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Mario Villarreal Gutierrez

CEO @Plusmotors & Cofounder @Intelimotor

Being a pre-owned car dealer for over 25 years has taught me a few things about the business.

I have had to live through everything, and believe it or not, I am grateful for the mistakes and problems I have had to face along the way, they have taught me much more than any success.

Today I share with you what in my opinion are the biggest mistakes that pre-owned car dealers regularly make, which highly limit the profitability and growth of their business.

1. Buying based on "gut instinct" and incomplete information.

The first big mistake, and in fact the one that has the greatest impact on the profitability of the business, is making investment decisions based on a methodology based on "instinct" and incomplete and outdated information.

The "instinct" is the one that the appraiser says he has. About this, the only thing I have to mention is that, although there is definitely an element of experience, it does not at all replace the importance of other considerations much more relevant to the decision making process.

"The pre-owned business is in buying."

MARIO VILLARREAL GUTIERREZ

One thing that is absolutely certain is that in this business, the money is made on the purchase.

If it is well purchased, the car acquired will generate the desired profit, if it was not well purchased, it will not, or worse, it will result in a loss, it is as simple as that.

That is why, in order to avoid flow and profitability problems in the business, one of the priorities of every dealer must be the continuous improvement of its purchasing methodology.

What I have personally learned is that there is no better methodology than one where the customer is the center, and most importantly, to put yourself in their shoes to understand their way of thinking.

Today, we know that the buyer has more buying options available to him than ever before. No longer is it necessary to go from place to place looking for the ideal car, now, from the comfort of your home, or really anywhere, anyone can see hundreds of thousands of options in an instant.

Through Facebook, Mercado Libre, Seminuevos.com, Autocosomos.com.mx, Segundamano.mx, among other great platforms where car sellers and buyers interact, the buyer can quickly learn about and analyze all the options, in order to find the best cost/benefit alternatives. The buyer will not be interested in, let alone go to test a car that has a very high or significantly low price compared to other options from different businesses that offer exactly the same. It is for this reason, and only for this reason, that not analyzing the entire market, as the customer does, is a big mistake when making an investment decision.

For me it is very simple, a pre-owned car must be acquired by first understanding how much it is going to sell for, something that can only be done by reflecting and asking questions such as: against whom am I going to compete and against whom will customers compare me?

Understanding the selling price before even making an offer is not magic, even if I wanted to, I can't see the future. What I can do is use data science with my valuation application to see how much cars like the one I'm considering buying are selling for, how many competitors there are (in real time), among other relevant data and indicators, so I know what price to buy it at to ensure it sells fast and generates the profit I'm looking for.

2. Establish the selling price based on the purchase price.

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The next mistake I want to mention is just as detrimental as the first, and that is that the selling price should never be defined by the purchase price.

The customer has no idea, much less cares how much the dealer's cost was, the only thing he is interested in is finding the car with the best cost/benefit ratio.

As I mentioned earlier, with the digital facilities that consumers now have, it is really difficult for a dealer to sell a car that is poorly positioned relative to the other options that exist in the market.

That's why an asking price based on purchase value will never work. The selling price should be set based on the actual market conditions, especially the supply, in other words, the competition, in order to have a very interesting car that will result in fast lead generation, sales and positioning for the business.

3. Limit inventory exposure.

Another very common mistake, also with serious repercussions, is the self-limitation dealers impose on themselves in terms of displaying their cars.

As we have seen, today most of a dealer's sales originate from digital media. Players like Mercado Libre and Facebook do an excellent job of generating traffic to their site, allowing any dealer to expose their products to millions of visitors.

But then why do we see that not all dealers advertise in all possible media? And why do those that do advertise, often upload their products with incomplete information or even errors?

It's very basic, but the reality is that I keep seeing dealers with these types of limitations and problems, which at the end of the day are causing their inventory to sell slower, resulting in higher costs and less profit, all because of poor exposure.

The good news is that this is very easy to fix, I recommend:

(1) Subscribe to a plan with all relevant marketplaces in your area (e.g. Mercado Libre, Seminuevos.com, Autocomos.com.mx, Segundamano.mx etc.).
(2) Integrate digital stores to your Intelimotor account (or manage manually).
(3) Publish and manage your inventory everywhere from one place.
(4) Ensure that when publishing cars all attributes are denoted without errors.

4. Lack of agility and quality in lead management.

Finally, and I don't want to leave without saying this even if it is very brief, but none of the above matters if there is no agility and effectiveness in lead management.

In order to make sales, it is essential that the dealer is quick to respond to each of the inquiries from those interested in their cars, but of course, without sacrificing quality.

Kindness and respect, hand in hand with excellent customer service, one of genuine help, is the finishing touch in this business.

To be able to operationally carry this out, the key is to have a great service team, and in parallel look every day how to make more automations that drive a better user experience for your customers and higher sales for you.

Final comments...

Sometimes as a dealer, the hardest part is identifying the errors in the operation, and sometimes the hardest part is fixing them.

Today, we have managed to identify these errors, and today we will also resolve them.

At the end of the day, the pre-owned car dealer needs tools and solutions to the problems that weigh most heavily on him. In order to really maximize the business, the best dealer will have to do a lot more, and it all starts with their infrastructure and technological resources. The good news is that at Intelimotor, we give them all that, so in reality, getting where they want to go is much easier than they could imagine.

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That's all for today, we hope you find this information valuable.

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