Cliff Banks
Cliff Banks has been involved with the automotive industry for nearly 20 years and has covered the industry for Ward's for nine years. He is an award-winning...more
On the hunt for used vehicle inventory? Here are some tips from Consultant Tony Albertson, a used-car specialist with NCM and Associates, that he provided for a story in our Ward’s Remarketing 150.
Hire an offsite buyer to beat the bushes for vehicles. It’s OK to pay the buyer anywhere from $200 - $500 for each vehicle but tie the compensation to how fast the vehicle sells.
Provide specific instructions on which vehicles you need. Don’t let the buyer buy off the cuff.
Advertise everywhere you buy used cars.
“It’s what made Carmax famous,” Albertson says. “They will buy the used vehicle, even if the customer doesn’t buy a vehicle from them.”
Maintain close ties with other local dealers who might be wholesaling vehicles you need.
Leverage your customer database. Create a direct mail campaign to customers in your database offering to buy their vehicles.
You also can target your marketing to customers owning vehicles you need. Be sure to personalize the letters or emails for each customer, Albertson says.
Another critical piece — if you’re paying for inventory management software, such as AAX, VAuto or FirstLook, use it. It may take some effort, but it’s worth it.
Don’t give up on the auctions. If you’re not already using the online auctions and services, you likely will find it increasingly more difficult to secure used-vehicle inventory.
Sites such as Manheim’s OVE.com and Manheim Simulcast or AESA’s LiveBlock or DealerBlock allow dealers to conduct all of the pre-auction and pre-sale research, acquire inventory before it even reaches the auction and trade with other dealers.
After Kelley Blue Book’s relationship with AutoTrader.com ended prematurely this June, it immediately devised a strategy to take on the industry behemoths, AutoTrader and Cars.com.
KBB is launching a pay-per-performance model (also called pay-per-lead) directly contrasting with the subscription models of Cars.com and AutoTrader. It’s a gutsy move, perhaps born out of some measure of desperation.
Kelley has the brand and the consumer visits, but it lacks the inventory and, some say, technological prowess to be successful. It is partnering with Vast, however, to provide it with the necessary technology. Vast’s goal is to create a network of lead providers that collectively will be powerful enough to force Cars.com and AutoTrader.com into the pay-per-lead model.
My guess is, dealers will continue doing business with Cars.com and AutoTrader in the subscription model, but certainly will play with Kelley and others pushing the pay-per-lead model.
Recently, I’ve heard several comments alluding to the fact that CRM (customer-relationship management) is dead, or at least is at a point where people are tired of talking about it. There is a notion among many dealers that vendors have over-promised and underdelivered. It might be dealers are expecting too much.
Ask for a definition of CRM and you’ll get 10 different answers. The problem is, automotive retail is a complicated business with a lot of moving parts. Add to that, dealers will have different goals or objectives for their CRM initiatives, and that makes measuring the return on investment difficult.
In the store, it’s easy to get bogged down in the details of the process, and if there isn’t a well-defined goal, dealership personnel get CRM-fatigue. Before long, you’re writing a check for a solution that sits on the shelf that never gets used.
Enough of the problems, what are some solutions? It’s not giving up on CRM — now, more thn ever, you need to find ways to drive both sales and service traffic. There are several simple solutions.
Here are some creative things dealers have told me they have done the last 12 months that have helped business. Nothing earth shattering — nevertheless, there may be some nuggets for you.
First, market to customers in your database. You already have the relationship with them. Offer something of real value on the service side. You can generate a ton of service traffic and repair orders with simple campaigns marketing to folks that haven’t been back to your store within the last year.
To do that you should find a solution that integrates easily with your dealer-management system. Being able to pull data from your DMS and integrate it with information in your CRM tool is invaluable.
Many of you are looking for used-vehicle inventory. CRM can help you do that. Create a list of vehicles you need, and then send targeted offers to people in your database that have those vehicles. Make it a special invitation, not a generic direct mail piece.
I know Cash for Clunkers probably is a dirty word right now in your stores. It was an intense program while it lasted and nobody wants to even mention the term now. But there has to be a way to continue leveraging those sales, and even the people who didn’t qualify who left the store without buying.
