Welcome to the first episode of the CBT News original series, Used Cars Weekly, with automotive industry expert and host Jasen Rice. Rice began his career on the retail side of automotive in 1997 selling cars online, and eventually ran award-winning internet departments along with being the GSM of an independent used car dealer. Additionally, Rice spent over eight years with Cox Automotive’s vAuto brand, before starting his own company Lotpop, Inc. in 2013.
Used Cars Weekly is dedicated to bringing car dealers, best practices and tips for the used car department, in-depth dealer interviews, hands-on dealership strategies, as well as vendor analysis. Rice begins his new show by introducing the foundational concept of the first 30 strategy. This strategy centers around getting the most value out of used vehicles. The best stores are doing 60-70% of their sales in the first 30 days of acquiring the vehicle.
During the first few months of the pandemic, many car dealers experienced a higher volume of vehicles than normal while demand stayed high. Automotive retailers quickly learned that they could sell more cars than they had in stock.
During the recent phase of the pandemic, car dealers have experienced higher gross profits. Rice says this is due to consumers being willing to pay top dollar for used vehicles because new-vehicle inventory is so low. Car dealers are having to pay more at used-car auctions, but they are still able to keep profits high because customers are buying with a sense of urgency.
These trends have made it even more crucial for car dealers to adopt the first 30 strategy. First 30 will increase the volume of vehicles hitting the lot in a month as dealerships increase the rate in which they sell vehicles. Rice believes this is the most challenging aspect of the strategy currently for car dealers. As more car dealers look to push vehicles off the lot in the first 30 days, acquiring used-vehicle inventory will become extremely competitive.
Rice concludes the episode by talking about middle bucket management. While car dealers should maintain 60-70% of their sales in the first 30 days, they should also maintain 25% or less of their inventory on the lot in the 31-60 day range. Rice also says that the sales rate in the middle bucket should be 5% more than the middle bucket inventory level.
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