For Avg. Income $1,850 4,500 5,800 7,700 8,600 9,400 10,200 10,900 11,500 Avg Book Avg. PTI 15.00% 3,000 5,600 6,800 7,800 8,700 9,600 10,300 11,000 Buy For Avg LTV-Front 115% 4,900 7,300 8,400 9,300 10,100 11,000 11,700 12,300 Avg Book Avg. LTV-Total 135% 3,500 6,300 7,500 8,600 9,500 10,500 1,130 12,000 Buy For Desired Profit $2,500 5,300 7,900 9,000 10,000 10,900 11,800 12,500 13,200 Avg Book Color Keys 4,000 6,900 8,200 9,400 10,400 11,400 12,200 13,000 Buy For Green Buys $750 $750 5,700 8,400 9,600 10,700 11,600 12,600 13,300 14,100 Avg Book White Buys $1,200 4,400 7,600 8,900 10,100 11,200 12,300 13,200 14,000 Buy For Red Buys >$1,200

27 Summary Understand your customers Understand your inventory Understand your finance companies Have a strategy Use discipline Copyright 2016 Used Car University, all rights reserved

28 Thank You Contact information Copyright 2016 Used Car University, all rights reserved