Offer a special service incentive for people who bought cars using the the program. Some dealers are planning a Cash for Clunkers after party a few months from now to generate service business. It doesn’t have to be a Clunkers party — it could be a party or picnic celebrating anything.
Tie into the local sports teams — whether it’s college, professional or high school. For example, offer free oil changes or car washes if the football scores 40 points. You can go in so many directions with this.
All of these things can be defined as CRM. The point is, be creative and aggressive now. Business is there, but it needs prodding.
Good luck, and if your store is doing something unique that is working, I’d love to hear about it.
Cash for Clunkers is now over after generating nearly 707,000 direct sales, along with countless other sales for customers not eligible for the program.
Now what? Most analysts are afraid September sales will experience a downturn without the popular government financing.
Many of you have stories of crowded showrooms and of customers racing to the dealership in the hours before Cash for Clunkers ended in order to buy a car. The industry hasn’t seen that sort of excitement in years.
Wouldn’t it be nice to continue that momentum the next several months?
I recently saw the fictional movie The Goods: Live Hard Sell Hard (you know, research for work) which details how a traveling sales team puts on a four day event to save a dealership from closing in Temecula, CA. (If you plan to see it, leave the kids at home). There’s one scene that struck me. The last day of the event, a hyped up concert at the dealership fails miserably and results in a riot.
TV news cameras captured the chaos. Unmitigated disaster, right?
Far from it. The scene’s star, Jeremy Piven (playing Don Ready, the movie’s hero) grabs a microphone, jumps in front of the news cameras and invites all of Temecula’s police department and anybody wearing anything resembling police gear to the dealership and promises a hefty incentive (I’m little shaky on the details – left my reporters’ notebook at the office) if they made it to the store by closing time.
Sure enough, it’s a Hollywood ending. The dealership is saved and Piven gets the girl.
In the midst of a wildy ridiculous story, I think there is a lesson to see. I couldn’t help but think Piven was capturing what being a dealer was all about with that stunt.
Instead of complaining how bad things were, he improvised and turned a bad situation into a winner.
Many of you did just that with Cash for clunkers. All sorts of problems and issues, yet you sold 707,000 vehicles.
Some of you want to keep that going. There is a group of 73 dealers who created their own stimulus plan (you can see the details at www.automotivestimulusplan.com) to compensate for some of the drawbacks of the government’s plan. Dealers participating in the program have raved about its success.
How about other areas?
A recent email from dealer marketing firm OneCommand, detailed the story of a California dealer who last year held a Labor Day picnic, bringing in more that 13,000 people. It was a weeklong celebration that generated more than $400,000 in service department work and more than 1,600 repair orders, and who knows how many customer contacts?
The point is, be creative, improvise and take control. If traffic slows, figure out a way to get them back.
Kelley Blue Book released a statement last week that got a lot of play in the media — including Ward’s. KBB is cautioning dealers to watch their used-vehicle inventory closely because the Cash for clunkers incentive program could create a bubble of inventory prices that could deflate suddenly once the program ends.
I’m not sure I agree with KBB’s analysis. There might be a deflation but how severe is the question. Used-car values have been climbing all year, and according to Manheim’s Chief Economist Tom Webb, prices should continue their upward trend the next few months.
Still, it’s probably wise to not get carried away with adding inventory.
I’ve since received numerous emails from people accusing me of being a socialist. A friend even wrote me saying the headline was “over the top.” Apparently, a lot of folks don’t like buying cars for their neighbors.
Sorry people, I’m holding firm — and am happy the Senate listened to my wisdom while approving another $2 billion for the popular incentive program.
Feel free to weigh in with you opinion on whether I’m a socialist.
Dealers tell me often one of their biggest challenges is trying to find good salespeople. One would think it should be easier today with the flood of salespeople on the hunt for a job because their dealership closed. Dealers might be getting more resumes, but how do they know if the applicant sitting before them can actually sell a car?
Lee Kemp thinks he has the answer with an interactive sales simulation firm he created several years ago. You can read about it here. An executive with a dealer group on the Ward’s Megadealer 100 tells me his managers love it because it’s simple to use and it’s evaluations are spot on. He says they also like the training component the solution provides.
