SMITH CHASE CUSTOMER SERVICE

Vol. 20 No. 7
JULY 2013
CUSTOMER SERVICE
TRAIN WRECKS
CHASE
SMITH
President and Co-owner
of Russell & Smith
Automotive Group
Page 18
Dave Anderson
Page 8
ARE YOU MAKING
CUSTOMERS
OR MAKING MONEY?
Charlie Polston
Page 68
EMAIL INBOX DELIVERY
AND SENDER REPUTATION
Neil Bibbins
Page 56
PROFIT ACCOUNTING
YOUR DMS
Sandi Jerome
Page 60
PRE-OWNED
Turnaround Specialist:
A Dealer Shares 5 Secrets
Behind His Used Vehicle Success
DALE POLLAK
“We’re making more net profit in a month now than we used to
make in an entire year. That speaks to two things…how bad we
were before and how good we are now.”
This quote comes from Paul Lynch, the general sales manager at DePaula Chevrolet, Albany, N.Y., who has led
an impressive turnaround in the store’s used vehicle department over the past 15 months. Check out some of these
results:
Volume: The store has grown from selling an average
60 used vehicles/month, to an average 130/month.
Gross Profit: With the extra volume, the dealership’s
front-end gross profit average has improved to nearly
$1800/unit. Each sold unit also averages $1,000 in F&I
and $350 in service gross profit.
Inventory: The store regularly maintains 80-plus
percent or more of its inventory under 30 days of age
(the benchmark I recommend is 50 percent), with none
of the roughly 130-car inventory above 60 days old. The
data indicate Lynch’s team retails most vehicles while
they’re fresh and able to deliver maximum gross profit.
This impressive turn-and-earn performance comes as
the cost-to-market average for Lynch’s inventory hovers
near 80 percent. “If our cost to market gets above 84
percent, we’re sounding the alarm,” he says.
Retail-Readiness: “If the cars aren’t done in the
shop and pictured up and online in 72 hours, we feel
very uncomfortable,” Lynch says. A streamlined process
ensures reconditioning typically takes 24 hours or less,
with an average cost of $700/unit.
I share Lynch’s results as an instructive example of
a dealership that bit the bullet and decided “enough is
enough” in used vehicles.
“We were in complete and utter disarray,” Lynch says.
“It used to take us 16 days to get a car ready for retail. We
had 90 cars over 90 days old. We weren’t really making
any money because stuff would sit there. When it sold, it
sold. It was like fake gross.”
Lynch says the turnaround his team achieved in
used vehicles wasn’t easy. The initial clean-up of the
store’s inventory resulted in $200,000 in losses and the
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Dealer
JULY 2013
effort required countless hours by managers to reinvent
their processes to emphasize the time-is-money nature
of today’s retail environment.
“It was a total culture change,” says Jay Newell, preowned sales manager. “But everybody’s on board and
knows their role. Even the clean-up guy knows how fast
we need to get cars online and ready.”
I asked Lynch to share highlights of the operational
changes he undertook to help other dealers who aim
to improve their used vehicle department performance
and profitability. He offered five pointers:
1. Separate reconditioning team. The store’s previous
16-day reconditioning time average owed to the
service department’s emphasis on customer pay
work. The fix: Use a portion of the store’s body shop
where three technicians and a writer focus solely
on reconditioning used vehicles. They meet every
morning to discuss their gameplan for each incoming
car and ensure any repairs fall within initial estimates
(if they don’t, the writer has a conversation with a
manager).
2. Acquisition discipline: “We don’t buy or sell cars
with bad CARFAX reports anymore,” Lynch says. Two
buyers—one using online auctions the other at
physical auctions—focus on acquiring vehicles with
a low market days supply to ensure they sell quickly.
The market days supply for the store’s inventory is
under 70 days. This year, the dealership has expanded
its acquisition “net,” acquiring vehicles from the
Midwest and Southeast, a necessary step to maintain
a pipeline of cars for its inventory.
3. Pricing Precision: Lynch’s managers review the price
on every vehicle once a week for nearly four hours as
Dealer-magazine.com
PRE-OWNED | Pollak, continued from Page 76
a group. They focus on outliers—
units that fall short of a 2 percent
SRP/VDP conversion minimum on
classified sites and those above
4 percent. They supplement the
weekly review with daily checks
of VDP conversions and adjust
prices whenever they spot a
need. “We’ve got multiple sets of
eyes on our pricing,” Lynch says.
“Some dealers may think we’re
wasting our time on pricing. I
think it’s the reason we’re not like
everyone else. There’s a sweet
spot for every single car and we’re
always looking to be right there.”
4. Market-focused Sales: Lynch’s
team implemented a sales
process that emphasizes each
vehicle’s value proposition based
on the market. Sales teams share
comparison cars and prices with
customers to underscore why
the dealership’s asking price and
vehicle represent a good deal.
“Our sales team understands how
and why we price our vehicles,”
Lynch says. “We don’t work a deal
with a customer until they’ve
seen the evidence folders on
every car. That’s what helps us
hold gross.”
Dale Pollak, vAuto’s Founder,
has 13 years of dealer leadership
experience and is a highly soughtafter
best-selling author and recognized
speaker on maximizing dealership
profits from preowned vehicle
operations. Pollak received his B.S.
in Business Administration from
Indiana University and is a graduate
of the General Motors Institute of
Automotive Development. He also
holds a law degree from DePaul
University’s College of Law, and is
a four-time winner of the American
Jurisprudence Award. You can
email Dale at [email protected]
For more articles,
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www.Dealer-magazine.com
WHAT THE
HECK?!
5. An “all-in” mentality. Dave
Rinaldi, a performance manager
who works with DePaula, has
nicknamed Lynch “The Bulldog”
for his tireless efforts to turn doubt
into belief at the dealership. “If you
don’t have everybody on board,
understanding what you’re doing
and why you’re doing it, you’re
fighting an uphill battle,” Lynch
says. “In a lot of dealerships,
there’s animosity or dissension
between departments. I think
our biggest accomplishment was
getting everyone to value the
same things and march together
in the same direction. You can’t
get the results we’ve seen without
that foundation.”
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