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| June 2011 | VOLUME 6 ISSUE 6
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Mark De Lucia from Dealermine answers this month's question for AutoUSA readers.
How can dealers utilize online services to squeeze profits from their idle parts?
As parts sitting on your shelf approach a certain age, the odds of selling dramatically decrease. At nine months they only have about 15 percent chance of selling. At 12 months, they are considered obsolete. As the clock strikes midnight on the last day of every month, another batch of parts rolls into the dreaded "O" category.
Parts Managers are asking "What do I do with this necessary evil called obsolescence?" One thing is for certain, since the dealer principal typically owns his parts inventory, he along with his Parts Manager, should have a plan in place that considers all the available options, in order to recoup as much of there investment as possible.
Here are just a couple of online services available to help Parts Managers and dealerships cash in on idle parts:
Online classified sites
Online classified sites such as eBay or craigslist enable you to list your parts inventory one part a time. One of the benefits to this approach is the potential for wide exposure and the ability to get close to full cost value for these parts. On the down side, listing the individual parts on these types of sites can be tedious, especially if you have to include a photo. It could take quite a while to put a dent in your obsolete parts inventory, especially with another batch of parts turning to junk every month.
Obsolescence Management Services
Another option is using an obsolescence management service. These online services poll your idle stock data and continually monitor the marketplace for you, relieving you of an arduous task. The advantage, if you're willing to take an aggressive discount on these parts, is that you can sell a considerable amount of your obsolescence very quickly. Also, with some services, if you reinvest this newly infused capital into purchasing your fast moving parts, you can make over 100 percent profit on this recouped cash in 12 months or less. Obviously, one con with services like these is that they have to take a loss in the current month that the part sells (usually a 50 percent hit). But if you're purge yourself from this dead stock in a hurry, the rewards are usually worth it.
There are many services available out there that are designed to help you manage your obsolescence levels and recoup some of the investment. Looking at the options is a step in the right direction. Once you try a few out, you can determine an obsolescence reduction program that will work best for you.
Mark De Lucia is founder and president of DealerMine Corporation. DealerMine provides a web-based service to help dealerships reduce their investment in slow-moving idle parts inventory. For more information visit www.dealermine.com
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AutoUSA Featured Interview
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Lee Allen
Internet Director
Vandergriff Hyundai | Arlington, TX
AutoUSA: Can you tell me a little bit about your dealership and your background in the industry?
Lee: We are located in Arlington, Texas which is right between Fort Worth and Dallas. According to the recent census the DFW Metroplex has about 6.3 million residents. We also have 12 other Hyundai dealerships in our market area, and that means we have to be at the top of our game every day. I started working in the auto business 13 years ago in the accounting area of a dealership service department. I moved into sales awhile later and for the last nine years have been with the Vandergriff organization.
AutoUSA: What is the size and structure of your Internet Department?
Lee: In addition to me, we have three to four people in the department. We work all the leads from cradle to grave. When we set appointments we get the paperwork ready and have the vehicles ready out front for the demo rides. Our team doesn't take any floor ups but work the leads from our websites and other sources. Through our marketing efforts online we generate a great number of leads from our primary website and consistently have about a 32% conversion rate. These prospects keep our team very busy.
AutoUSA: Do you use third party lead providers?
Lee: While we target most of our marketing energy to our own websites to generate leads we do use two other lead generators. I have had great experience with AutoUSA leads and our team has learned how to work these leads to increase our closing ratios. We find that most of the time these leads are consumers still in research mode, so we provide the info they want, and continue to maintain contact with them. Then usually within 30 days we hear from them that they want a specific color or options and they will be coming in to close the sale within a few days. If a dealer tried a "what's it gonna take to put you in a car today" close they would scare off most of these prospects. They have a different buying pattern and we respect that process. In these cases patience really pays off.
AutoUSA: What do you do that is different from your competition?
Lee: We focus on the buying and dealership experience. We have a great loaner program; provide a hand wash for every car going through the service department, offer cold beverages to waiting customers, and we introduce prospects to our service department. It's amazing how often the prospect will have a few questions for our service advisors about service and maintenance on the vehicle they are considering buying, and they appreciate the opportunity to ask someone those questions. Our service team also consists of a female service advisor. That makes many of our women customers and prospects feel more comfortable on their visits to the service department.
If they ask about financing or incentives we show them the Hyundai website where current incentive programs are listed. This way they know we are being upfront with them. We also offer door to delivery service. This means if we have a prospect looking at a vehicle, for example a Genesis, we will offer to bring the vehicle to their home or office so they can see it and take a test drive on their own turf. This sends a strong message about our focus on customer service.
AutoUSA: What types of marketing and advertising do you do to increase web traffic?
Lee: We utilize four digital billboards in the market area, regularly update our website pop-up coupons, and send email blast notices to all of our service customers whether they bought their vehicle from us or not.
We also have a Trade-in Challenge promotion where after 15 months we send customers a mailing to see if they might want to trade out of their vehicle into something larger or smaller. If we take their vehicle in trade, and use the same parameters they used when they bought the car originally and can't get them the same or a lower payment we will make their next car payment for them.
Website: http://www.vandergriffhyundai.com
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Web Selling & Marketing
Internet News Developments of Significance to Dealer Management
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Want Loyal Customers? Dare to Be Different
Dealers often ask themselves - "What is the magic formula to keep our customers loyal?" In recent years, our industry has changed dramatically. Today customers expect more value, better service, and to be treated like never before. This is the case not only in automotive showrooms and service drives but in every business throughout the country. How can you obtain a customer's loyalty? (Read More)
Stop Whining About Price
Price cutting is a self-inflicted wound. Nobody holds a gun to your head and makes you cut your price. I know that many of you are thinking right now: "There is so much competition today that you can't maintain profits," "Everybody is giving everything away," "The salespeople can't negotiate," and "Everybody knows our pricing from the Internet..." (Read More)
What Isn't Going to Change
Business constantly changes, and we all need to be aware of coming changes in the industry. But sometimes we need to step back from the crystal ball and focus on things that will not be changing anytime soon. It's nice to know something are stable. . . for now. (Read More)
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This newsletter is published as a combined news, editorial, and market research enewsletter by Automotive Information Network, Inc. and AutoUSA. The content is intended to be for informational, educational, and promotional purposes only.
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Automotive Information Network, Inc
425 32nd St, Manhattan Beach CA 90266
310 265-2225; Webitor@automotivedigest.com
Web Editor: Mark Dubis
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AutoUSA
200 SW 1 Avenue, Ste. 1500, Ft. Lauderdale, FL 33301
Contact: Vincent Hoag at 800-243-9935
or via email at support@autousa.com
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