Used Car Profit

We all want to retain as much profit as we can in a used car deal, whilst still being competitive enough to attract enquires.

Obviously, there is stock turn to think about and used car use by dates.

However, a lot of comes down to how your sales team are managed and paid on used cars.

Here are the highlights:

{01:45} Sales Manager controls profit

{03:34} Sell to the boss

{09:12} Value Added Products

{15:41} Second face

{17:09} Look at Part Exchange

About Symco Training:

Symco Training was founded in 2000 by Simon Bowkett and it was his belief that the business had to offer its clients something different. That difference was clear to Simon from his days in the dealership when he experienced many sales trainers who had all the answers, but were unable, unwilling or both to actually show the delegate how they could be implemented. It remains the ethos of the business today. You see, Symco only employ trainers that are committed to delivering not only in spiring and insightful training, but are equally as happy to demonstrate these skills and techniques with real customers in your own showroom. We believe in order for sales training to be effective and in Simon’s words ‘real world’, it needs to be tried and tested in the only place it matters the showroom floor. There is no room for theory when your goals are for your team to sell more cars, hours or parts and retain more profit. In dealerships around the world the focus applied by many of the sales executives is to try and sell a deal. Symco specialise in getting your teams to focus on selling themselves, the product and then supporting this with the deal.

To find out more visit

www.symcotraining.co.uk

Welcome to the Selling in the Motor Trade Podcast, an association with Symco Training. This is the weekly podcast where we share best practice tips and ideas on how to sell more cards, improve your service department and generally put more profit into your dealership or dealer group. I'm your host, Simon Bowkett. As some of you probably already know me as skipping, I will start with saying thank you for taking the time to listen to this podcast. Hi, welcome to another episode of Selling in the Motor Trade. Today I want to talk about the profitability of your used car department, retaining profit in that used car dealer. We all know we want to retain as much profit as we possibly can. However, in the modern world, if you're not on the front page of car zone, auto trader, whatever country you're in, you don't get the inquiry. Yes, we know that Tommy Gibbs took lots of out stock term. I believe in turning the stock around targeting the overage stock is important. Come on, listen to the podcast with Tommy Gibbs, how he talks about a used buy date on every new scar. Great, great ideas. Something else I want to talk about, which is more simple and fundamental. Do we pay your salespeople a commission on the profit they retain from the used car? Now, we're based in the UK and there's two schools of thoughts. Number one is yes, we still pay people on their used car profitability. But then there's more and more dealerships out there saying, well, actually the sales manager controls the profit in that used car. So really, let's just pay them on the bottom as in a fixed price, whatever the unit that they sell. And the salesperson then can focus on selling that value added products. I get why that's happened. You see, after coded 19, you didn't have to be a genius to make profit out of a used car. It was a limited supply market. And actually did the salesperson do a lot to retain that profit. I don't know if you're a salesperson list list. I don't want to upset you or disrespect you, but the sales process was the cost of the album. You want it? If not, I got four other people who want it. Okay, that's it. That kind of made sense. And we're making huge profits out of every needs car. Okay. So that's where lots of people said, oh, we'll just pay them on the bottom because I hear this praise all the time. The sales manager controls the profit in the deal. Okay. So get that in a strictly wrong business. But did the salespeople control the profit? You know what? I think they really can. I mean, it wouldn't be the first time that something like this is happened in a dealership. Okay. And listen, if you'll listen to this, you'd be a salesperson. If you've asked me to work in a laugh, you know, you've done it. The conversation goes to my base. Hey, Mr. Customer. You tell me you want seven and a half thousand pounds for your car. If that right. Yes. But if we're going to pay you seven and a half thousand, you'd be happy to go ahead and secure that new car. Yes, it would. Great. Okay. And be happy to leave me a thousand pounds on either credit or debit card. Yeah. Yeah. Happy to do that. Okay. Or whatever you teach you guys to get that firm commitment. The salesperson then goes into your sales manager and says, hey, boss, they want eight grand for their car. No, no, no, no. See if you can get it. Seven up. Okay. And you see what I