Pub. 5 2016-2017 Issue 3

18 San Diego Dealer 3 Tips To Tune Up Your Used Vehicle Performance and Profitability I t’d be wise for dealers to take a deeper look at three aspects of their used vehicle inventories: 1. What percentage of your used vehicles are less than three years old? Howdoes this figure compare to a year ago? For many dealers, 52 percent of their used vehicle inventory is less than three years old, according to Edmunds. com. The number represents a seven percent increase from 2011. The prevalence of“near- new”vehicles owes to the ongoing increases in off-lease vehicles returning to the market and dealers’efforts tomaximize their certified pre-owned (CPO) sales. 2. What’s your average cost of used vehicle inventory? How does this figure compare to a year or two ago? For many dealers, the average cost of inventory has increased by nearly double-digit percentages in recent years as they’ve pursued CPO opportunities, kept off-lease vehicles for retail and played to consumer demand for SUV and truck segments. 3. What percentage of your new vehicle deals involve trade-ins? What’s the average age of those vehicles? For many dealers, there’s been a fairly steady decline in new car deals that include trade-ins. Industry stats show it’s dropped to about 45 percent. At the same time, the average age of new vehicle trade-ins is about six years old. I’ve been raising these questions with dealers recently as we address ways to improve their used vehicle performance and profitability. In many instances, dealers are having a decent year volume-wise in used cars. The problem: They’re finding it harder to move the needle upward, both in the number of units they put across the curb, and in the gross profit they generate with each retail sale. It’smy belief that these performance difficulties owe, at least in part, to the declining diversity of used vehicle inventories. Today, these inventories often feature a larger share of higher-dollar, near-new vehicles than in recent years past. On the surface, this trend isn’t necessarily a bad thing. By Dale Pollak, Founder of vAuto – a Cox Automotive Solution 3