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Used Vehicle Inventory Acquisition... Your Service Lane vs. Auction Lane


By Ed French


Many dealerships rely primarily on customer trades and auction vehicles to source their used vehicle inventory. However, the best used vehicle operators go way beyond that strategy and, as a result, could be eating your “used car lunch.” 


Not having a comprehensive process for seeking out used car inventory on your service lane is costing you a bundle.


Here’s the comparison…


Primary Advantage of Non-Auction Acquisition


Up to 40% of your gross profit on used vehicles is being eaten up with auction fees and related costs. So sourcing your vehicles away from the auction lanes will make it that much easier to hit your gross profit targets.


Maximize Your Service Lane Acquisition Opportunities



It is highly recommended to mine your service department every day. 17-digit VIN specific appraising tools can be very useful in this endeavor. Some will scan the VIN or the license plate to launch the process… gathering all the data necessary to help you arrive at a “true cash offer.”


You can communicate that offer to the customer on the repair order, or by using a mirror hanger…etc. This sticky note attached to the repair order gives the customer an opportunity to trade or sell the vehicle rather than pay the repair bill. There might not be better timing to make such a presentation.




The 3% Rule



Do the math. If you write 40 repair orders per day, that will work out to be 11,520 per year. If you can appraise and buy just 3% of those vehicles that would result in 345 additional used vehicles.


These vehicles would be acquired without the typical auction vehicle costs… average auction fee of $500… average wholesale inspection and freight of $400 more. That means your cost advantage of buying this car off of your service lane is about $900.


These are averages and your costs could be different. But as an example, you can also take the math a step further. Take those saved fee expenses and multiple it over the 345 vehicles purchased… you added $310,000 to the annual gross profit for the used vehicle department.

Not only the cost, these tend to be excellent vehicles with a higher gross profit potential. You have maintained the vehicle. You know the previous owner. You have a great story to tell about this vehicle.


It’s a huge opportunity!


For Much More on this topic: https://www.dealersedge.com/french

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