New Used Car Data, Old Used Car Metrics

New data-old metrics

I had the pleasure to host an Expert Roundtable on Vehicle Reconditioning this last week at the Internet Sales 20 Group-3 Day Workshop in Pennsylvania and truly enjoyed the fact that the dealers and dealership employees I met are really starting to embrace the fact that a great reconditioning process drives and supports the growth of ALL departments. I still remember the first time I heard a couple of my favorite sayings: 1."An Army travels on its belly"...and

2."It does not matter how much land your Army conquers if you do not have a sufficient supply chain to reinforce, resupply and rearm them to be able to hold it."

In short, "the car is the star" and the dealers who have control of the logistics of acquisition and reconditioning are the ones who are getting bigger and do not have the severe ups & downs so common in our Industry.

Now to the title of this thing. I also had the opportunity to listen to different speakers and be part of quite a few conversations. I was listening to a rather large 3rd party lead provider and listing service (the name doesn't matter, they are all similar in function) talking about a call he had handled from a dealer earlier that day. The dealer had called and was upset that the number of leads and online activity that they were receiving on their inventory was not worth the amount they were paying and was threatening to cancel their contract, sound familiar? The rep calmly pulled up the dealers online inventory and explained that before blaming them he should pay more attention to the fact that 30-35% of his inventory didn't even have pictures-sound familiar, again? Well, that squashed that-what was the dealer to say? No help, just a simple it's your fault, not ours. This has been the age old "go-to" of lead providers. It's your fault, you aren't merchandising or displaying your cars correctly.

Yes and No. Yes, the dealer should be aware of and actively working a plan on controlling his online presence. Yes, the market is still there. No, we cannot keep using the same metrics to measure success or what causes it. Has anyone ever pointed out the fact that that dealer may be turning his or her inventory at such an accelerated pace that 30-40% of his inventory will always be missing pictures and that it isn't a problem? As someone who has had to defend his position MANY times of why the used car inventory always had a lot of missing pics, I understand. My most successful months were always the months when the metrics pointed south and for good reason. Math. When you are working a plan and selling a lot of cars, you should also be buying and taking in a lot of trade ins. It is only a great circle of life if the circle never ends. That means you will always have cars in a state of reconditioning and flux causing a drop in online picture percentages-but if it is being done correctly you should also have a great weekly percentage of newer cars getting pictures done. This will also show, according to current metrics a low amount of retail ready cars. But remember, when a car is retail ready and sitting it is only costing the dealer money-not making money like it is when recon is being done. Ever heard the term "dead inventory?" Another metric that can work against you is "price to market". When you work a successful pricing strategy and "price to market", you will sell more cars. Usually, the freshest and most sought after sell the fastest-constantly leaving the others to age and this will also throw your metrics out of whack-especially if you are a volume store. This is when the veterans know to keep going and play the averages-its all about the averages and to keep putting pressure on the process. You should and always will have an aging problem if you are pushing your store to outperform the market, I actually sweated bullets when my inventory looked perfect. That meant nothing was happening. Controlled chaos creates unexpected opportunities. But most people do not think of inventory as a fluid living thing. They see it as stagnant information and dollar signs on a dashboard and stop there. What I cautioned and counseled the rep to do was dig deeper..be of service to the dealer (he pays the bill). Is the missing pictures a symptom of a bigger problem or is that just a side effect of growth. Is that dealer, in fact, doing almost everything right, but lacks the training or tools necessary to support that growth? Buying cars is fun, selling cars can be fun too. The hard part is controlling all of the steps in between-and getting them marketed in a timely, repeatable and relevant manner. Has the dealer simply outsold his ability to resupply and remarket efficiently or does the dealer actively work a plan and have a legitimate concern about the quality and quantity of leads he is being provided for what he is paying? I don't know-neither does the rep. But what I do know is that the 3rd parties need to take a bigger role in changing how we measure success and where to place the blame.

The consumer, not the market, is moving faster and will keep accelerating. They pull the trigger at a faster rate than ever before in our history-ask Amazon. The consumer, not the dealer is truly utilizing the available tools and data to make decisions and when 2+2=4, they buy. That means that dealers will have to push to think in new directions as to how to better market their product to the consumer in a more informative and timely manner. Who cares about "custom comments" when someone can give them Original Build Sheets, Live Service History and a detailed list of how the vehicle was reconditioned at the dealer level? And that means we need to change our thinking on what "Frontline Ready" really means and what the newly updated metrics need to be. To me, "Frontline Ready" has two meanings for two very different purposes. First, to me is my cars online "Frontline Ready" state. Is the car's information correct, is it priced relevant and is there enough information available on my site to engage and build a "covet" factor great enough in the consumer to create an opportunity. Second, is the physical "Frontline Ready" needed to deliver the vehicle into the new owner's hands to complete the purchase. 

At this point, we are all pretty solid on what VDPs and SRPs are, and we spend an awful lot of money trying to see into our neighbor's backyard. But do you have any idea how tall the grass is in your own backyard and how little attention you have paid to it? I guarantee you will be surprised at the difference in profitability you will gain by looking inside at your own practices and processes first, then strategically planning and supporting a plan for growth. There are other antiquated metrics that need the meaning or definitions changed and that can be a topic of another article or discussion.

-Mike Boyd