S.T.E.M. the Tide
of
Margin Erosion!
Data Strategies to Drive More Margin from Your Used Car Operation!
Tony Rhoades | AutoAlert, LLC | Vice President, Product | [email protected]
TONY RHOADES
Vice President, Product, AutoAlert LLC
• Former member of the U.S. Air Force Space Command
• Previously spent 16 years delivering results in various automotive retail sales,
finance, technology, and e-commerce roles, the majority of which was with Gunn
Automotive Group of dealerships.
• Has served on dealer advisory boards for several industry technology providers,
and is a sought-after speaker for automotive industry events and conferences.
• Considerable retail experience, technical background, and dealer-centric
approaches to automotive retail innovation.
Tony Rhoades | AutoAlert, LLC | Vice President, Product | [email protected]
S.T.E.M. the Tide!
• Service Lane Auctions
• Acquire quality inventory on the drive
• Turn Management
• Find buyers early for your under 30 day
inventory
• Cut wholesale losses by retailing your aged
inventory to existing customers
• Improve inventory mix
$6K
$5K
$4K
• Eliminate Costs
GROSS $
• Avoid auctions
• Reduce recon expense
• Decrease holding costs
$3K
$2K
$1K
• Maximize Margins
• Improve Gross – 17%
• Sale fresh inventory in the first 30 days to
maximize gross
• Reducing holding costs by selling fresh
inventory to your existing customers
$0K
5
$(1K)
10
15
20
25
30
35
40
45
50
55
60
TURN
$(2K)
Tony Rhoades | AutoAlert, LLC | Vice President, Product | [email protected]
Service Lane Auction
• Fixed Coverage (% Total Net Profits) – NADA Average?
• Improved Customer Satisfaction
• Fast & Easy Process
• Seamless buying experience
• Owner Retention
• 200+ Incremental Units each year
• $2,000 PRU = $400,000 additional Gross
• Length of Ownership
• 6.5 years
Tony Rhoades | AutoAlert, LLC | Vice President, Product | [email protected]
A few key statistics…
36 – the number of months in which most customers would like to trade their vehicle
but cannot due to negative equity, according to NADA
68 – the average number of months in a consumer’s trade cycle
56% - the percentage of buying populations which would purchase a vehicle more
often if they were happier with the “process”, according to Automotive News®
67% - approximate percentage of “loyal” service customers who will purchase their
next vehicle from a different dealer
75% - of consumers would be very likely or somewhat likely to trade in their vehicle
today if their monthly payment would remain about the same.
Tony Rhoades | AutoAlert, LLC | Vice President, Product | [email protected]
Steps to the Sale on the Drive
• Service Advisor Greeting
• No disruption to the advisor check-in
• Record Review (Mobile VIN Scan)
• Previously Sold
• Service not Sold Customer
• Meet & Greet
• Introduction and thank them for their business
• Record Tagging for follow-up
• Present the Opportunity
• Acquisition Word Track
• Response Handling
• No – Thank them for their time and again thank them for their business
• Yes – Be prepared to conduct as much of the conversation on the drive as possible
• VIP Service to Sales handoff
• Concierge or Sales Team approach
• Point of Sale Materials
• Legitimize the Program
Tony Rhoades | AutoAlert, LLC | Vice President, Product | [email protected]
Service Lane Results
“We take in high-quality trades on 75% of the
50 units a month we are selling in the service
drive.
“Data mining is the catalyst that puts those
opportunities in front of us; without it
identifying the right prospects we’d just be
shooting from the hip.”
– East Coast Dealer
Tony Rhoades | AutoAlert, LLC | Vice President, Product | [email protected]
Turn Management
• Proactively find buyers based upon vehicle age
• Fresh Inventory
• Auction bound
• Quickly match top grossing units and to buyers
• Identify ‘Fastest Selling Inventory’ and customer from whom you
can acquire
Used Car Profitability
• Focus your one on one time with
salespeople on your most
profitable inventory. Match
customer to salesperson to
vehicle.
$2,500
$2,000
$1,500
$1,000
$500
$0
0
5
10
15
20
25
Cost per day
30
35
40
45
50
55
60
Gross
Tony Rhoades | AutoAlert, LLC | Vice President, Product | [email protected]
Eliminate Costs – and Frustrations
•
Auction vehicles are not the best vehicles - your own customers’ low mileage
vehicles you’ve serviced are
•
Vehicles are at auctions for a reason, usually quality – service lane trades are
almost always superior, cleaner so they’re nearly ready to go online or the lot
•
Auction fees, transport costs and typically higher recon costs erode your margin –
trades capture in your service lane save these costs
•
Keeps UCMs and buyers on the lot, not at often unproductive auctions
•
Lower cost of sale (< $200)
Tony Rhoades | AutoAlert, LLC | Vice President, Product | [email protected]
Maximize Margins
• Increase Value
• Trade Cycle Disruption
• Convenience
•
Data-driven new-car sales on average return 21% higher gross than sales originating from ups
and online channels
•
Can drop new-car cost of sales to under $200 NOT more than $600!
•
Used-car sales driven by data mining average 17% higher gross
•
Higher quality trades originating from your service lane “auction” require less reconditioning
•
Better trades get on the lot or online fast so selling can begin
•
Trades you originally sold are in-market models that tend to sell soon faster, reducing your
turn and costs associated with holding inventory
Tony Rhoades | AutoAlert, LLC | Vice President, Product | [email protected]
Margin Erosion: It Can be Managed!
Margin erosion is
simply C.O.G.S.
rising faster than
Sale Prices or Sale
Prices falling faster
than C.O.G.S.
This results in
shrinking margins!
http://www.extension.umn.edu/agriculture/dairy/business-tools-and-budgeting/margin-compression/
Tony Rhoades | AutoAlert, LLC | Vice President, Product | [email protected]
“Success is not a campaign, it's a capability!”
• Accountability
• User Support
~ Skutta
• Training
Tony Rhoades | AutoAlert, LLC | Vice President, Product | [email protected]
Tony Rhoades
AutoAlert, LLC
Vice President, Product
[email protected]
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