Pre-Owned R.O.I. – Assess them – Find them – Fix them – Sell them (Part 1of 4)

26 Sep

(Part 1 – Assess them)

Pre-Owned vehicles are the life blood of any successful automotive dealership!

For some dealers, that don’t floor plan pre-owned vehicles, this is where aLOTof cash can be found!

So why is it that some dealers feel that the Pre-owned department takes a “back seat” to the New vehicle department?

Limited allocations or availability of New vehicles can be maddening! You never know when an earthquake and tsunami will impact your ability to get New vehicles.

Economic conditions can also impair your ability to have the correct “mix” of New vehicles. When gas prices go up, you can never seem to have enough “high gas mileage” vehicles available!

You can NEVER get enough of the “hot” New vehicles and there are always plenty of the “slower moving” New vehicles available!

On the other hand, your Pre-owned inventory can be as small or large as you like. You can stock the exact mix of “hot” pre-owned vehicles to maximize your R.O.I. (return on investment).

Taking the time to properly assess your Pre-owned inventory to “find” the correct mix of vehicles for your market is imperative to your success!

You have to assess what are the quickest and best moving makes and models in your area.

Make sure to stock your own “brand” of pre-owned vehicles. Whatever the manufacturers sign says on your building, make sure you have the correct mix of Pre-owned vehicles that were great selling vehicles when you sold them “New”! For example, customers will naturally gravitate to a Chevrolet store to look at and find Pre-Owned Chevrolet’s! Make sure you have the right mix on the lot!

You have to assess market conditions. What are the best Makes, Models and model year vehicles to stock? If there is a lack of New models, do you stock 1 and 2 year old vehicles to fill the void? What if New models are plentiful? Do you stock 3 year old models and older to maximize and balance your inventory options?

You have to assess seasonal conditions. Is your dealership in a northern climate? Have you stocked enough 4 wheel drive vehicles going into a winter season? Is your dealership in a southern climate? Have you stocked enough vehicles for the “snowbirds” arrival? Whatever the season, you need to be prepared and look ahead to seasonal conditions that give you an opportunity to maximize sales.

You have to assess economic conditions. Are gasoline prices going up? If gas prices are up, you need to stock additional “high gas mileage” vehicles. What is the median income of people in your area? If the median income is lower than average, do you stock less expensive pre-owned vehicles? You need to know the economic demographics of your area!

You have to assess availability conditions. Is there a shortage of available new models? Is there going to be a large amount of a certain model that is going to flood the market because there was a great lease deal on it 3 years earlier? Either a lack of or a plentiful supply of a certain model can change dramatically what the vehicles value may be worth! It is important that you research this and know it going forward. If there is going to be a lack of a certain model, you can “step up” on an appraisal of this vehicle. If there are going to be a huge influx of a certain model that is “coming off lease”, you may want to be a tad more conservative in it’s appraisal.

You NEED to have a Pre-owned “perfect inventory” map and guideline to correctly stock your Pre-owned department.

Do you have the correct tools and information to help you in this assessment? Or….are you just “winging it”??

The utilization of the correct tools to help you in this assessment is imperative to your success!

Maximize your opportunity in your Pre-owned department by assessing exactly what your inventory mix should look like!

Constantly monitoring your Pre-owned inventory mix will ensure you are getting your highest R.O.I.!!!


About the Author: From a Salesperson to a Dealer, I have a vast amount of experience in all areas of the automotive environment.

You can follow me on:

My website:  

Twitter: @jimkristoff

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Automotive Digital



1 Comment

Posted by on September 26, 2011 in Archive of all blogs


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One response to “Pre-Owned R.O.I. – Assess them – Find them – Fix them – Sell them (Part 1of 4)

  1. Mohammad

    October 1, 2011 at 1:32 pm

    The Author is absolutely correct in terms of summing the complete used car business into a mathematical equation which do deliver provided the constant of the equation namely ( where to find the mix of these buties constantly) gets a proper value which most of the time it don’t ,the only nagging question that remains unanswered most of the time specially if the business turn over is high is where to get the good cars from….


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