Tony Rhoades | AutoAlert, LLC | Vice President, Product | [email protected] S.T.E.M. the...

Tony Rhoades | AutoAlert, LLC | Vice President, Product | [email protected]

S.T.E.M. the Tideof

Margin Erosion!

Data Strategies to Drive More Margin from Your Used Car Operation!

• Former member of the U.S. Air Force Space Command• Previously spent 16 years delivering results in various automotive retail sales,

finance, technology, and e-commerce roles, the majority of which was with Gunn Automotive Group of dealerships.

• Has served on dealer advisory boards for several industry technology providers, and is a sought-after speaker for automotive industry events and conferences.

• Considerable retail experience, technical background, and dealer-centric approaches to automotive retail innovation.

TONY RHOADESVice President, Product, AutoAlert LLC



S.T.E.M. the Tide!• Service Lane Auctions

• Acquire quality inventory on the drive

• Turn Management• Find buyers early for your under 30 day

inventory• Cut wholesale losses by retailing your aged

inventory to existing customers• Improve inventory mix

• Eliminate Costs• Avoid auctions• Reduce recon expense• Decrease holding costs

• Maximize Margins• Improve Gross – 17%• Sale fresh inventory in the first 30 days to

maximize gross• Reducing holding costs by selling fresh

inventory to your existing customers

TURNG

ROSS

$

$0K

$1K

$2K

$3K

$4K

$5K

$6K

$(1K)

$(2K)

5 10 15 20 25 30 35 40 45 50 55 60


Service Lane Auction• Fixed Coverage (% Total Net Profits) – NADA Average?• Improved Customer Satisfaction

• Fast & Easy Process• Seamless buying experience

• Owner Retention• 200+ Incremental Units each year

• $2,000 PRU = $400,000 additional Gross

• Length of Ownership• 6.5 years

36 – the number of months in which most customers would like to trade their vehicle but cannot due to negative equity, according to NADA

68 – the average number of months in a consumer’s trade cycle

56% - the percentage of buying populations which would purchase a vehicle more often if they were happier with the “process”, according to Automotive News®

67% - approximate percentage of “loyal” service customers who will purchase their next vehicle from a different dealer

75% - of consumers would be very likely or somewhat likely to trade in their vehicle today if their monthly payment would remain about the same.

A few key statistics…


• Service Advisor Greeting• No disruption to the advisor check-in

• Record Review (Mobile VIN Scan)• Previously Sold • Service not Sold Customer

• Meet & Greet• Introduction and thank them for their business• Record Tagging for follow-up

• Present the Opportunity• Acquisition Word Track

• Response Handling• No – Thank them for their time and again thank them for their business• Yes – Be prepared to conduct as much of the conversation on the drive as possible

• VIP Service to Sales handoff• Concierge or Sales Team approach

• Point of Sale Materials• Legitimize the Program

Steps to the Sale on the Drive


“We take in high-quality trades on 75% of the 50 units a month we are selling in the service

drive.

“Data mining is the catalyst that puts those opportunities in front of us; without it

identifying the right prospects we’d just be shooting from the hip.”

– East Coast Dealer

Service Lane Results



Turn Management

0 5 10 15 20 25 30 35 40 45 50 55 60$0

$500

$1,000

$1,500

$2,000

$2,500

Used Car Profitability

Cost per day Gross

• Proactively find buyers based upon vehicle age• Fresh Inventory• Auction bound

• Quickly match top grossing units and to buyers

• Identify ‘Fastest Selling Inventory’ and customer from whom you can acquire

• Focus your one on one time with salespeople on your most profitable inventory. Match customer to salesperson to vehicle.

• Auction vehicles are not the best vehicles - your own customers’ low mileage vehicles you’ve serviced are

• Vehicles are at auctions for a reason, usually quality – service lane trades are almost always superior, cleaner so they’re nearly ready to go online or the lot

• Auction fees, transport costs and typically higher recon costs erode your margin – trades capture in your service lane save these costs

• Keeps UCMs and buyers on the lot, not at often unproductive auctions

• Lower cost of sale (< $200)

Eliminate Costs – and Frustrations



Maximize Margins

• Increase Value• Trade Cycle Disruption• Convenience

• Data-driven new-car sales on average return 21% higher gross than sales originating from ups and online channels

• Can drop new-car cost of sales to under $200 NOT more than $600!

• Used-car sales driven by data mining average 17% higher gross

• Higher quality trades originating from your service lane “auction” require less reconditioning

• Better trades get on the lot or online fast so selling can begin

• Trades you originally sold are in-market models that tend to sell soon faster, reducing your turn and costs associated with holding inventory


Margin erosion is simply C.O.G.S. rising faster than

Sale Prices or Sale Prices falling faster

than C.O.G.S.

This results in shrinking margins!

http://www.extension.umn.edu/agriculture/dairy/business-tools-and-budgeting/margin-compression/

Margin Erosion: It Can be Managed!

“Success is not a campaign, it's a capability!”

• Accountability• User Support

• Training


~ Skutta

Tony Rhoades

AutoAlert, LLC

Vice President, Product

[email protected]

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