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