As car dealers realize they need to expand their “net” to acquire cars, many recognize the typical used vehicle manager isn’t fully up to the task.
I’m not talking about the manager’s ability or skill, although that can often be an impediment as online sources play a larger role in a used vehicle department’s acquisition.
The bigger issue is simply a question of time: Can a manager who’s often charged with desking deals, overseeing reconditioning efforts, appraising cars and attending physical auctions really put the energy and effort into finding and purchasing cars in today’s supply-constrained environment?
A growing number of auto dealers address this challenge with an inventory specialist—a person with good technical and organizational skills, as well as an ability to unemotionally evaluate cars based on their “fit” with a dealership’s used vehicle purchasing parameters.
It’s not unusual for dealers to find these individuals already at work in the dealership. I know of several stores who plucked their inventory acquisition specialists from their detailing and lot management crews. In most cases, the acquisition specialists focus their energy and time on acquiring vehicles from online auctions.
Of late, I’ve been asked for recommendations on the best way to compensate an inventory management specialist, particularly since it’s really a dealership position that hasn’t existed in the past.
The following pay plan comes from a New York velocity dealer. I like the pay plan’s simplicity and built-in incentives to ensure the acquisition specialist follows a careful and deliberate course to consistently buy wholesale vehicles that meet the dealership’s purchasing criteria (e.g., market days supply, cost to market, etc.):
Base Pay: $300/week (Note: The dealer says he initially paid $500 in base pay/week, a figure that diminished as the acquisition specialist hit his stride and built a pipeline of cars.)
Incentives: The dealership pays $100 when a vehicle the acquisition specialist purchases sells within 30 days, and $50 for vehicles that sell within 31 to 60 days. If a vehicle doesn’t sell within 60 days, the store wholesales the car and pays no incentive.
Hedge Fund: The dealership adds a $100 “acquisition pack” to each vehicle the acquisition specialist purchases to cover the cost of pay plan incentives. “There’s no way we can get hurt,” the dealer says. “The reality of the market is that we’re not going to pay him $100 on every car.”
I’d welcome your input. What inventory acquisition specialist compensation plan has worked best for you? Any other pointers that would help dealers successfully create this increasingly important position?
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