At last, used cars drive profits for N.Y. dealer
Shake-up brings in right processes, right people
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For years, Suzanne Cochrane, general manager of Helms Bros. Inc. in New York, struggled to sell 15 used vehicles a month at the company's Mercedes-Benz dealership.
In 2005, the used-car department's losses became substantial. Cochrane won't say how large they were, but the red ink prompted her to fire her used-car manager, disband the department and turn its operations over to her new-car sales manager. Used vehicles remained a backwater at the dealership for years.
Then in 2009, inspired by a factory-backed program on how to make money on used vehicles, Cochrane really shook things up. Among the changes:
-- She hired a new used-car manager and with her sales staff started analyzing the sales potential of used vehicles each day.
-- She banned wholesalers -- agents who buy used vehicles from dealerships -- from the store.
-- She began using inventory-management software to understand used-vehicle price trends in her market.
-- She certified as many used Mercedes-Benz vehicles as possible.
The new way of doing things shifted the focus from how much the dealership paid for vehicles to how much those vehicles would sell for, Cochrane says. "It was a totally different mind-set than I'd ever worked with before," she says.
The latest changes, coupled with cost-cutting moves made more urgent by the recession, allowed her to sell 250 used vehicles in 2009, slashing her losses in the used-vehicle department.
In 2010, the dealership sold 400 used vehicles, generating what she calls a "significant" net profit for the department. She declined to be more specific.
Cochrane, 49, also is general manager of the company's Bayside Volkswagen dealership, in the same part of Queens as the Mercedes store. That store began implementing similar changes in its used-car department at the beginning of the year, she says.
The Mercedes-Benz store has done well with new vehicles. Last year, it sold 1,700 new cars and trucks. Cochrane expects new-vehicle sales to remain flat this year.
But used-vehicle sales were a problem, even before the recession.
From 2000 to 2005, Cochrane went through four used-vehicle managers at the Mercedes store. One left; she fired three. Those managers mostly bought vehicles they personally liked, she recalls. But for whatever reason, they weren't getting the job done.
Wholesalers were constantly in and out of the store, distracting her staff, she says.
But in late 2008, she joined a Mercedes-Benz USA program to help dealers improve profitability through certified used vehicles. Hired by the factory, NCM Associates Inc., an Overland Park, Kan., consulting company, spent a year helping Cochrane improve used-vehicle operations. In November 2009, she hired her current used-car manager. A department that previously drifted through management changes without clear procedures now follows specific processes.
For example, Cochrane, her used-vehicle sales staff and service writer do regular walk-around critiques of used vehicles. After a vehicle is taken as a trade-in, Cochrane and the others discuss whether anyone has a potential customer for it, whether the vehicle needs reconditioning and at what cost.
If a used vehicle has been on the lot for 20 days, the conversation turns to why it has not sold. They also discuss whether it would be better to wholesale it and move on.
Wholesalers: Stay off-site
The used-car manager no longer calls wholesalers to ask how much they would pay the dealership for unwanted vehicles. The process often drew three or four wholesalers in a single day to the dealership, which Cochrane found disruptive.
Now, her inventory-management tool gives her wholesale price information. The dealership moves vehicles earmarked for wholesale to an off-site lot. On Mondays, the dealership faxes information about those vehicles to wholesalers. Potential buyers look over the vehicles on Tuesdays and then bid in a silent auction on Wednesdays. The highest bidders are notified Wednesday evenings.
Cochrane says the change is less intrusive and more profitable. "The difference between what two wholesalers are willing to pay for a car can be thousands of dollars," she says.
In the past, Cochrane also struggled with certified pre-owned. She had a difficult time justifying the outlay to recondition a vehicle not knowing whether there was a buyer willing to pay the higher price of a certified vehicle.
But to meet the factory's criteria, she had to join the certified program. That meant spending to meet the certified standards first, and finding a buyer second. "I couldn't just get my feet wet. I had to jump in," she says.
Last year, about 80 percent of the used vehicles the Mercedes store sold were certified vs. about 40 percent before the changes at the dealership. In April, 25 of the 30 used vehicles the dealership sold were certified.
Part-timer promotion
Cochrane was a high school sophomore in 1977 when she got her first part-time automotive job as receptionist/biller at Luby Chevrolet in Forest Hills, also in Queens.
She stayed at Luby until the store went out of business in 1982. The same year, she took a similar clerical job at Helms Bros.' Mercedes-Benz store.
Cochrane fell in love with the business, and her career took off. She was promoted to inventory administrator in 1984 and finance and insurance manager in 1986. She took over as sales manager of the company's newly acquired Saab dealership in 1992 and rejoined the Mercedes store as sales manager in 1995.
In July 2000, Cochrane completed training at the National Automobile Dealers Association Academy. She became general manager of the Mercedes and VW stores the same year. The group sold its Saab dealership in 2005.
The married mother of 10-year-old twin girls says she is "grateful and loyal" to Douglas Callahan, the company's owner, who gave her the opportunity to grow within the company at a time "when women weren't the norm in this industry."
Cochrane says the job requires hard work and long hours but the rewards are great. And she still loves it.
"Even on the craziest days and under the bizarrest circumstances, I love it," she says. "They all laugh at me here. I tell them one day I'm going to write the book."
You can reach Arlena Sawyers at asawyers@crain.com.
