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6 more ways to boost used-car results

6 of the best ways to boost used-car results

Spot On! Del Toyota

SUV, pickup drivers more loyal than car owners?

Despite 2018 forecasts, dealers optimistic for Q2

Spot On! Sands Chevrolet

Buick sets standard in J.D. Power survey

Can ‘limitless thinking’ drive your store’s success?

Spot On! Car Pros Kia




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In Other Words


Buckle up for the coming ‘Carpocalypse Now’ over electric cars

A “carpocalypse” is coming in the next four to seven years as carmakers unleash a dizzying number of new electric vehicles on the market without there being close to realistic demand. (Forbes Autos)

Service departments face renewed pressures to recondition used vehicles

As new-vehicle sales — and profits — slump, franchised dealerships are placing renewed focus among service departments on cutting the time and cost of reconditioning used vehicles. (Automotive News)

Vehicle market forecast: Partly cloudy, maybe rain

“Partly cloudy with a chance of rain” is the forecast, not of the weather, but of the U.S. used-car market by Anil Goyal, vice president-operations at Blackbook, a tracker of vehicle values. (WardsAuto)

Reflecting the community: Diversity at the dealership

With demographics transforming America, the auto industry is tackling the internal issue of how best to advance minority and women dealers and dealership managers and encourage diversity. (NADA blog)

Cars Americans don’t want to buy

While some of the most in-demand vehicles may only last a few weeks on dealership lots, many vehicles will sit for months before they are sold. (24/7 Wall St.)

6 more of best ways to boost your dealership’s used-car results

How does your used-car operation measure up?

The six key performance indicators (KPI) we shared last week should begin to give you an idea compared to thousands of others, including high performers.

Cox Automotive addressed KPIs in “Metrics That Matter for Best Dealership Performance” in its 2018 Used Car Market Report & Outlook, compiling a list of 12 KPI and best-in-class benchmarks from “vast amounts of data” it collected for the report.

110717 IL Personal touch important, even though car shoppers want digital optionsHere are the six more indicators, according to the Cox research:

Immediate wholesale volume

The best used-car departments “separate the measurements of immediate wholesale, that is, a vehicle never offered for retail from aged wholesale. They look for ways to keep trades … [and] typically have discounted recon rates for older vehicles and few to no packs.” This should be “under 33 percent.”

Immediate wholesale profit/loss per vehicle

“The goal is a small profit/loss per vehicle [about $150], an indication that appraisers are accurately assessing valuations and assumes no inventory adjustments or pack adjustments.”

Aged wholesale loss per vehicle

“Vehicles that were reconditioned and offered for retail but did not sell are likely to lose money.” Top performers separate these “from the ones that were wholesaled immediately and set a KPI for the average wholesale loss on these units. A benchmark of 5 percent wholesale loss allowance is common.”

Appraisal-to-trade ratio

“[This] is the ratio of all vehicles appraised to how many were traded … It is a key indicator of the support the used-car department provides to the new-car department.” It should exceed 50 percent.

Gross return on investment

“GROI is the product of the gross as percentage of the sale multiplied by turn rate. … For a vehicle to make financial sense, the goal is a minimum GROI of 120.” This can be applied to an entire inventory.

Cost to market

“The highest achievers monitor cost to market, which compares the retail value of a vehicle to the total investment in a vehicle, including acquisition cost, reconditioning, transportation, pack, etc. … Minimize costs to enable aggressive acquisition of inventory and deliver maximum ROI.”

For more details, download the 2018 report.

6 of the best ways to boost your dealership’s used-car results

Key performance indicators (KPI).

They are the benchmarks that tell you whether your dealership is on track with used-car sales – or if you have more work to do to get the best possible results.

But which indicators rise to the level of being “key” to your dealership’s sales performance?

Cox Automotive addressed KPIs in “Metrics That Matter for Best Dealership Performance” in its 2018 Used Car Market Report & Outlook.

110717 IL Personal touch important, even though car shoppers want digital optionsBased on “vast amounts of data from thousands of dealers, including the highest performers,” Cox came up with 12 KPIs and best-in-class benchmarks “against which dealers can measure their own performance.”

