7 Excellent Ideas From Velocity by Dale Pollak
Dale Pollak, founder of vAuto, is well known in the dealership world. He puts out a lot of content on his blog and 3 books: Velocity in 2009, Velocity 2.0 in 2011 and Velocity Overdrive: The Road to Reinvention in 2012. If you’ve read one of them, there isn’t a need to read the others. They all cover the same subject of using Moneyball analytics for your auto dealership to increase overall profitability. The verb he’s coined and beaten to death is velocity sales; to focus on inventory turns for high salable inventory. Essentially it’s better to sell 3 cars in 90 days for $1500 net profit each ($4500 total profit for the same space) versus 1 car in 90 days for $3000 net profit ($3000 total profit for the same space). $4500 – $3000 = $1500, you’ll gain an extra $1500 by focusing on inventory turns with the velocity mindset.
At this point, most dealers have seen or have access to pricing analytics through various providers to help them make smarter buying decisions. In the majority of cases, you make your money on the buy so this subject matter is very important. Below are 7 excellent ideas from the book Velocity. This isn’t a review, but I would recommend checking out his first book Velocity for the distilled version of his ideas.
1. I believe the used vehicle department is the heart and soul of a dealership – its success feeds the sales and profits in new vehicle sales, F&I, and parts and service.
This is true if your dealership has slept on used car sales. It is a key area to focus resources on to drive sales and balance revenue across the board. It is also the fastest area to gain profit as the gains are made on the buy.
2. Waiting for the right buyer to come around on a unit just doesn’t work anymore.
In the velocity sales model (it’s not the only one), absolutely. Inventory turns, inventory turns, inventory turns. You can’t hold out and wait for that perfect buyer as speed is of the essence.
3. You have to treat your investment, or used vehicle inventory, like a trading portfolio where a decision to hold a stock is based upon the type of stock and your ability to sell it, and a decision to sell is based on how much it costs you to keep the stock rather than how much you’d lose if you sold it.
Although this isn’t a good metaphor, dealers should take the emotion out of buying and selling. Unlike stocks, vehicles depreciate, cost money in insurance, floor planning, maintenance etc. It is vastly more important to treat inventory like a hot potato than stocks.
4. Vehicle price, mileage and condition are the top drivers that determine whether they’ll contact a dealership.
What would you would expect, but backed up by data. You’ll want to highlight these items in your marketing. Price and mileage are easy to identify, condition, less so. Use CARFAX or AutoCheck as well as calling out the condition, good, bad, things to look for, etc in the description and photos.
5. There are two types of dealers – those who focus on showcasing the story behind their vehicles and those who are just listing them.
Great point. 97% of dealers spend no-time thinking and writing their descriptions that would help them stand out from a crowd. It is simply laziness. Such an easy thing to do, only takes 5 mins to write a description for a vehicle. Have go-to phrases ready to make the writing easier.
6. It helps me keep the customer honest.
When the dealer can point out the exact market layout, a customer can’t argue with facts. The playing field is increasingly more level as data analysis becomes widespread through websites, news and software apps.
7. Applying investment-minded management principles to your operation won’t matter if you don’t present them.
Can’t have one without the other. Even if spend all of your time buying right, you still have to go out and market the vehicles correctly and then do a great job in the sales process.
These 7 ideas are worth studying and reading more on to see how you can apply them at your dealership. What ideas from Dale’s books do you subscribe to?