Sam Griswold

Here is a list of units currently available for wholesale purchase:

1. 2005 Chevrolet Malibu Classic   $5500
2. 2000 Ford Contour   $1800
3. 1995 Ford Taurus   $450
4. 2000 Oldsmobile Alero   $300  (Not Running)
5. 1994 Toyota Camry   $1800
6. 1993 Toyota Corolla   $1500   (Needs CV Axel-Broken)
7. 2003 GMC Envoy   $4500
8. 2002 Dodge Dakota Ext Ca   $4500
9. 2006 Ford F-250 Lariat Diesel (High Mile)   $16,000
10. 1995 Pontiac Grand Prix   $1600
11. 1996 Dodge Caravan   $2000
12. 2000 Pontiac Montana   $2250

The new efficient used car market place once again requires a new approach for valuating a used vehicle. In the past, our industry has valued a used vehicle based on its historical wholesale value. Today, I am firmly of the opinion that the value of a used vehicle intended for retail should be derived from its current retail market value, rather than its wholesale value.

For example, imagine that you are the seller of a 2007 Ford Explorer Eddie Bauer 4×4 with an automatic transmission. In your market, there are 42 of them that are identically equipped with very similar mileage. Based on the ranking of price, your happens to be 38th highest of the 42. The likelihood is very small that a shopper for this type of vehicle will appear at your store. if, however, your price was ranked in the top 10, the likelihood of seeing a shopper would be much greater. If you agree with this premise, then you’re half way there to understanding why buyers purchasing used vehicles based on wholesale values are dead wrong.

The reason they are wrong is that these vehicles were recently being purchased in the auction lanes in the high $17k to mid $18k range. So, let’s suppose that you paid 18k. After transportation of $300, reconditioning of $700 and a mere profit of $1500, you would have ask $20,500. The problem is that the average retail price of the 42 identically equipped, similar mileage vehicles in your market was $19,200. This means that your asking price is $1,300 above the average and your competitive ranking would have been 38th out of 42. Considering the fact that there are 37 identically equipped similar mileage vehicles in your market available for sale for thousands less, how likely is it that you would sell this vehicle quickly? Not too likely. If you wanted to position your in the 10th position, you would have to have priced it at $18,464, which would have been a $536 loser after transportation and recon.

So I ask you, was the vehicle you purchased worth $18,000? Well, yes, if you believe that a vehicle’s worth what someone is willing to pay in the wholesale market place, but clearly no if you have a more enlightened view, that a vehicle in today’s transparent and efficient market place will only bring what the retail market will bear, and in this case that is somewhere in the mid $18k range.(Top 10)

We must resist temptation to pay extraordinarily high prices for vehicles just because the herd is doing so. Rather, purchase vehicles for amounts that will allow you to put a respectable profit on top of you acquisition price and still position the vehicle in the lower range of its current competition in the market. if it means that you can’t buy a vehicle that way, then let it go. Its a far better problem to be light on inventory that is owned right than to be heavy and long on inventory waiting for the market to come around.

Sam Griswold
Wade Raulerson BPG

Over the past few years I feel I  have became a unique blend of used car and internet proficiency.

The Key to a successful dealer operation lies in four quadrants. In order to operate at your maximum capacity you must have the right mix of:

Product, People, Process & Promotions

To be the best, it isn’t enough to just meet your customer’s expectations; You must exceed them!

Sam Griswold
ISM Wade Raulerson BPG

What Does Portfolio Management Mean? How does it Apply to Used Cars?

The art and science of making decisions about investment mix and policy, matching investments to objectives, asset allocation for individuals and institutions, and balancing risk against. performance.

Do these sound like the same fundamental factors we face in the used car retail environment?

If we can maximize our ability to effectively invest in our preowned portfolio can we then assume a predictable R.O.I.?

Your computer can help you make great management decisions and help take your department to another level, but not without doing the basics right. Pre-owned is not a department where doing it by the seat of your pants works any longer. This is the department that controls your new car sales and F&I, helps increase parts and service income, and most of all, helps your cash flow. Your used car manager handles your used car department portfolio, which can often reach into the millions of your dollars. If he were your stockbroker or a commodities broker, wouldn’t you be interested in his ability to acquire and trade those commodities at maximum profit? 

Some dealerships assume that the computer software will solve their problems. It may, (may being the optimum word) as long as your manager uses it. We have entered an new era in the automotive industry, if your dealership does not have a used car manager that can balance technology with basic used car management skills you can easily find yourself in an enormous negative equity situation. With the volatility of the automotive dealership of this day and age this one person can single handedly bankrupt an otherwise healthy dealership. This is one of the most crucial positions within the organization. Find and retain the right person and you will flourish.