can do. They walk straight back out there and say, hey, greatness to customer. We can do seven and a half grand for your car. You see, the salesperson's just worked harder on the manager than they have the customer. In fact, you know what? It's not that this is what I think at some times. So what you tell me, sir, you want seven and a half thousand for your car. Is that right? Yes. And if I'm kept you seven and a half thousand, you'd be happy to go ahead and secure that. Yeah. Of course. And I say that is that extra money is going to come from an independent buyer that someone has got the overheads we've got here. The first thing they're going to know is if they pay X amount over the market, tell you will they get to own the car? So to get that figure effectively, I'm going to have to sell your car to someone else. So if I can get that figure, you will be able to go ahead with it. Yeah. Yeah. Yeah. Yeah. Have to do that. They then go into that boss transaction manager, sales manager, showroom manager, whatever you call it in your business. Okay. I know there are lots of different slightly different old things, but they go into their boss and say boss, they want eight and a half grand for their car. No, no, no, no, no. See if I can get it for eight, your salesperson goes back out because we're eight news, Mr. Customer. We can give you seven and a half. And there's a single patent favorite protection, which you've never heard about before. They're going to shove in and give it to you for three. If you get one of that, you know, you've done it. In fact, so many times is that salesperson just getting the sale of the value out of the product by taking out the profit in the view. But again, I hear people say, Oh, no, but a manager controls the profit, a manager controls the product. Yes, I get that. I get that. I get that. But that will only work. If you was a sales manager, listen to this, we'll get off your bum, go out and speak to the customer. You only need to do it once. And you know, it's like, Mr. Customer, my salesperson says, you're hoping to get eight and a half down to your car. Is that right? No, I told Simon seven and a half. You only do it once. And then you know that your salesperson might be trying to pull the wool over your eyes. Okay. Guys, I don't know what's your right condition structure for your business. Okay. I personally quite a lot of the idea that salespeople still paid on the profit on the use car. Okay. In fact, I love the idea that when it's out of the industry, some people pay 20% profit on that use car, but actually then no basic law. Now employment laws, we can't do that. And I think there's a huge benefit and pay people of decent basic wage nowadays attract better people to the business as they say. Now, having said that, when someone says that, I always say, well, we know good people when we come along all those years ago. Now, people getting mortgages and don't shoot the messenger. I know there's probably two schools of course there. But if you're in a business where the power's a be and deciding your dealer group that we're only going to pay on the unit, okay, whatever the unit is, that's what they get paid on. And also we'll pay them on the value out of products. Just make sure your salesperson isn't working new more than the customer. Guys, when a salesperson finds that out, they find it by accident one day. On training course, okay, wow, I found the hidden gem here. Look at this. I'm going to make myself lots of money this way. And you know what? I do that. In fact, I'm going to tell you this one. This one, I'm talking about this last week. This last week, I'm running a training course, the salespeople's time and in the field group. Well, run dealer group. Okay. And one of the leading senior salesmen, when we're talking about negotiation, we're talking about retaining profit, okay, and Mr. Mr. Customer, that's just not feasible. How flexible can you be? And realistically, what we hope to get your car, what, seven, six, seven, seven, something like that, we'll get all these things. And the salesperson, and from the whole group, turn around and say, I don't do any of that. Okay. What what I just do is I just turn around and say, what we're having to get to your account, eight grand. You go on the boss and say, hey, they've been down the road and then we're on off it, eight and a half grand for their car. The boss always say, no, no, I see if you can get them for eight. Okay. Yeah, I just lied to the sales venture. Because he never comes out and speaks to him and just get the deal done. I don't care what profits in it as they're from. I just want to get the units off next. Guys, I love the guys are being honest and saying that. I don't think it was smart in that training course, but he's not unique. That happens up and down the country all the time. So I just want to have a quick one today to talk about. Your commission structure. Okay. If you pay on the unit, okay, just make sure that the sales person is not working hard on you, then the customer. Now, I