We’ve known Lee for several years back when he was a Ford dealer in Minneapolis. (He was part of Ford’s minority dealer development program. His landlord was also his competitor — Denny Hecker, who’s automotive empire recently collapsed.)
Lee left the business in 2005 to follow his dream of being in the Olympics. He was a national and world champion wrestler in the late ’70s and was all set for the 1980 Olympics when President Carter decided to boycott the games that year.
Lee finally made it as a coach of the U.S. Olympic Freestyle Team in 2008. He now operates two wrestling schools — one in Atlanta and one in Chicago. But he couldn’t shake the car industry. He restarted his company last year with business partner and industry veteran Steve Munyan and hopes to help dealers with their hiring processes.
Is the government’s program proving to be too popular? Sales at many dealerships are going through the roof with many reporting selling more than a hundred vehicles in the program’s first few days.
Dealers essentially are having to front the cash for the $3,500 - $4,500 vouchers and probably won’t receive reimbursement money from the government for several days. The government has 10 days from the time deals are approved to electronically submit money from cash-for-clunkers into dealer accounts.
The problem is, dealers have to scan, create PDFs and electronically submit at least 20 documents for each deal for the National Highway Traffic Safety Admin. to approve it. Many dealers are reporting deals are being rejected for incomplete or incorrect information. The rules published by NHTSA last week consist of a 135 page document and filled with legalese, so mistakes and misunderstandings are bound to happen.
Another problem is that dealers often are unable to log onto the government website to submit the paperwork.
In other words, dealers may be waiting a while for the money — and with so many dealers having cash flow and credit issues today they’ll have to be careful they don’t clunk themselves out of business.
Nonetheless, the incentive is a big hit and inventory is flying off dealers’ lots, so dealers are willing to put up with some frustration.
Amidst the frenzied activity surrounding General Motors’s bankruptcy filing yesterday, Saturn also filed chapter 11.
Saturn Spokesman Steve Janisse tells me the filing should not impact the potential sale of the brand either postiively or negatively.
Technically, that may be true, but with Saturn in bankruptcy, it probably is easier for the brand to eliminate dealerships. Recent media reports regarding Roger Penske’s involvemnt with Saturn confirm what I’ve been hearing for a couple of months.
Sources tell me Penske is investigating a partnership with Nissan Renault to sell Korean-built Renault Samsung vehicles in the U.S. using the Saturn retail network.
It’s likely that Penske, who already distributes Smart, needs signifcantly fewer dealerships to sell Samsungs than Saturn’s current 384. I’m guessing here, but if Penske and Carlos Ghosn decide to pull the trigger on the deal, Saturn could lose anywhere from 130 to 150 dealers in the next couple of months.
So if you’re a Saturn dealer, you might want to study the Smart distribution model and its dealerships — you know, just in case.
Several weeks ago, President Obama guaranteed the warranties for Chrysler and General Motors vehicles. A noble gesture, but it means nothing if the dealers can’t get the parts to fix the vehicles. Apparently, it’s starting to become a problem for Chrysler dealers and likely will for GM dealers once that company declares bankruptcy.
Chrysler Vice President Steven Landry told dealers on a conference call just under two weeks ago that the auto maker was watching the parts inventory closely and managing it to maintain a 30-60 day supply.
With Chrysler in bankruptcy, several suppliers have stopped shipping parts to the auto maker. Add to that, none of the plants are running at the moment which means Chrysler is ordering minimal parts, if any.
Independent shops are starting to report they can’t get Chrysler parts.
Not only is the problem costing dealers service work, it’s going to start costing them sales. Yesterday a friend told me she needs to get the air conditioning fixed on her Dodge Caravan but the dealer can’t do it because the part is on backorder and has no idea when it will be shipped. I suggested an idnependent shop, but the vehicle is under warranty — which at this moment, isn’t worth the paper it’s printed on.
She’s leasing the vehicle and will try to turn it in if she can’t the air conditioning fixed. But whether she sticks with Chrysler, don’t count on it. “It’s not worth the hassle,” she says.
Ward’s Dealer Business Editorial Director Cliff Banks shares his views on emerging trends and technologies that promise to help dealers sell more vehicles.
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