Used-car manager? Maybe you don't need one

Printed in Automotive News Oct. 17, 2011

Cary Donovan says he realized five years ago that many new-car dealerships don't need used-car managers.

So Donovan's employer, Sam Swope Auto Group in Louisville, Ky., eliminated the position at about half of its 15 dealerships. Swope would have done so at every store, but some manufacturers require a used-car manager, and a few dealerships have high volume that makes the position necessary.

Donovan, director of Swope's used-vehicle operations, assembled a three-person team to buy the group's used-vehicle inventory online at auction and handle most appraisals.

Now Swope buys more used stock that turns in 30 days or less. And Swope has increased its used-to-new sales ratio from 1-to-1 a decade ago to 1.5-to-1 today.

"In the past, a used-car manager was basically a guy that came into the store on Monday, went to the auction on Tuesday, came back on Thursday night and was off on Friday," says Donovan, 52.

"I want people in the store; I want people managing their people and managing the processes and not running all over the country," he says.

Dick Swope, 62, CEO of Sam Swope Auto Group, says the family's philosophy is that dealerships can't succeed without a strong used-car department.

"We believe that used cars drive our new-car success," he says. "If we're successful in the used-car arena, and in turning used cars at a rapid pace, we can always afford to stretch on new-car trade-ins."

Sam Swope Auto Group and the Swope Family of Dealerships of Elizabethtown, Ky., make up Swope Automotive Group, founded by Sam and his brother, Bill, the father of Dick Swope.

The two groups report their sales together. Swope Automotive operates 24 dealerships and ranks No. 63 on the Automotive News list of the top 125 dealership groups, with 2010 sales of 8,092 new and 12,412 used vehicles.

After 40 days in inventory at the Sam Swope group, a used vehicle is offered for sale to other group stores, with the selling dealership setting the price. If it hasn't moved at day 45, Donovan accepts electronic bids from Sam Swope group stores. If another Swope store buys a vehicle but doesn't sell it within 45 days, it goes directly to auction.

The new system is so successful, Donovan says, that less than 10 percent of the group's used-vehicle retail stock is offered to sibling stores and an insignificant number goes to auction.

He says: "We buy the cars we need rather than buy cars just to fill a hole."  c