“Our sales were strong, but the bottleneck in the whole operation was the time it took to get our used cars front-line ready,” he told Automotive News. “It’s not that [employees] don’t care; it’s just not necessarily their job to think about the big picture. Incentivizing them to buy into the big picture makes everybody more money.”
He started paying service techs at the retail rates used for customer repairs if they could move used vehicles through the system within 48 hours and reducing pay to at-cost rates the longer they were held up. The dealership also tweaked how it stores vehicles so managers can see exactly where they stand in the reconditioning process; prioritized getting photos of used inventory online more quickly; and altered its pricing strategy to be more competitive.
The results? Anderson and his team reduced the rolling used-vehicle inventory turn from about 50 days in 2019 to 30 last year, helping boost sales about 12 percent year over year. He also increased the store’s profit per used vehicle by 23 percent. The dealership sells 300 new and 400 used vehicles a year.
“After we got rolling and everybody starting seeing that it was working, it really took off,” Anderson said.
The dealership moves on a used vehicle minutes after it’s bought from an auction or traded in, adding it to the system and moving it to a dedicated pre-service lot. While the vehicle waits to be serviced, detailed and photographed, the team will post an image online of a vehicle under a red sheet, telling prospective customers that it’s still being prepared but urging them to call about it because “1 in 5 vehicles will be sold before the pictures appear online.”
That marketing tactic, Anderson said, has boosted the amount of calls about vehicles within their first day or so on the lot.
Ideally, the car will make its way through the service department within two days. Techs often give it the same priority as a customer vehicle.
Anderson said he monitors used-vehicle prices daily and adjusts his pricing as needed.
To ensure the store has an ample supply of used vehicles as it churns through inventory more quickly, Anderson also implemented Kelley Blue Book’s Instant Cash Offer program, significantly increasing the number of off-street purchases.
Anderson said the new processes not only have increased store sales and profits, but have made the team closer.
“I have a very strong staff, and they support each other throughout the departments,” he said. “Everybody’s on board with the philosophy that the quicker you can get the vehicles in and out, the more money everyone’s going to make.”