Portfolio management is all about strengths, weaknesses, opportunities and threats in the choice of debt vs. equity, domestic vs. international, growth vs. safety, and many other tradeoffs encountered in the attempt to maximize return at a given appetite for risk.

Sam Griswold
ISM Wade Raulerson BPG

If 90% of customer shop online, why advertise anywhere else? A shift in the traditional mindset will be necessary to achieve results. To survive in today’s automotive marketplace a dealership MUST operate more efficiently than their competitors in order to gain valuable market share. There is no other medium that is trackable or offers the same level of R.O.I. as Internet Advertising, still some dealers are just not getting it!!

Sam Griswold
G.S.M.
Palm Chrysler-Subaru

I have been removed from the oversight of our dealerships website/internet department for the past 16 months, unfortunately during this hiatus (into the world of Finance & Insurance), we as a dealership have severely regressed in our online presence. Well, I now find myself in the unique position of front-end operations manager. I have oversight of Sales, Interent and F&I. I am very excited about this opportunity and can envision a new direction. Our dealerships online presence is my priority, we will not only gain back lost presence, but set a new standard for online shopping. Our customers will have an experience like no other. I feel I will be able to apply my progressive management foresight and theories to take us in a new direction. We will set the standard for others to follow. My goal is to grow our market share to new heights, not only offsetting the down-market but showing growth for 2009. The tumultuous times are only going to affect the ones who allow it to bring them down. This will be a time for the right people to persevere.

Sam Griswold
ISM Wade Raulerson BPG

The Sales Manager of the future will encompass both Internet and Traditional skills.

Today’s automotive market place will no longer reward the dealers who still use draconian methods to sell their inventory. Simply adding a few thousand dollars profit on top of the cost and putting it on the lot for sale hoping to get lucky. Depending on the source used 80-87% of all vehicles sales now originate online. If you are not competitive in today’s technology driven buying world your days in this business will be short lived.

Having a solid grasp on all aspects of front-end operations will be essential. A multi-dimensional manager will be the foundation of any successful automobile dealership. Technology has propelled the evolution of the car buying process to a completely new dimension. Dealerships holding on to the “Old School” mentality and process will be forced to either play catch-up or to eventually close the doors. Understanding how to implement a successful Internet marketing strategy will be the key component in the success of all auto retail stores of the present as well as the future.

I.e…. 5 cars on an average of 17 day turn @ 800/700 front profit equals $7500 front gross as opposed to 2 cars on 45 day turn @ 2000/700 equaling 5400 front gross, not only are you 2100 ahead in gross BUT you also have added an additional 3 customers to your database!!

Dealerships who still operate under the old school mentality of “Gross is King” are the ones struggling to keep their used car departments afloat. Why is “Water” in the used car department such a chronic problem across the country? It is the lack of intelligent, forward thinking managers. Until this industry purges itself of the guys who have no desire to grasp and understand the tools that will be come the mainstay of this business it will not get better. I am referring to the guys that think “I am the best car guy in the business, there are no books or computers that can tell me how to do my job better, I know everything about used cars.” A “gut feeling” is all they go on for appraisals, stocking and pricing of their used car departments. Market data nor any other analytical factors play a part in these crucial decisions. Once these root issues are addressed by the dealerships of the today they will position themselves in a place that enables a market share shift within their respective region. Steal market share from your competitors and sell cars, how much better can it get than that?!

New/Used vehicle success requires a new way of thinking. Traditional mediums of the past are falling to the way side at an unbelievably fast rate. Everything is shifting to the internet for ease and thoroughness of information available. A more intelligent shopper requires more intelligent dealership personnel. Online advertising, tools and staff will be the key factors in a dealerships success.

Over the next couple of years we will see the “Internet Sales Manager” and “Sales Manager” positions meld into 1 position. A sales manager who can not effectively oversee the Internet driven traffic and sales will no longer exist. This merging of the 2 positions into 1 will bring forth the best people with the most knowledge a foresight to implement and execute a successful plan to keep the dealership sales bolstering. Superior managers utilizing the best technology available will be a requirement for any dealership who wants to remain & thrive in the automotive retail industry.

Managers who spearhead the sales departments tactics will no longer rely on the antiquated methods of yesteryear.

Communication, comprehensive understanding of implementation & execution of technology, personal skills and a willingness to evolve with the industry will be essential management requirements.

Sam Griswold
G.S.M.
Palm Chrysler-Subaru