Keith Kocourek has a new weapon in his competitive arsenal: A used vehicle inventory management system that helps him retail vehicles in less time, and make more money, at his five Wasuau, Wisconsin based dealerships.
“Provision is a game-changer for me,” Kocourek says. “Our sales have increased 31 percent on the strength of our improved ability to quickly find the cars we need at the right prices.”
Other dealers have also become more competitive and profitable in their used vehicle sales departments with the help of Provision.
“With Provision, my cars meet customer demand better than they’ve ever done in the past,” says dealer Sean Del Grande of the Del Grande Dealer Group, San Francisco, California. “Our sales are continuing to climb.”
“I’m much more efficient finding and buying the cars I need with Provision,” says dealer Marc Ray of Grogan’s Towne Chrysler, Toledo, Ohio, which has doubled its used vehicle sales. “It helps me buy cars that people are searching for and make fewer mistakes. I can buy cars people want to buy without guessing.”
There are four chief reasons vAuto’s Provision system is winning praise from dealers and helping them sell more used vehicles and make more profits:
- It gives dealers a real-time, accurate read of supply and demand dynamics for specific vehicles in their markets. Provision is the only inventory management system on the market that renders and measures real-time consumer clickstream data from AutoTrader.com to help dealers know the exact vehicles that today’s consumers want to buy. This data, blended with Provision’s measurements of the current availability and sales rates of specific vehicles (down to trim level and equipment) in a local market, gives dealers the most holistic view of the opportunities and risks each vehicle represents. As dealer Ray notes, “I need to know the full package on every car — how many people are searching for it, its scarcity in the market, everything,” he says. “Provision gives me the full package to make the right decisions.”
- It offers a strategic method for managing used vehicles. Traditionally, dealers and used vehicle managers stick close to their franchised brand and familiar makes/models as they decide the types of vehicles to acquire for their inventories. This approach can limit a dealer’s used vehicle retailing potential because it focuses attention to what’s most familiar, and likely does not account for the way today’s buyers research and shop for vehicles. According to industry stats, most buyers begin their search for a used vehicle by identifying the shape/type of vehicle they want, and then narrow their focus, based on availability, to specific makes, models and price points. Provision captures this consumer behavior by helping dealers establish inventory “buckets” based on brand-neutral vehicle segments and types. As dealers identify the quantity of vehicles for each “bucket,” Provision identifies both franchise and non-franchise brands that fit. Dealers can also fine tune their “buckets” by price ranges, ensuring selection and “step-up” cars within each that match consumer demand.
- It simplifies decision-making. Provision provides dealers a Report Card for every vehicle they evaluate for potential acquisition — whether it’s at auction or a trade-in. The Report Card details seven characteristics for every car, including consumer demand, consumer interest, availability, a dealer’s past experience and profitability potential. In this way, the Report Card effectively distills the data and metrics (such as market days supply, cost to market and price to market) that are the cornerstones of modern-day used vehicle inventory management. The Report Card offers an easy-to-understand A-F grade for every vehicle, and similarly evaluates and grades each inventory “bucket” and the overall inventory itself. Dealers say Provision’s grading system offers an intuitive, less-complicated method for managing day-to-day decisions to appraise and acquire cars, as well as keeping close tabs on their overall inventory performance and return on investment (ROI).
- It makes acquiring vehicles more efficient. Provision assembles buy lists of vehicles dealers need to fill their respective inventory “buckets.” It then links to Manheim, Adesa, GMAC and other national/local auctions, detailing the precise lanes, run times and price points where these vehicles are slated for sale. Dealers can then determine the vehicles to pursue, and access condition reports to determine those that offer the best “fit” for their inventories. In this way, Provision answers three critical questions — what to buy, what to pay and where to find the “right” vehicles — in three simple clicks. “This is a huge efficiency gain for us,” says Trent Waybright, director of used vehicle operations at Kelley Automotive Group in Fort Wayne, Ind. “Before Provision, we were spending eight hours each week to match our buy lists to vehicles at specific auctions. Now the matching is automatic.”
vAuto’s Provision: Setting Your Inventory Strategy
Provision allows dealers to establish their inventory strategy by determining the number of vehicles they should carry in distinct “buckets” of vehicles, segmented by their shape and type (e.g., compact, intermediate, SUV, etc.).