don't want to get into the counter words with FCA. We know that half of the people listening to this podcast are in America and Australia around the world. In the United Kingdom, we have the FCA, the financial contact authority. We have to treat customers fairly. Okay. We know there's a big debacle about a gap insurance, what's happened in the UK, where we weren't allowed to sell it. If you look into findings, there's lots of people concerned. How many customers know they've got it? How many of these value added products are effectively coming out of the profit in the deal? So there are going to be more controversy. If your sales person is going to be back, I don't know. Are they yelling? No, that's a high. Okay. And it's probably silly word to say that. But actually, they're not stealing off a customer. Who are they stealing off? Yeah, again, I need to find another word that's stealing. Okay. But you get the point. I'll get to you what? This is years ago, I was in Oak Furniture Lane. But people who are not in the UK, Oak Furniture Lane is a furniture shop. They're selling enough oak furniture. My youngest, and this tells you how long ago this was, because my youngest has just turned 18, but he was going to his very first big boy bag. He's coming out of this little mini-cop vintage, big boy bed. So we went into Oak Furniture Lane. And this bed was 499 pounds, so four eight beds, a mattress, a little side table for it. And this was, I think, end of November, beginning of the 7th or something like that. So I said to the salesperson, I said, yeah, that's good. I think I'll do what we're looking for. But do you do me a favor? You know, and I know in the Boxing Day sales, that bed is going to be a half price sale or further reduction or something like that. Okay. Do me a favor. Can you tell me what the Boxing Day sale prices are going to come down to? Agreed to that. And I'll just do it now. If not, I can't be bothered coming back here on Boxing Day, but what I'll just, I'll just phone up and find out what it is. And I'll just do it then. It's, yeah, yeah. I'm saying exactly like that. Hold on. Let me don't see what I could do. He goes away and he says, right, I'll tell you what, the bed with the bedside table and matches there is 499. But what I'll do is I'm going to give you this extended warranty. OK, what it does, it covers you for a year's, the actual, all the wood in that and the construction for five years warranty. And there's this polish on it. So right. OK. And then how much is 49. 95, basically 50 quid. OK, right. 50 quid for that. Does it cover the mattress? No, no, it just covers the oak. Right. OK, I'll tell you, I just don't see any value in that because it's a piece of oak. You know, the whole phrase, strong as oak. OK, I think oak in five years will probably still be all right. So no, thanks. OK, the guy who played doing said, Oh, no, no, no, but you get the polish as well. Then I'm going to give you that. So it's for nine, nine. And I'll give you that to me. So I said, do you really think that's worth 50 pounds? Now, of course, I'm putting on the spot. And you have to say, well, yes, I do. Right. Well, if that's worth 50 pounds, do me a favor. Just take 50 pounds off the value of the bed. And I don't see the value. Do it for 450. I'll do it. He said, right. We'll do that. I think I'm looking after two young children in the furniture shop. OK, as Emma's paying for this. Making sure they don't try and use a toilet that's never been bombed in or something like that. And the guy turns around and says, yet, there's the credit card and Emma's pays for that. OK, and the range of delivery date, all that. He said, right. And he's the street Polish answer a bag of Polish. I'm not telling you that. So what I'll do in a second. Can I just have a look? Of course, on the invoice. And I want you to remember these numbers. The price of the bed was four nine nine. This extended warranty was basically 50 grid. So he's got the price of the bed. 400 pound extended warranty. 50 quid for a total of four 50. But what will sorry, you missed understand me before. I said I didn't see a value in that extended warranty. Did not know, but you said 450 as 450. What I've done is the price of that is 400. And the extended warranty with the Polish is 50 quid. But yes, I know. But you've now given me a piece of paper that says you're happy to something about it 50 quid. The piece of paper says there's the insurance product for 50 quid and the Polish with it, which I don't see any value in. The doing it, I take that off it. Do you want to know? But we agreed 50 quid. Yeah, I know we did. But listen, there's insurance product on there for 50 quid. I don't see any value of it. I was frustrated with him. I said, do you need to go and sweep your manager? Or should I go and have a chat room? What do we want to do? OK, he went away. Now I can't see my own wife. So what's your problem? I did have a problem. And here's my problem. OK, what the guy was doing is I'm certain that he's getting paid a commission. Exeterify