Used Vehicle sales continue to be a critical part of any dealership’s strategy.
Quarter after quarter, used vehicle sales continue to perform: in July 2016 alone, it’s estimated that more than 3.6 million units sold. But no matter how aggressively you promote used vehicles, your dealership won’t make the most profit unless your sales team is consistently and firmly defending the gross profit on each and every vehicle they sell. Saying this is easy, but it’s often difficult to effectively train sales staff to protect each vehicle’s profit, leading to diminishing returns on sales.
To help train your sales team, here’s my simple—but effective—wordtracks to protect the gross margin on UV sales. I’ve used them for years. And this is a tool I frequently recommend to my consulting clients.
Defend your used vehicle gross profit with these wordtracks
(In this example, the selling price of the car on the dealership website and “on the windshield” is $14,750.)
1. Use the first 30 seconds to introduce yourself and the dealership.
Here are my recommended wordtracks:
“Our dealership/dealer group has been in business for __ years because we treat our customers very well and we know that price is important when a customer purchases a car (or truck) …”
“You may be aware that __ thousand customers purchased used cars and trucks from our dealership/dealer group last year.”
2. Get the prospect back to the dealership after the demo.
After a demo ride with a prospect, the salesperson should instruct her to park the used vehicle near the entrance to the service department. As she gets out of the car, the salesperson should say “… let’s go back to my desk and I will show you what we found and fixed on this car/truck.”
3. Do a trial close.
If possible, walk the prospects into the showroom through the service department and comment, “This is where you will bring your car for oil changes and other maintenance …” See how the customer reacts.
4. Demonstrate the vehicle’s value.
After the prospects are seated at the salesperson’s desk/table, you should say, “I will get the value folder for this car and show you what we found and fixed on this car.” The salesperson should review each item in the folder with the prospect and watch for their head to nod in agreement ... a “trial close.”
After the review, sales staff should summarize the folder: “… and that’s why we know the selling price … $14,750 … on this ___ is a fair price.”
The prospect’s response will tell you the next moves. If she responds, “I’ll give you $13,500 for it right now,” the salesperson now knows that the prospect likes the car, but she is trying to get it for less. The salesperson’s job is now to defend the gross. (“$13,500” is not yet an offer; it is an indication that the prospect is willing to buy the car).
5. Defend the gross against price objections.
Connect the reconditioning to the current price. Your salesperson should explain, “If you had come to our dealership and purchased this car ‘as is’ before we completed all the repairs on it, we may have sold it to you for less than $14,750.”
Review the value folder again, paying particular attention to the clean Carfax and internal repair orders which reflect all the repairs which were performed “at our (internal) cost.”
Reinforce that these documented items are the reason “we know that $14,750 is a fair price.”
6. Protect gross profit from counter offers.
If the prospect counters with “We’ll pay $14,000 right now,” the salesperson should try to overcome the price objection without taking an offer to the Sales Manager.
Use one of the following scripts to protect the vehicle's gross profit:
- “What financial formula did you use to determine that this car is worth only $14,000? We price our used cars and trucks very competitively online; that’s why we sell so many of them: __ thousand alone in 2015. If we didn’t price them competitively, people like you wouldn’t find them on the internet.”
- “I imagine you spent several hours on the internet searching for a car like this one; you drove __ miles to our dealership to see it so you must feel it’s a fair price. No one drives __ miles to see a car if they feel the price is too high. But, I understand you don’t want to ‘pay too much’ for this car. However, I think you know that $14,750 is a fair price. So that you can go home and tell your friends that you ‘got us down’ on the price, you can purchase the car for $14,700 and still go back and tell your friends that you ‘got us down’ on the price.”
At this point, if the prospect continues to offer less than $14,700, the salesperson should take the offer to the Sales Manager who should attempt to close at $14,700.
How does your dealership defend the gross? Tell us here. Have more dealership concerns? Meet with Terry or another NCM consultant to identify opportunities for improvement in your store.