What works for you? Dealers share used-car strategies
 | Cole: Anticipate customer needs |
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SCOTTSDALE, Ariz. -- In 2005, the West-Herr Automotive Group Inc. decided to create its own used-vehicle brand rather than promote the certified used-vehicle programs offered by the brands it sells.
It pulled its used-vehicle listings out of third-party Internet sites and bought newspaper, TV and radio ads squarely focused on driving consumer traffic to its own westherr.com. There, it explained the merits of the West-Herr Peace of Mind Car, its designation for late-model used cars and trucks.
The 18-dealership, 19-brand Blasdell, N.Y., group's efforts have paid off.
West-Herr's used-vehicle sales grew from about 5,000 units in 2005 to an expected 15,000 this year, said Jack Anderson, the company's used-vehicle director.
Anderson was one of several dealers and dealership managers who outlined their used-vehicle strategies during a panel discussion at the National Remarketing Conference here this month.
"When our contracts came up, I pulled out of AutoTrader.com and Cars.com and I spent that money on building our brand," Anderson said.
"Some of it was training, but a lot of it was just telling consumers: 'Look, we have a good brand. We give a three-day, money-back guarantee. We give a 30-day exchange policy. We give a powertrain warranty with our brand.'
"Initially, we had growing pains. It cost us money to stand behind it, but we've evolved over the years to where that program cost us very little because our cars are reconditioned so well. We know what the car is going to need so we build a car we're not going to have to buy back in three days or exchange in 30 days."
West-Herr ranks No. 23 on Automotive News' list of the top 125 dealership groups in the United States with retail sales of 17,933 new vehicles in 2011. The group also sold 13,887 used cars and trucks in 2011.
Panelist Courtney Cole, co-owner of Hare Chevrolet in Noblesville, Ind., said there is nothing wrong with factory certified used vehicles, but they don't work for her store, either.
Cole is always trying to anticipate her customers' needs. That might mean looking for less expensive vehicles for which she can get financing for those customers who fall into the special finance or buy-here, pay-here categories. Her dealership sells a little over 200 used units a month.
Or consider her response to Hurricane Sandy. Two days after the storm hit, Cole increased her typical used-vehicle inventory by about a third to 350 units. She assumed that prices would increase as dealers along the East Coast stocked up on used vehicles to sell to consumers who lost vehicles in the storm.
Among the vehicles she purchased were several late-model Mitsubishi Endeavors.
"So many times our advertising is for a solution for the customer," Cole said. "They come in and we've got to put them in something whether they are upside down or have poor credit."
By having the low-priced Endeavors at a time when prices are rising, she said, "our salespeople are excited and everybody is making good grosses. Everybody's happy: The customer is happy, we're happy."
Trade-ins' appeal
Greg Johnson, director of new and used vehicles at Larry H. Miller Group of Cos. in Sandy, Utah, said his group makes a concerted effort to acquire most of its used-vehicle inventory from customer trade-ins.
He says there was a time when his used-car managers would routinely offer less for a trade-in than it was actually worth -- "because that's what we do" -- and sometimes lose the new-car deal in the process.
But after calculating how much it would take to buy similar vehicles at auction --including auction expenses, vehicle transportation costs, and travel and hotel costs for the used-car manager -- it makes more sense to put more money in the trade, at least for vehicles that fit the dealership's needs, he said.
About 30 percent of the vehicles Johnson buys at auction are purchased online. He said he makes a big effort to keep his used-car managers at their stores working used-car deals. "There's no better place than to have the used-car manager -- working the deal, appraising a car, buying a car from a customer, working a car in the service drive or just getting involved in a deal."
The Miller Group has 42 new-vehicle locations and six stand-alone used-car stores. It ranks No. 10 on Automotive News' list of the top 125 dealership groups in the United States with retail sales of 30,865 new vehicles in 2011, plus 30,764 used units.
You can reach Arlena Sawyers at asawyers@crain.com.
