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.