Service lanes can become source of used-car inventory

Ben Benstock: "We've built a used-car factory in our service department."
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Brian Benstock has found that his own service department is the best place to shop for used vehicles.

When the general manager of Paragon Honda in Woodside, N.Y. needs a used car or truck of a certain model year, color and trim level, he searches his database and invites owners of those vehicles into his service department. He offers them discounts on maintenance work.

When they roll in for service, the dealership appraises them and offers a proposal some owners can't refuse: A new Honda for a monthly payment similar or lower than their current one.

The result? Paragon Honda acquires more than 100 used vehicles a month directly from vehicles brought in for service -- about 30 percent of them in direct response to his service offers. It also increased its service repair orders by about 20 percent per month in 2013 over 2012.

Says Benstock: "They asked Willie Sutton 'Why do you rob banks?' and Willie said, 'That's where the money is.' Where's the best place to find used cars? It's right in your service department. We've built a used-car factory in our service department."

Benstock says the program was created and refined in 2009 and 2010, when the recession and industrywide decline in new-vehicle sales reduced the number of trade-ins that his dealership generated.

At the same time, used-vehicle demand remained relatively high and used-vehicle prices skyrocketed. Benstock shied away from buying used vehicles at auctions because he feared that he could not acquire and sell them at reasonable prices. Acquiring vehicles from consumers was a cost-efficient solution, he says.

"Sure enough, our service department was filled with great opportunities," he says. "You never need just one; you need groups of cars."

Now Benstock is looking mostly for 2008 and 2009 models. Those vehicles are relatively scarce because that is when new-vehicle sales plunged to 13.2 million in 2008 and 10.4 million in 2009, from more than 16 million in the mid-2000s.

Benstock's system works like this:

He searches his dealership data base for customers who own the vehicles he needs, say, 2009 black Honda Accords. He looks for owners who have equity in their vehicles or are reasonably close to having equity. He sends them offers for discounted service work.

He offers more than discounts on oil changes and tire rotation. Benstock says customers who have vehicles that are out of warranty often respond to offers for more expensive jobs, such as timing chain replacement or suspension repairs.

The discounts vary and can involve discounted or free labor. He adds: "We want to give them a meaningful discount; otherwise it's not going to drive business."

You can reach Arlena Sawyers at asawyers@crain.com.


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