Here are the first six indicators, according to the Cox research:

Used-to-new ratio

“Used retail unit volume equaling or surpassing new retail volume is a foundational correlation of highly successful used-vehicle departments, assuming the dealership is meeting new-vehicle volume goals.”

A great result is 1.25 used vehicle sales to every one new-vehicle sale.

Inventory turn rate

“The highest performers turn inventory every 20 days … Fast inventory turns maximize high-gross opportunities associated with fresh inventory and drive profits in other dealership departments.”

Price to market/market days supply

“Top performers embrace the balance between a vehicle’s desirability and its price. They use data to dictate when it is appropriate to ‘go for the gross’ and when the window for profit is short … The data is also a foundational element in inventory acquisition and appraisal processes.”

Mechanical and cosmetic reconditioning time

“Top performers solve reconditioning delays … Speed is paramount.”

Reduced reconditioning markup for older vehicles

“Retail reconditioning hinders vehicle acquisition, especially on older vehicles that tend to be some of the most desirable but also have the highest reconditioning costs.”


“High performers understand the drag that packs place on their used car operations. They slow down acquisition, including reducing new car appraisals.” The Internet has changed this dynamic.

Visit the Inside Lane blog next week for six more KPIs from top-performing dealerships.

For more details, download the 2018 report.

SUV and pickup truck buyers more loyal to segments than car owners

SUV and truck buyers are a loyal breed.

And while that may not be a total surprise, the strength of that loyalty might be.

About three-quarters of SUV owners who purchased a new vehicle last year and about the same percentage of pickup truck owners selected the same type of vehicle, if not the same model or brand, according to Edmunds’ Loyalty Report 2018.

040318 IL SUV and pickup truck buyers more loyal to segments than car owners

SUV owners are most loyal to the growing segment.

Consumer loyalty to SUV models increased for a fifth consecutive year in 2017 and the eighth time in nine years to 75 percent, while truck-buyer loyalty was nearly as strong, slipping just 1 percent to 74 percent from the previous year, reported Edmunds, a source of automotive information.

“While historically truck buyers have been the most fiercely loyal to their segment, the growing number of SUVs on the market has given this segment the loyalty crown,” said the Edmunds report. “While segment loyalty for trucks remains high, it has leveled off in recent years, partly because there simply aren’t as many model choices available for truck buyers as for SUV buyers.”

“In fact, due to the breadth of SUV offerings of all sizes, the segment has developed into a funnel for buyers of all types – stealing business away from both cars and pickup trucks,” said Edmunds.

The biggest loser in all of this continues to be the car segment, the report showed.

Cars-owner loyalty slipped for the fifth consecutive year to 57 percent, down from nearly 70 percent, as millions of cars owners switched to SUVs and pickup trucks.

“In 2017, passenger cars accounted for 36 percent of all new vehicles sold,” said Edmunds. “This is the lowest market share figure ever for cars and a noticeable decline from just five years ago when cars constituted half of the sales in [the] new-car market.”

Edmunds noted that “slowing sales and lower margins have caused a few major automakers to either re-evaluate the passenger car segment or abandon it completely.”

In reaching its conclusions, Edmunds examined more than 13.9 million vehicle transactions “to delve deep into what drives buyer loyalty at both the segment and the brand level,” examining “why shoppers have made such a dramatic pivot away from passenger cars toward SUVs.”

Edmunds traced the shift in consumer preferences to a combination of the recession that started in 2008 and stricter, government-mandated, fuel-efficiency standards.

“The irony of the last decade is that had the recession not happened, and had automakers not been forced to develop more fuel-efficient SUV options, the segment may have stayed limited to just those buyers who preferred larger, truck-based SUVs,” said Edmunds. “But the fact that market forces compelled automakers to create SUVs that drove and consumed fuel similar to passenger cars actually led to abandonment of the passenger car segment we’re seeing today.”

More details are available in Edmunds Loyalty Report 2018 on brand performance.

Despite 2018 forecasts, dealers are optimistic about Q2 – Cox Automotive

Car dealers are optimistic about next quarter.

Maybe that optimism should come as a surprise considering predictions that new-vehicle sales will decline again this year and that used-vehicle sales will rise only slightly.

New-car sales the first two months of the year were down about 19,000 vehicles compared to 2017, with March sales figures due out in a few days. Last year, March was the second-strongest month of the year with new-vehicle sales of about 1.55 million.

