Let’s look at risk and its impact upon the average dealer. The first thing many dealers think of regarding risk is a water report. They seek to identify vehicles that raise their financial position higher than the wholesale market’s position. These dealers are defending themselves against wholesale loss, but after the fact. I believe we create our wholesale loss at the time of acquisition. When you acquire a vehicle, you should consider its likelihood to sell retail and be aware of vehicles that have a history of long turn times or low gross profit. This information helps you make informed decisions when determining the rates at which to purchase vehicles–rates that help relieve wholesale loss when the values of the assets are undetermined.
Also, remember that if you have vehicles that turn slower or make less profit, you can advertise them in the marketplace at a lower price to bring in more customers. This is not just about lowering cost position. If you consider all data at the time of acquisition, you can increase your position on vehicles that sell well on your lot, thus increasing the possibility of having better cars than the competition. This enables you to turn vehicles faster, increase your average sales price over time and avoid hasty decisions due to a hectic work schedule.
By quickly analyzing key factors, contemporary software provides a score on each vehicle, helping you make the best “buy or sell” decision. It also helps you identify risk, thus enhancing sales opportunities. Overall, the lesson is you don’t have to build a bigger dealership to be successful; you just have to build a better inventory, one vehicle at a time.
Vol 2, Issue 12