It’s been an eye-opening experience as I’ve taken part in early training sessions for dealers who are adopting the new ProfitTime GPS (Global Profitability Solution).
The training sessions typically address two main elements—how dealers can use ProfitTime’s 1-12 scoring system to establish the strategic start/end points for every appraisal (your “target” and “threshold”), and how the system helps dealers and managers know how often, and how well, individual appraisers bring in cars that fit the strategic objectives dealers establish.
Broadly speaking, the feedback from dealers, managers and appraisers in these sessions has been extremely positive. I was worried that some might view ProfitTime GPS’ strategic appraisal baselines, and its recommended appraisal and pricing amounts, as too restrictive. Similarly, I was concerned that the system’s reporting tools, which provide a greater level of detail (and accountability) on appraiser performance, would make individual appraisers uncomfortable.
Instead, it’s been gratifying to hear exactly the opposite. Everyone seems to understand that ProfitTime GPS’ strategic objectives serve as efficiency-minded guideposts, not hard-and-fast rules. Appraisers appreciate seeing the potential open and end points for a vehicle when they start a new appraisal. They also appreciate the system’s built-in logic, which automatically adjusts appraisal amounts and retail price recommendations to help bring in vehicles to meet their dealer’s objectives and give them flexibility to step up or back on a vehicle when they need to. I suspect the overall understanding that ProfitTime GPS is intended to help everyone do a better job contributes to the positive feedback we’re hearing about the appraiser performance page. What’s to fear if you’re set up for success, right?
But the sessions have also revealed what might be described as two fault lines in the current processes many dealers use to appraise vehicles. The fault lines aren’t new or unknown. They are, in fact, appraisal fundamentals that, due to the hectic nature of appraising cars and making deals, often get forgotten or overlooked:
- Pencil-sharp reconditioning estimates. Over the years, vAuto Performance Managers have been helping dealers and their teams do a better job of assessing each car’s condition and getting as close as they can to actual costs when they estimate the reconditioning work needed to get a vehicle ready for retail. Even so, it’s an area of appraisals that could be better. On the training calls, I’m hearing dealers emphasize to their teams the importance of getting the estimates right. Why? Because any variance—which anecdotally I’ve heard can range from $300 to $600, depending on the dealership—means you’ve got less money to apply toward acquiring the vehicle and customer in front of you and, if you buy the car, you don’t have a clear view of a vehicle’s investment return or profit potential if the recon estimates are wrong.
- How much you need the car, and the market likes it. On the training calls, appraisers shared how they liked the way ProfitTime GPS’ Global Acquisition system “pivots” to recommended appraisal and pricing amounts based on how much a dealer’s inventory needs a car and how much the market likes it. As one appraiser put, “it’s sometimes hard to know how much we need the car.” The comment’s honest, but it also reveals a big risk. If your buyers and appraisers don’t know how much you need a car, or whether the market likes the car, they really don’t know how much they can or should pay for it. This age-old truth has become even more critical as dealers are putting more people, in more places, to acquire inventory from anywhere and everywhere.
A final point: Perhaps the most telling aspect of the training calls came via the realization among dealers that as ProfitTime GPS gives them a way to strategically guide and measure appraiser performance, their used vehicle departments will ultimately see better, more consistent outcomes. As one dealer noted, “there’s always been thousands of dollars of difference between appraisers and more consistency will only help us.”
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