032918 IL Despite 2018 forecasts, dealers are optimistic about Q2 – Cox Automotive - Copy (1)

And yet, the mixed outlook is not enough to curb dealers’ enthusiasm for the second quarter.

“Expectations for the next quarter are up substantially [over Q1],” according to a Cox Automotive survey of 896 dealer respondents from Jan. 29 to Feb. 12. “More dealers expect conditions to be strong in the future compared to those who believe conditions will be weak.”

“Dealers have very high expectations for the next 90 days, with positive views of the recent tax reform likely contributing to their optimism,” said Jonathan Smoke, Cox chief economist, in a press statement released just before the NADA national convention. “They expect their customers to have more disposable income and the U.S. economy to be stronger as a result.”

Other significant market improvements reflected in the Cox survey, Dealer Sentiment Index, include:

  • A decline in pressure to lower prices.
  • An increase in dealers’ ability to get credit.
  • Increases in new- and used-vehicle inventory levels.

“Perceptions of the new-car sales environment by franchise dealers remains one of the most positive areas of dealer sentiment,” Cox reported, with the index rising 17 points to 70 from 53 recorded in Q4.

The increase was similar among both franchise and independent dealers.

Sentiment among new-car dealers was higher than last quarter in most areas, including new-vehicle sales environment, new-vehicle inventory. Optimism was greater among both franchise and independent dealers responding to the Cox survey in describing the current used-vehicle sales environment and current used-vehicle inventory levels.

“The current market improved, but expectations for the market moving into the spring jumped even more dramatically,” said Smoke. “Dealers are optimistic by nature, so I expected stronger views for Q2 … [but] the strong optimism and high expectations surprised even me.”

Download a copy of the first-quarter Dealer Sentiment Index results at Cox Automotive.

Buick top ‘mass-market’ brand for customer service – J.D. Power

The way to a vehicle owner’s heart is through …

Customer service.

High-performing dealers will tell you that a high level of service helps drive customer satisfaction and ensure a positive customer experience.

And that’s money in the bank.

Brands can be made or broken by the collective customer satisfaction.

Buick is riding high in J.D. Power customer service study.

Buick is riding high in J.D. Power customer service study.

In the case of the latest J.D. Power Customer Service Index Study, the “mass-market” standard is set by General Motors’ Buick brand, for the fourth time in five years.

Buick, which received five out of five quality circles, was one of three General Motors brands in the top four along with GMC and Chevrolet, both of which scored four of five circles.

Only MINI broke GM’s grip on the top four, finishing in a tie for second with five JDP quality circles. MINI also was the only brand that has beaten Buick among mass-market brands in the last five years.

“Buick, for the second consecutive year, ranks highest in satisfaction for dealer service among mass-market brands, with a score of 850 [out of 1,000],” according to JDP’s press release about study results. Chevrolet and Mini tied for second at 849, followed by GMC at 843.

This year’s luxury brand winner was Infiniti with 876 points, making it the fifth different winner in five years in that segment, and beating out Porsche at 874 and Audi, Cadillac and Lexus at 871.

The study, which was based on responses from more than 74,000 drivers of 2015 to 2017 model-year vehicles, measures customer satisfaction with every aspect of their vehicle shopping experience, including their satisfaction with the dealership from which they purchased a vehicle as well as the dealerships they visited but from which they did not purchase a vehicle.

JDP found that overall customer satisfaction “continues to improve,” along with gains in customer satisfaction with service adviser, service facility, service initiation and vehicle pick-up.

“When a customer is happy with the service a dealer provides them, they’re more likely to tell their friends and family members about it,” said Chris Sutton of JDP’s U.S. automotive retail practice. “This experience creates promoters for the vehicle brand who are more likely to return to a dealer for repairs and common services like oil changes and replacement of batteries, brakes and tires.”

Among other JDP study findings:

  • Customers prefer online service scheduling capability, with Internet usage increasing among all generations, although younger customers adopt it at a much faster rate.
  • Overall satisfaction improves with valet service in which a vehicle is picked up for service and returned, especially among premium-brand customers.
  • Common reasons customers choose a service provider are prior experience and convenience.
  • Younger customers seem to be influenced more than other generations by promotions, coupons and word of mouth when choosing a dealer to service their vehicles.

