Used-car advice from John Edelman
The last year or so has been hard on the industry with inventory being hard to get. How do you manage it and get what you need?
We review what’s been selling. But that changes by week, the day. If it doesn’t sell, we discount it to make it go away.
As for getting what we need in tough times, it’s not simple. We have good relationships so that even when vehicles are hard to come by, there’s always something. It was toughest last summer when new cars weren’t being manufactured and that meant a shortage of used. That was the toughest time for us in 25 years.
We had to work harder, but the relationships help. There is still loyalty.
How do you maintain good relationships?
There has to be a win-win situation for everyone when you buy a vehicle – the buyer as well as the seller – even if it means paying a little more. In the end, there will always be something around.
You started out in 1984? Have things changed?
In the last five years there has been a big shift. Now, we have to run as efficiently as possible. There’s no room for fat. But the help has to come from staff. They are on the floor. I’m not. So I need their help.
We used to have someone come in to empty the trash bins and clean up the shop. One of our service department staff said that wasn’t necessary if we bought a scrap cart and they filled it while they work instead of leaving scrap for someone else to pick up. Now, our 130 bays are self-cleaning and we don’t need a cleanup person to come in the morning.
We started building a new facility in 2008. With the economy the way it was it seemed counterintuitive. The new building has 45,000 sq. ft. and 130 bays. It increased our productivity per man by 30 per cent!
What business office products sell well at your dealership?
What sells well is what staff believes in. Our store has its own warranty program. Seventy per cent of our customers buy a warranty. When we sold outside warranties, our sales rate was about 15 per cent.
We heard from staff that they didn’t believe in outside warranties because many of their customers complained about the trouble they were having with their claims.
We asked them if they would have confidence in a warranty if it were ours. They said yes.
The first month that we started selling our own warranty, sales went from 15 a month to 125!
Employees have to believe in what they are doing.
How do you maintain your high sales rate?
Our closing rate is 52 per cent. We believe that you have to take care of the customer and their guard will be down. If it costs $100 to fix a car right in the first place, do it. That can be difficult in the last 18 months. But we need to make sure that the customer is able to take their guard down.
You can have someone who sells a high percentage of everything, but that may not be right for the customer. So if a sale is too high pressure, that particular sales person will be put on the floor by their peers.
Do you have any advice for new-car dealers?
Yes. End the rivalry between the service department and sales. We give our service department a bonus when a car is sold. Why not have the used-car department hire and staff its own service department?
Any closing thoughts?
We need to start supporting each other. Don’t tell people you are having the greatest month when you’re not and put down someone who says things are tough. We are not here to stomp on each other. It’s been difficult. Let’s start supporting each other – even if it means giving out a tip or two. What goes around comes around.
Wouldn’t it be cool if in Ontario, we were known as the industry that takes care of itself – of each other?