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3 Ways to Maximize Used Car Gross | vAuto

Now that we’re well into Q4, you’re fully focused on meeting your year-end goals. If your used car strategy skews toward gross, the strategy should guide the way you price, appraise and acquire vehicles. Here are three ways to optimize your processes to maximize used car gross at your dealership:


  1. Align Your Prices With Data-based Recommendations

The urge to avoid loss is part of human nature, and it comes into play every time dealers price their used cars. In general, dealers tend to price vehicles to make the gross profit they expect. The process doesn’t necessarily account for whether the vehicle deserves to make the expected gross profit, based on its unique investment potential. This is the dynamic that often plays out when dealers have put too much money into a vehicle, price it to make gross and it doesn’t sell. The likely reason is the vehicle’s priced too high for the market, and dealers only price the vehicle right after its sat too long in inventory and depreciation has washed out any gross profit potential, if it even existed on Day 1.

We see this story unfold at dealerships across the country. That’s why we developed the Pricing Alignment Tool as part of ProfitTime® GPS. The tool uses data science to show how closely your actual prices align with the prices recommended for your market based on data science that distills each vehicle’s Market Days Supply, Cost to Market and retail sales volume in proper measure for the vehicle. At a glance, you can see your pricing alignment percentage for each type of vehicle in your used car inventory — platinum, gold, silver and bronze — so you can optimize gross on the cars with the most profit potential.

You can also use the tool to help you understand why your pricing might not align with the recommendations. In some cases, your team’s natural tendency toward loss aversion might be the cause of pricing misalignment. But in other cases, your team might price vehicles below the recommended level for good reason — because you’re going for volume or a vehicle’s unique circumstances warrant pricing the vehicle outside the recommended range. Either way, the Pricing Alignment tool helps you optimize the turn and gross profit on every vehicle, making gross where you can/should and taking less on vehicles that need to move quickly.

Note: Provision® also provides metrics to help you price your vehicles, but only ProfitTime GPS delivers real-time pricing recommendations and insights to help you analyze the “why” behind your team’s pricing decisions.

  1. Ensure Consistency Among Your Appraisers

These days, it’s not uncommon to see wide variance in appraisers’ Look to Book and Cost to Market percentages. Each appraiser might also take a unique approach to estimating reconditioning costs and determining their appraisal amounts. All this inconsistency results in lower profitability for the dealership.

To help you achieve consistency and maximize your used car gross, ProfitTime GPS lets you set a strategic appraisal objective within the tool. This way, each appraiser knows exactly how you want them to at least start appraisals foryou’re your used cars. The tool also allows you to see each appraiser’s on-strategy percentage so you know whether or not their decisions support your objectives for volume, gross profit or a blend of both. Less variance in your appraisal process means more profit potential.

Note: Provision provides tools to evaluate appraiser performance, but ProfitTime GPS takes these details to the next level by showing how closely your appraisals align with your used car strategy.

  1. Optimize Your Acquisition Process By Channel

In today’s market, finding used cars is more difficult due to lower supplies and higher competition. Wholesale prices reflect the situation. In response, many dealers have had to go beyond their traditional auction and trade-in sources to acquire a higher share of inventory directly from consumers. Some believe multichannel acquisition proficiency is necessary for success in today’s market.

But as dealers have expanded the reach, they’ve often  and the process begs for better management. 

ProfitTime GPS provides the insights you need to manage your acquisitions by channel and maximize your used car gross. It starts by setting your strategy for the types of vehicles, segments and price points for your used car inventory to meet current demand in your market. The Global Acquisition dashboard shows you the types of vehicles, and their average investment potential by channel—so you know where you can source your gross and volume vehicles. The system’s appraisal report also reports how well they acquire vehicles according to your used car inventory strategy. Use these insights to refine your used car strategy and determine which cars you want to sell and where to acquire them in order to meet your profitability objectives.

Note: Provision can help you manage multiple acquisition channels, but it requires your buyers and appraisers mark each vehicle’s specific sourcing channel. Without this, you can’t know, with the precision today’s market requires, the sourcing channels that work best for your used vehicle department.

Many factors can erode profitability potential across your used car inventory. But if you establish a strategy and use it to guide your pricing, appraisal and acquisition efforts, you’ll maximize your gross and end the year on a high note.

To learn more about how vAuto’s tools can help you maximize used car gross, request a demo today.