Provision delineates these “buckets” with price bands, ensuring dealer inventories match the prevailing price points for each vehicle segment in their respective markets.
In this way, Provision sets the strategic foundation for an effective inventory composition that matches the way buyers look for cars and meets buyer demand and interest in each vehicle segment.
To help dealers establish their inventory strategies, vAuto assigns a Performance Manager, or coach, to each Provision dealership. They work with the dealer to assess past sales history by segment, as well as the segment-focused sales volumes in a dealer’s market. Together, the Performance Manager and dealer can then allocate the correct number of vehicles for each “bucket” that accounts for the market and a dealer’s goals for inventory turn, market penetration and sales volumes.
Once completed, Provision uses the dealer’s inventory strategy to scan and scour market data to recommend specific vehicles that will sell best in each “bucket.” In addition, Provision tracks dealership sales and market data by “bucket,” alerting dealers when individual “buckets” and vehicles require attention.
A fully completed inventory strategy for a Toyota dealer would look like the following:
Provision tells a Toyota dealer the number of vehicles needed to acquire or sell to meet inventory targets for each “bucket.”
Provision makes the recommendations to buy in green, and the recommendations to retail or wholesale vehicles in red.
Note: This Toyota dealer has chosen not to carry luxury vehicles — due to a strategy that focuses more on lower-cost, faster-selling cars. Similarly, the dealer does not include sports cars in the inventory strategy due to limited buyer interest in the dealership’s market area.
Setting Baseline Inventory Parameters
vAuto Performance Managers assist dealers in identifying “who they want to be” as part of their used vehicle inventory management strategy.
Provision asks dealers to define the broad parameters of their used inventories: What is your days supply target for your inventory? What are your gross profit goals and acceptable minimums? How old will you go with model years? How large is your online market area (e.g., the geographic distance you target on used vehicle listing sites such as AutoTrader.com and Cars.com)? How much do you “pack” cars? What are your transportation costs?
Understanding Pricing Bands
Provision helps dealers define a pricing strategy for each of their inventory “buckets.” To do this, Provision reviews current pricing and local market data to determine the pricing “sweet spot” for each inventory “bucket.” This functionality helps dealers identify pricing bands that offer the greatest opportunity — and to calibrate the number of vehicles to target in each band for maximum sales and profit potential.
Adjusting for seasonality, market changes
Provision recognizes used vehicle supply and demand dynamics change given the time of year and season. What dealer hasn’t “gone long” on used vehicle inventory in anticipation of customers looking for cars as spring blooms and summer looms?
Provision lets dealers adjust the inventory days supply of vehicles in each “bucket” to account for these changes in season and consumer buying habits and preferences. As dealers make these adjustments, Provision responds by re-calibrating its recommendations, in green and red, to acquire and sell vehicles.
Identifying opportunities for market share, sales volume gains
Provision provides a “Workbench” that allows dealers to become students of their markets. The “Workbench” lets dealers see non-franchise brand vehicles that market supply and demand data indicate as good sellers — an efficient, real-time read of opportunities for dealers to expand their market share and used vehicle sales volumes. Provision’s unique grading system ensures dealers are aware, upfront, of potential risks associated with these opportunity vehicles.
A Provisioning Tip: Most velocity management dealers ensure at least 50 percent of their used vehicle inventories consist of non-franchise brand vehicles to maximize their market share and sales opportunities.
vAuto’s Provision: Grading Every Car To Maximize Opportunity, Minimize Risk
Provision is the only used vehicle inventory management system that uses an A-F Report Card on every vehicle to help dealers identify and address the opportunities and risks inherent in every vehicle.
This is especially important in an era of increased equipment and options offered by manufacturers on new vehicles — add-ons that can make or break the appeal of these cars as they become used retail units.
“The manufacturers have added things that complicate the used car world,” says Jack Anderson, used vehicle director at West Herr Automotive, a 17-store dealer group in Buffalo, N.Y. “Now, if you’ve got a 2010 F-150 pick-up, it better have synch or the vehicle won’t sell well.”
