Without making a single purchase in the auction lane, Bob Ruth Ford in Dillsburg, Pennsylvania, has grown its regular stock of used-car inventory to 400 vehicles.
Driving the news: Vice President Rob Dell, during a recent appearance on Daily Dealer Live, explained how the dealership is crunching the numbers and working different channels to acquire vehicles right now.
During the segment, Dell said the store typically sells between 40 and 50 new vehicles per month, but focuses heavily on the used business, where it moves three to four times that volume.
To fuel the used lane, the dealership needs to bring in hundreds of cars per month.
Dell called last month a “world record” for a single-point store, acquiring 357 vehicles directly from consumers.
Turning the channel: Instead of going to the auction, the dealership is working different channels to fuel the lot.
Dell said all their used vehicles come in either from trades or directly off the street.
In fact, he said they bring in 180 to 200 vehicles off trade, which he wants to see increase due to the profitability.
Social platforms ranging from Facebook Marketplace, eBay and Auto Trader are also used in the dealership’s searches for used inventory.
“You've got to have open eyes, and what I found out in the last five years is they change,” Dell said. “You can’t just stay in the same lane. You’ve got to look at all lanes.”
How it works: The dealership has fine-tuned its approach, with team members having specific responsibilities.
For instance, the dealership has five reps whose job is to get VIN numbers and information from consumers.
Meanwhile, an inventory team of four to five appraises all the vehicles, going out 300 miles.
The dealership, which has two part-time drivers, then picks up said cars directly from the consumer and provides multiple payment options to reduce friction.
Performance-based pay: Dell said the team’s compensation plan is performance-based, with a sliding scale based on how purchases perform when they sell.
And that it only works when the staff is taught to make better investments.
The dealership’s comp plan and data-specific approach, he added, has helped limit recon costs across 4,500 units to $30,000 for the year.
“Once they start dialing it in, you have better performance, you have increased profitability, then they see it as the real win, which is the compensation,” Dell said. “And then, everybody starts rowing in the same direction.”
Buying and selling vehicles: When acquiring vehicles, Dell urges the team to ask who is selling the cars and to check the vehicle history, which is a must.
They’ve also decided to separate who buys the car and who prices it, with a third person tasked with selling it in 30 days.
From there, Dell said there’s a hard stop for inventory sitting at 45 days.
Purchasing decisions are based on data, including seasonality, like not purchasing Jeeps in the winter in Pennsylvania.
“86% of the inventory we sell in the first 30 days,” Dell said. “You’ve got to be willing to sell a car for a front-end loss and understand you can still make money doing that because it ran through the whole machine and it’s going to get a trade 52% of the time.”
Never say never about auction: While the focus has been on acquiring vehicles outside of the lane, Dell admits the dealership may be looking at options in the second half of the year.
“I'm lacking some core product right now, and I think there's some opportunity. We'll see how the rest of the year shapes up,” he said, referring specifically to auction buys.
Either way, he noted the auction is his slowest-moving source.
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Bottom line: Inventory acquisition is constantly changing. Dell points out the need to evolve and change, rely on data to make decisions, train your team, and “go all in” on committing to a strategy.
“You’re going to get burnt from time to time, but that’s the cost of doing business,” he said. “Just be willing to make those mistakes… Mistakes are just the tuition for learning.”
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