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THE GOOD FIGHT: Paul John, executive director of the Georgia Independent Automobile Dealers Association, discusses how the association fought against state legislation that would have raised the taxes on used-car purchases.

Dealers Use In-House CRM to Drive Sales

Dealers Use In-House CRM to Drive Sales

Robert Beck, president, Stop ‘N Drive Motors, San Antonio, Texas:

“We have one location and we opened up in 2005.

“We usually stock about 40 to 50 cars. We have relationships with local new-car dealers that have on-site auctions. So we go to their place and try to outbid everyone else. 

“We also buy at regular auction – Manheim auctions. When we go to the auction, we try to only buy new-car trade-ins.

“Over the course of the year, we sell an average of 15 a month.

“We are 100 percent buy-here, pay-here. Down payments vary. During tax season, people have more of a down payment than they do now. Over the course of the year, I’d say it’s about $2,000.

“Average retail price is about $13,900.

“It used to be, when we opened up, we’d try to keep term lengths at 36 months. Now that’s crept up, probably, to 42 or 44. But cars have gotten more expensive since we opened up.  I remember our plan was to buy a $4,500 car. You can’t get much for $4,500 now.

“The average year is probably a 2007, maybe a 2008.

“Average mileage is going to be anywhere between 100,000 and 120,000.

“My partner’s a good buyer. He has to shake the bushes, but he always comes up with some good pieces.

“We’d always like to get more trucks. Right now, we only have one truck, but that’s because we recently sold a few. Normally, we’d like to have four or five trucks.

“Our niche is mainly trucks and SUVs. We have some sedans, because some customers will want a rig with good gas mileage. But guys who work need the pickup truck to work or they need the SUV to carry their kids in.

“We’re mainly domestic. We’ll pick up a few imports if we come across a good deal.

“Average reconditioning is about $500. We do it ourselves.

 “We do very little advertising. We do some on Facebook and Google. We also have our website.

“Repeat and referral is a big part of our business. We have a CRM tool that we developed years and years ago in-house. We contact customers on a regular basis.

“We recently sold a 2008 Chrysler Aspen. It had 127,000 miles and we sold it for $14,900.”

 

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  • Consulting Group Reflects on Growth After First Year

    A year ago, industry veterans Tom Stewart and Richard Curtis launched  Auction Management Solutions Inc (AMS) to provide consulting services to the automotive industry. 

    This past year AMS has seen explosive growth in its core business, adding independent auto auctions, service providers, and vendors. 

    “Richard and I are humbled by the success we have achieved in such a short period of time”, Stewart said.  “We started this firm to deepen relationships between consignors and our clients, and to illustrate that independent auctions can and will continue to provide all the services consignors have come to expect”.

    AMS currently represents 17 auctions across 14 states, with new locations being added steadily. The latest addition is Rea Brothers’ Mid-South Auction in Pearl, Miss.

    “We are confident that our new working relationship with AMS is going to provide real dividends for our auction,” , John Rea, the auction’s managing partner. 

    The main focus of AMS is to provide strategic business development services, with an emphasis on processes, profitability and exposure that aid in the growth and success of the client/partners.   “It is our intent to keep our clients on the forefront of the automotive remarketing industry by maintaining a comprehensive and competitive suite of services”, Curtis said.

    AMS recently announced the addition of two additions to their staff.   

    Jamye Carpenter was brought on board in April as vice president of business development.

    More recently, Shelly Frank came on board. Frank birngs more than 25 years of experience in the auto finance and wholesale auto auction industry. 

    Frank previously served as loss mitigation operation manager of Fireside Bank, and as vice president of business development with North Bay Auto Auction. She continues to work with North Bay on projects as a consultant.

    Frank has also been active in the Western Chapter of the National Auto Auction Association.

     

    “Both of these women bring years of experience, a wealth of industry knowledge, and contribute diverse areas of expertise to the team, allowing AMS to provide all manners of service to our partners”, Stewart said.

    “AMS looks forward to many successful years of working with our clients and providing services to, and for, the entire industry.”

     

  • Uncertainty Drives Dealers in Different Directions

    The industry is in a state of transition and dealers are uncertain about the best way to move forward.

    Take the issue of whether or not to finance their own sales.

    Michael Darrow, owner, The Auto Traders in Durham, N.C., said about 40 percent of his sales are subprime deals.

    Darrow also “dabbles” in buy-here, pay-here. Lately, he’s been increasing the amount of paper he keeps for himself, doing two or three buy-here, pay-here deals a month out of 38 sales.

    “The lenders have tightened up a little bit, which is where we’ve seen more opportunity for buy-here, pay-here,” Darrow said. “Now a lender says, ‘That’s a $900 fee,’ that’s when we’ll keep it in-house.”

    Rex Echer, owner, The Car Shoppe, Salina, Kan., is acting like one of those finance companies.

    His store used to be evenly split between straight retail and buy-here, pay-here. Now retail sales make up 70 percent of the business.

    “ It’s a little safer,” Echer said.

    A major issue for Echer is a lack of quality inventory.

    “It’s harder to find anything with good mileage,” he said. “For the buy-here, pay-here stuff, I don’t know what good mileage is anymore. Maybe 150,000 or less.”

    This drives up the recon costs.

  • CarMax’s Mix Drives Earnings Higher

    Executives at CarMax Inc. attribute the company’s success to a pretty simple idea: selling what people want.

    They said the mix of vehicles positively impacted their earnings in the company’s latest quarter. CarMax reported net earnings growth of 20.7 percent in its latest quarter.

    The vehicle mix improved compared to last year’s offerings. Their percentage of sales in large and medium SUV’s and trucks rose to 27 percent, which is about three points higher than the prior quarter.

    “So even last year, when we were little bit lower in large SUV’s and trucks, we were still putting what folks wanted to buy and what were also a good deal for them,” said CarMax CEO Bill Nash. “So I think the supply has increased on these vehicles and has driven price down somewhat but again we’re going to buy what the consumers want.”

    The company’s new online appraisal initiative helped CarMax stock the right vehicles. The online system allows customers to receive a value for their vehicle before coming into the store.

    CarMax executives view buying inventory directly from consumers as a better value proposition.

    “It is more profitable than buying it off-site so we’re always trying to drive as much as possible through the line but even given this quarter where we were allowed a little more off-site purchases because the volume, we’re still able to maintain gross profit per unit,” Nash said.

    Even though CarMax is stocking more SUV’s and minivans, the average selling price remains down a bit. Nash said that this could be attributed to the acquisition prices.

    “I think this speaks to the execution that the stores are doing and the great things that are buyers do, making sure that they’re getting the best price and really at the end of the day that’s really where it starts,” Nash said. “You have got to buy the vehicles at the right price so lower acquisition prices more than offsetting the increase that you would normally see from the mix shift.” 

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