Decision Maker 101: Rule Number One for Your Used Car Department

Believe it or not there is actually a pretty easy way to tell whether your used car department is everything it could be. One simple question will tell you just how badly you are dropping the ball.

I could go on for hours about the screwed up used car departments I have witnessed over the years. Aged inventory. Stupid advertising, I mean really stupid. Dealers hiring a two-pack-a-day old school used car manager then expecting them to navigate the new world of automotive retail. Yep…stupid.

So, what is the one question you need to ask, as a starting point, to figure out if you are really dropping the ball? Here it is. Do you manage your used car department like it’s a separate business? That’s it. Pretty simple. Do you treat your used car department as a completely separate business? Business plan? Marketing? Sales process? Even staff?

New car dealers commonly fail to recognize that their used car department is a completely separate business.

The most common mistake new car dealers make in their used car departments is the failure to recognize that their used car department is actually a completely separate business. Think about it. On the new car side, the manufacturer provides everything the dealer needs to be successful. They provide all the product marketing. Branding. Messaging. The manufacturer even controls marketing spend through co-op advertising. They do the market research, set planning volume based on make and model. Most of them even provide sales training for staff. Walk around presentations, product knowledge, and the sales process. Even your service department has a plan. Training for the techs, maintenance schedules. Every detail planned out. If you think about it, you’d have to be pretty incompetent to screw up a new car franchise, unless of course you wind up with a crappy franchise, then you may need to be a little sharper.

Not so for your used car department. All those things the manufacturer does for you on the new car side, are the things you need to do on the used car side if you are going to optimize your used car business. Do you have a plan? And I don’t mean a plan to hire a half decent used car manager, I mean a complete business plan.

What is your business plan? Have you decided what you are going to sell and how you are going to do it? What is your speciality or niche? What is your planning volume? How many staff do you need? What about marketing? Branding? Messaging? What does your inventory make up look like? What about your sales process? Even your sales staff. How many salespeople do you need? Sales Managers? Finance Managers? What about your service department? How do you pay your techs for reconditioning? Are they the same techs that deal with your new cars and customers? Are they paid to maximize revenue? On customers that's great, but on your used cars, not so much.

Every part of your used car department requires a plan in the same way your new car department has a plan.

Every part of your used car department requires a plan in the same way your new car department has a plan. A plan that involves more than throwing a bunch of random inventory onto a lot, letting your techs spend your money rebuilding the units, then relying on a used car manager to make it happen on his or her own. It’s a separate business. It requires a complete plan, from staffing and process, to inventory planning and management, and on to marketing plans from budget, to brand, and beyond.

And there it is. The bottom line. If you don’t look at your used car department and treat it as a completely separate business, then you are leaving money on the table. If you aren’t doing the same things for your used car department that the manufacturer is doing for you in your new car department, then you are dropping the ball. Yes, the business license is the same. The ownership is the same. Maybe even the general manager, and general sales manager are the same. If you’re a smaller dealer, your sales staff and management may even be the same, but believe me, the used car business is a completely different business from your new car business and if you want to do it right, that’s the place to start. Good luck and good selling.