The results for both mass-market brands and luxury brands, as well as more details about the study are available at the J.D. Power website.

How ‘limitless thinking’ may help drive your store’s success this year

Limitless thinking + customer focus + continuous effort.

These are among Santander Consumer USA’s building blocks for success with dealers during what may be a tough year for new-vehicle sales but slightly better than last year for used sales.

“What worked in the past [with customers and dealers] won’t necessarily work in the future – it’s about limitless thinking,” said an SC sales director at the company’s national sales meeting recently in Fort Worth, TX. “We’re going to think big. We’re going to think limitless.”

021518 IL One word captures SC’s dealer and customer focus for 2018Which is, of course, good news for dealers who want a true partner in growing their businesses.

“We have growth we can do with the dealers we do business with today,” said Rich Morrin, president of Chrysler Capital & Dealer Relationships, at the SC sales meeting.


Adding up the reasons Santander Consumer will be good for your business in 2018

Santander is all about giving dealers a funding option in 2018

One word captures SC’s dealer and customer focus for 2018

Limitless thinking means SC is doing everything possible to boost your results, which includes refreshing, even revamping programs to ensure that dealers who work with us see the difference.

That involves better pricing across the credit spectrum with our new scorecard, and being “proactive to market conditions and the ever-growing needs of our dealer partners.”

Other program highlights are:

  • Fewer stips making it easier to submit more packages to SC.
  • Greater flexibility on financing terms.
  • More-efficient funding.
  • Increased participation.
  • Higher LTV/PTI allowances with higher FICOs.
  • The opportunity for more backend in some tiers.
  • Decreasing fees on better-quality packages in most cases.

The program also includes access 24/7 to our Dealer Extranet and powerful Rehash Tool, and the opportunity to participate in SC’s direct mail program and revamped RoadLoans program.

And our sales team is empowered to work with dealers to make things happen.

“Our job is to help our dealers get their deals funded,” said one regional sales manager. “Putting more cars on the road is what we’re there for.”

Our team of area sales managers (and regional sales managers) are knowledgeable auto-lending professionals who can help you navigate the process of securing more deals with SC across the credit spectrum, whether that involves assisting with setting up an account on the Dealer Extranet, explaining various other programs we provide or keeping an application on track with a buyer.

If you’re not getting the results you want, just ask your ASM how we can help accelerate your business. All we want is a chance to compete for more loan packages.

Our keys to success are especially relevant to your business when you need options to seal a deal.

We’re shining a bright light on dealerships: Will yours be one of them?

Spot on!

That’s what dealerships must be to thrive in today’s automotive sales environment.

Spot on in sales.

Spot on in service.

Spot on in messaging.


Spot on in everything!

It’s no surprise that some dealerships thrive more than others.

Our series “Spot on!” will shine a bright light on dealerships across the country by profiling some that excel in an important aspect of the business, according to members of the Santander Consumer USA sales team who work with them every day – about 160 area, regional and inside sales managers.

Yes, we’re going to name names – and regularly publish profiles and photos on our dealer blog, Inside Lane, starting in about a week and continuing indefinitely.

A recent informal survey of dealerships found an interest in reading about what other dealers do well. Our sales team thought that seemed like a pretty good idea.

This is one way we hope to satisfy that interest among the dealers who do business with us.

“People are already pumped about this,” said one area sales manager in the Northwest region. “I think that this is going to be a very positive addition to our relationships with dealers.”

We hope dealers will be pumped, too.

Five things that will make a difference in your sales for 2018

Rain or shine, good days and bad, boom or bust, you’re out there selling cars.

And with new-car sales expected to retrench this year – and used-car sales rise only slightly – you need to do everything just right to make sure you get your piece of the pie.

Some things you’re doing, or not, which didn’t hurt as much when sales were increasing year over year, could prevent your dealership from squeezing the best results from lower consumer demand.

Is selling to women on your to-do list for 2018?

Is selling to women on your to-do list for 2018?

CBT Automotive Network took a tongue-in-cheek, yet still useful, look at How to NOT sell cars in 2018.