your warranty. That piece of over whatever they're trying to do. OK. And I was upset because effectively there's that word against stealing. I need a better word than stealing. OK, but he's affected and stealing. He's not feeling from me, not at all. He's actually taking the money out of oak furniture. But that's why I wasn't upset. I don't have shares and oak furniture, or anything like that. But here's why I'm upset. When you go with the dog, guess what? He was able to solve that game for 400 quid. OK, that's what I could have got it from. I didn't see any value in that. OK, and that's where I thought, how often is this again happening in the mototray day in and day out? Of course it is. Guys, if you pay a salesperson on the process they're retaining a used car, guess what? That can't happen. Now, a new car, you might just pay on the unit price. Make sure it doesn't happen there as well. So I suppose commission structures aside, because you might not be able to change your commission structure. If you've got the ability to change your commission structure, I'll get to you. I'm just a fan of paying people at the profit on the car to stop that happening. But what I'm a bigger fan of, to stop this, it's so easy. If your bosses say you was a sales manager, you control the profit and the deal, you do. The only way you do is make sure you second place every single customer every single time. And listen, my customer tells me you're hoping to pay 450 for that bad or whatever it is. Oh, listen, my salesperson tells me that you're hoping to get enough grand for your cars. That right. I told the salesperson seven and a half. You'll only do it once. And then the salesperson knows that you know, I might come out and speak to them. Now, we're not talking about catching salespeople out. We're all on the same page. In fact, catching salespeople out, I was a bastard. The amount of times I'd say, how do you get on with that customer? No, no, I phoned them. They said they're just going to put it off for a while or whatever. OK, if I give them the book, you can see the salesperson going into this shock. How often have you tried this as well? Management team, listen to this. You phoned the number and it doesn't work. Oh, the customers told you they're going to put it off for a couple of weeks. They're just going on all of those. How did they tell you that when the phone number doesn't work? Did you use a fucking horse or something? OK, now do it with the big smile on my face and just let them know that, hey, listen, everything you've done, I've probably tried as well. OK, we're all on the same side here. Just tell me, I can't remember the customer. I'm not sure. Keep them cool. OK. We're all on the same side, but sales managers actually make sure you manage the process on that one. Now, salespeople listen to this. You might sit down and think, George, he never comes and looks at the car anyway. The customer's trading their part exchange. OK, and you'll start mis-disgribing the car. Yeah, it's mint. This car is brilliant. It's perfect. It's really good. The car comes in the stock and it's got more hits than the bean tors. It's got alloy wheels used as parking sensors. OK, and your salesperson says. Sorry, your sales manager says, hold on. I thought this car was perfect. If you're a salesperson, listen to this. Don't miss just ride the car. OK, because I tell you what happens is you'll get the reputation that you always missed a shrub a car and your salesperson, who's ever done in your business. We start realizing that. Listen, Simon always mis- describes the cars. So I know he's telling me it's mint. Although he's telling me it's a 10 out of 10. But the last four cars he said were 10 out of 10 weren't. And what will happen is when you do get the car, that's perfect. Your sales measure, whoever's voting the car will naturally start shizzling the price back anyway, because you've got the reputation that you always mis-prescribe it. Now, if you're a management team, listen to this, don't just allow your salespeople to go and value the car by themselves. Go and have them look yourself. I know you've got what's on. Guys, I really do understand that whenever I took that second facing go and have a look at the car, I know some people saying, I haven't got time to do that. Look at everything else I'm doing. I know what it's like in the modern business. We're in car dealerships every day of our life there. And I do understand that. I tell you what, those two things, part of your job, it really will stop some of these issues happening. Anyway, guys, just a short one today, but I hope that gives you some food. But I'll see you next time. That just leaves me to say that all details of this episode and other episodes on the selling in the motor trade can be found on our website, simcotraining.co.uk. Go there to get a copy of our book, Words That Sell Cars. Go there to sign up to a free trial of our sales fitness online sales training program. Easiest way to get hold of me is Simon Bowkett, food link. Thank you.