The Provision Report Card is built on a simple premise: If dealers are fully aware of the opportunities and risks each used vehicle represents, they can make better decisions — and fewer mistakes.
The Provision Report Card distills a host of market supply and demand data to assign a grade for each of the seven characteristics that determine whether a used vehicle is a top-notch winner, a so-so performer or a vehicle to avoid.
These seven characteristics assess both market supply and demand data (including market days supply, consumer demand/interest), and the inventory strategy preferences the dealer has established (e.g., minimum level of profitability, market size, etc.).
The following shows how the Provision Report Card grades a specific vehicle:
- Demand is the number of people in your area that are searching for this car. With a grade of A+, this car is in the 99.47 percentile when compared to all the other vehicles in your market.
- Interest is the average conversion rate from SRP to VDP for this vehicle in your area. This car gets a B- with an average SRP to VDP conversion rate of 2.93%.
- Volume is the number of units sold in your area recently. This car gets a C+ for having sold 5 in the past 45 days.
- Days Supply measures the current available supply of similarly configured vehicles and the rate at which such vehicles have been sold over the last 45 days. Vehicles with lower days supply values are in higher demand and, therefore, represent greater turn and gross profit potential than those with higher days supply values. This car gets a B- with 45 days supply.
- Profitability is the difference between the average auction price of this car to the average list price of the car after adding in a fixed reconditioning/transportation fee. This car gets a B because the national average auction price is $15,900 compared to the average list price of $21,843 in your market.
- Availability is the number of units available at auctions now. This car gets a C+ because there are currently 12 available at auctions.
- Experience measures the success of your recent sales of this make/model. This car gets an A because your dealership has sold 21 of this make/model. On average, those vehicles were on your lot for 31 days. The last sale was yesterday.
vAuto’s Provision: Sourcing Cars in Three Easy Clicks
Provision is the only used vehicle inventory management system on the market that automatically matches a dealer’s recommended used vehicle buy list with specific units at Manheim, Adesa and GMAC auctions nationwide. This functionality is crucial to help used vehicle managers quickly find the vehicles they need and know the maximum price they can pay to achieve their gross profit and sales volume goals on every vehicle.
The following points illustrate how Provision guides dealers and used vehicle managers to “buy right” every time — and do so more quickly than the competition.
Knowing “What to Buy”
Based on a dealer’s used vehicle inventory management strategy and goals, Provision recommends a “shopping list” for vehicles that will address the vehicles needed to fill each inventory “bucket.”
The “shopping list” identifies each vehicle’s Provision-set grade, as well as the VIN, the presence of condition/CarFax reports, vehicle color and mileage.
Knowing “What to Pay”
Provision provides bid guidance dealers can use for appraisal or auction vehicles. This guidance assesses each vehicle’s acquisition costs (purchase price, fees, transportation and reconditioning) against prevailing retail market prices. Provision offers this guidance to ensure dealers “buy right” on every vehicle. Likewise, the guidance is useful to balance instances where it’s necessary to “step up” at auction or appraisal — Provision immediately shows the effect of this decision on a vehicle’s profit potential.
Knowing “Where to Find” the “Right” Cars
Provision’s exclusive, direct access to leading auctions allows dealers and used vehicle managers to quickly identify the auctions where they can purchase “shopping list” vehicles the most efficiently and quickly.
Provision allows dealers and used vehicle managers to immediately access online auctions and place proxy bids to efficiently acquire the vehicles they need to fill their inventory strategy and “buckets.”
vAuto’s Provision: A “Game-Changer” for the Automotive Industry
vAuto founder Dale Pollak calls Provision the “industry’s first system to bridge the gap between the wholesale and retail marketplace for used vehicles.”
The system is a “game-changer” that will help dealers become better used vehicle retailers and achieve the profitability, sales volumes and return on investment they seek in their used vehicle departments, Pollak says.
“This is a business intelligence break-through for the automotive industry, made possible through our alliance with AutoTrader.com and Manheim,” Pollak says. “Provision brings game-changing insights and tools to help dealers efficiently and effectively know what vehicles to buy, what to pay and where to find them — all with a real-time, market-based, precision approach.”