“Sales processes have evolved, and the traditional way of selling cars is losing its effectiveness,” wrote Jason Unrau at “Dealers and salespeople who resist change and continue to do things the way they’ve always been done can expect their sales numbers in 2018 to slip.”

“If you don’t want to sell as many cars in 2018, keep doing these five things,” he wrote, suggesting, of course, that doing the reverse is more likely to boost your results.

Print advertising

Citing a report, Unrau writes that “newspaper readership in print declined eight percent in 2016 from the previous year. That stat is accelerating as more people read news online and papers are left on the stand. Spending money on print ads was effective in the past, but that tide is turning.” He suggests targeting desired readers online with the help of a digital marketing agency.

Which shoppers to target

“Nearly 80 percent of automotive industry personnel are male … [and] vehicle ads are often highly masculine,” writes Unrau, an automotive specialist with more than 15 years of dealership experience. “In contrast, 65 percent of new-car buyers are women and 80 percent of car purchases are influenced by women.” He suggests creating greater appeal for female shoppers by hiring more female staff, changing the way you advertise, and updating your showroom processes.

Value of the walk-around

Don’t rush or skip this step – or, for that matter, the test drive – if you want to make the most of customers who have entered your showroom. “Build a relationship with the shopper and nurture interest in the car itself with a thorough, knowledgeable walk-around … [and] test drive,” he writes.

Negotiating with customer

“Car buyers spend more than eight hours, on average, researching a car before setting foot in the dealership,” Unrau writes. “They know the list price. … But as soon as price is the focus of the shopping experience, you’ve either lost the sale or all the gross profit. … Negotiate based on terms whenever possible [and] present financing or lease terms to base the conversation on.”

Set yourself apart

“When the car is the focus of the sale, you aren’t setting yourself apart, and the customer has no reason to stay and buy from you,” Unrau writes. He recommends setting your dealership apart from others in the area selling the same product by making shopping a dealership experience. “Show the customer what makes you different, both personally and as a company.”

And make a difference in your results this year.

How to steer your dealership through traffic in 2018 and beyond

Where is your dealership headed in 2018?

With the industry anticipating slackening demand for new vehicles, and only slightly higher demand for used-car sales in the coming year – and for the foreseeable future – it means one thing.

Dealers must look for other sources of revenue and profit to steer their businesses into the future.

“It’s time to … identify ways your dealership can continue to generate profit amid this post-peak environment and growing demand for a streamlined car-buying experience,” wrote Paul Whitworth in Look Back in the Rearview to Illuminate What’s Ahead for CBT Automotive Network.

110717 IL Personal touch important, even though car shoppers want digital options

So, here’s what he’s talking about to offset slower sales and margin compression.

A close look at last year’s results, when the automotive retail industry as a whole realized just 0.4 percent profit, “suggests that not enough retailers are taking advantage of other, perhaps more profitable, sources of income [than vehicle sales],” wrote Whitworth, an executive at Dealertrack.

Those areas are:

  • Fixed operations
  • F&I sales
  • Process improvements

Fixed operations

Citing Cox Automotive, Whitworth writes that “less than one in three service visits are being conducted at a dealership. This is a huge missed opportunity for renewable, reliable sources of income, not to mention customer retention and loyalty. And the failure starts at the point of sale.”

“Why not leverage the opportunity and make fixed operations an integrated part of the sales process. Sales-to-service turnover shouldn’t be an afterthought,” writes Whitworth. “It should be an imperative part of the sale of every new and used vehicle.”

F&I sales

“F&I sales have huge profit potential,” writes Whitworth, suggesting that for “every dollar a dealership generates through F&I, it retains about 70 to 80 cents.”

But that probably means you must streamline your F&I sales process.

“Offering optional add-ons, including extended service plans … by a separate department, in a separate office, after the close of a sale” creates a costly disconnect, Whitworth writes. “But some dealerships have started to implement a sales-F&I hybrid approach” guiding the whole deal.

Process improvements

This includes better employee training, better technology and better internal processes.

“In the car business, time is money, so find ways to reduce holding costs, make your employees happier, and your technology more accessible, integrated and user friendly,” he writes.

“You’ll find that a few changes and improvements … will go a long way toward increasing profits and making your business more appealing to customers and employees, alike,” writes Whitworth, making it “the starting point” for a stronger business in 2018 and beyond.