FUNDAMENTALS OF PRE-OWNED...

CHARACTERISTICS OF TOP-PERFORMING AUTO RETAILERS

Joe BasilNCM Associates Moderator/Consultant/Instructor

FUNDAMENTALS OF

PRE-OWNED SUCCESS

ABOUT NCM

NCM® ASSOCIATES

+ Founded the automotive 20 Group in 1947

+ Provides

– 20 Groups: Largest Provider in North America

– Training

– Consulting

– Benchmark® Tools

– Business Intelligence: axcessa®, HealthCheck™, and TSI Auto Solutions

– Travel Solutions

+ 100% employee-owned and headquartered in Kansas City

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NCM DEALERSHIP CLIENTS

+ OEMs

+ Dealer principals

+ CFOs and CEOs

+ General managers

+ Department managers

+ Controllers

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COMPONENTS OF SUCCESS

FOUNDATIONS

+ Inventory Strategy Model Plan

+ Marketing

+ Sales Process

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KEY ELEMENTS

+ Leadership

+ Vision/Values

+ Culture

+ Business plan

+ Best people, right position

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KEY ELEMENTS

+ Changing environment: Disruptors

+ Information age: Universal access

+ Friction-free

+ Re-invent

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DECISION-MAKING

+ “I think”

+ “Everybody-nobody”

+ “All or None”

+ “Information-based?”

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DATA vs. INFORMATION

+ Data = useless in its own form

+ Information = data in a place, time, and format useful to make decisions

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INVENTORYSTOCKING

INVENTORY STOCKING MODEL

+ Unique/CPO

+ “A” car

+ “B” car

+ “C” car

+ “As-Traded”

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+ Type

+ Make

+ Model

+ Year

+ Options

+ Color

+ Mileage

+ Condition

+ Price

INVENTORY CATEGORIES

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+ What is a CPO car?

+ Are you in the CPO business?

+ Is there an opportunity?

+ What are your gross-per-unit expectations?

+ How fast should they “turn?”

CERTIFIED PRE-OWNED (CPO)

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+ One-of-a-kind+ Easier to replace the customer

than the car+ Gross expectations should be

very high+ Will account for less than 10%

of total inventory

“A” CAR

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2013 Subaru Outback56,000 miles

+ Still under warranty

+ Replaceable merchandise

+ Most wholesale loss exposure

+ In most cases, accounts for over 60% of inventory

+ Key is to keep these “turning”

“B” CAR

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2018 Camry LE26,000 miles

+ Lower price points+ Out of warranty+ Good, sound cars you’d sell to

your family members+ Return on investment high+ Would account for less than

30% of total inventory

“C” CAR

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2010 Chevy Malibu89,000 miles

+ Do you keep these?

+ Do you have a process for selling them?

+ What does “as-traded” mean?

+ Usually under $6,000 price point

THE TRULY “AS-TRADED” VEHICLE

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MARKETING

+ How the Internet works

+ How customers behave on the Internet

+ What to pay attention to

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MARKETING FUNDAMENTALS

MARKETING FUNDAMENTALS

+ Information-based

+ Brand image: What are you selling?

+ How is your store described by customers and competitors? How do you want it to be described?

– New car dealer that happens to sell some used cars?

– Used car dealer that also sells new cars?

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TODAY’S AUTO SHOPPER

Courtesy of:

luxury suv

Intent is redefining the automotive marketing funnel

Myth #1: Auto shoppers know what brand they want when they start shopping.

5auto brands considered

71% unsure of vehicle choice at onset

Google/Ipsos, “Digital’s Influence on In-MarketAuto Consideration”Study, US,August 2018. 18+ who are in-marketfor a vehicle in next two months (n=740 survey, n=767 behavioral)

52% of luxury purchasers

bought a vehicle make that wasn't in

their initial consideration set

Myth #2: Video is only a branding tool.

Consumers watch video throughout the entire shopping process

Brand1

Brand 2

Brand 3

Brand 2

Brand 3

Brand 2

Brand 3

dealer purchase

> 1 month from purchase

10 videos 3 brands

1 month from purchase

6 videos 2 brands

2 weeks before purchase

5 videos 2 brands

Google/Ipsos,“Digital’s Influence on In-MarketAuto Consideration”Study, US,August 2018. 18+ who are in-marketfor a vehicle in next two months (n=740 survey, n=767 behavioral)

Myth #3: Shoppers need some type of dealer contact before going into the dealership

More than half of car buyers have no contact with a dealership prior to their first visit

Source: Car Buyer Journey, Cox Automotive,2018

71% of shoppers no longer take a high-value action online before purchase

>1 month 1 month 1week

71%no HVA activity

Request financing info Request a test drive

Request a quote

purchase

Google/Ipsos, “Digital’s Influence on In-MarketAuto Consideration”Study, US,August 2018. 18+ who are in-marketfor a vehicle in next two months (n=740 survey, n=767 behavioral)

Digital empowers shoppers to get what they need without having to contact a dealer

Gearshift 2018 (Q1 + Q2) Question asked: NQ6 -Search extensions -What information did you look for before you went tothe dealership?

Base: New car buyers, n = 519 Source: Auto CB2018Google/Ipsos,“Digital’s Influenceon In-Market Auto Consideration”Study,US,August 2018. 18+ who are in-marketfor a vehicle in next two months (n=740 survey, n=767 behavioral)

40%

View listings of current vehicle inventory

86%

Review pricing and incentives prior to dealer visit

22%

Read dealer reviews and recommendations

SALES PROCESS

SALES PROCESS

+ Friction-free: “Time = new consumer currency”

+ Convenient, Easy, Enjoyable

+ Online/Email

+ Telephone

+ Text/Video

+ Face-to-face

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SALES PROCESS

+ Documentation vs. Negotiation

+ Up-front/One price

+ T.O. vs. One point-of-contact

+ Appraisal and price presentation

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+ Structured yet adaptable

+ Consistent

+ Word track and vocabulary

SALES PROCESS

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+ Re-invent yourself+ Information-based decisions+ Inventory model drives marketing+ Marketing based on consumer and market information+ Sales process: adaptable, convenient, easy, efficient, friction-

free+ Time = new consumer currency!!!

TAKEAWAYS

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THANK YOUWe appreciate your time.

Joe Basil | jbasil@ncmassociates.com | 716.583.1869