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Beware the Pitfalls of a “New Car Masquerade” in Used Vehicles

In the past few weeks, I’ve come to understand what I’d call a “new car masquerade” in used vehicle departments across the country.

Perhaps the circumstances are familiar at your store: The new car department remains under-stocked on inventory, and you’ve got some would-be new car customers who can’t get the new car they want because you don’t have it in stock. As a result, your used vehicle department is actively stocking one- or two-year-old vehicles that can help you make deals with customers who came in wanting a new car.

This new car masquerade in the used vehicle department isn’t necessarily bad. In fact, it’s a smart move to ensure you’re doing everything you can to satisfy every customer who comes to your dealership.

But here’s what’s problematic: Dealers and used vehicle managers often aren’t aware of how the new car masquerade can hurt their used vehicle department, especially when you over-rely on auctions to acquire the near-new inventory.

A key signal that the new car masquerade may be hurting your used vehicle department typically appears in the department’s inventory-level Cost to Market percentage. At many stores, the inventory-level Cost to Market percentage has been trending upward.

That’s been the case at a Midwest dealer group I visited last week. Within the group, one store’s overall Cost to Market percentage was 92 percent. At a similar store, the overall Cost to Market percentage was 83 percent. It wasn’t a surprise to anyone that front-end gross profits were far richer at the store with the lower Cost to Market percentage than the other.

We all agreed the Cost to Market difference between the two stores was substantial. The observation led to a discussion about how/why each store was acquiring its inventory. We used the Global Acquisition system in ProfitTime GPS to understand the roots of the disparity. The analysis yielded three key insights:

Insight 1: The dealership with the higher Cost to Market percentage acquired a far-larger share of inventory from auctions compared to the other store. When we compared at the number of auction-purchased vehicles at the two stores, we found the store with the higher Cost to Market percentage purchase nearly 13 times the number of auction vehicles, with 2021 as the median model year. We also noted that the auction-purchased inventory took longer to sell compared to the sister store—a difference that reflected higher retail price mark-ups to compensate for the higher costs required to own the auction-purchased vehicles.

Insight 2: While the dealership with the higher Cost to Market percentage had a higher share of 2020 and 2021 vehicles in its inventory than the sister store, it had fewer three-to-five-year old vehicles. The reason: The dealership’s reliance on auction vehicles to source near-new inventory appeared to come at the expense of sourcing older-model units the sister store was more proactively, and successfully, acquiring from the service drive, sight-unseen and other sourcing channels. (Note: Both stores appeared to do a comparably decent job of acquiring the same volume of trade-ins, where the median model year was 2016 at both rooftops.)

Insight 3: Both stores have a performance improvement opportunity. The store with the higher appetite for near-new inventory, and the higher overall Cost to Market percentage, would be wise to offset its reliance on auctions by tapping other sourcing channels to acquire inventory at more favorable investment values. The shift would address the relative dearth of three-to-five-year-old units that likely represent a sales volume opportunity, and help reduce the store’s higher overall Cost to Market percentage.

Meanwhile, the store with lower overall Cost to Market percentage could use the strength of its current multi-channel acquisition efforts, which enables them to acquire slightly older-age vehicles at more favorable investment values, to step up their efforts to purchase a larger share of near-new inventory, even from auctions. The shift might raise the store’s overall Cost to Market average, but it would be a strategically measured trade-off to help them serve customers who can’t (or won’t) currently purchase their new vehicle of choice.

I’m sharing this rundown because I believe it has relevance and utility for dealers in a market where new vehicle supplies will remain short for some time, and near-new used vehicles will be the easiest and most-expensive to acquire at auctions. The big take-away: It’s OK for your used vehicle department to masquerade as a new vehicle department, provided you dance with as many sourcing channels/partners as possible to ensure your overall inventory selection, profitability and sales volume doesn’t suffer.

The post Beware the Pitfalls of a “New Car Masquerade” in Used Vehicles appeared first on Dale Pollak.


Safety benefits for car leasing websites online.

There’s countless advantages to renting a vehicle. Initially, you will drive another a brand vehicle with the most recent innovation, wellbeing highlights and cleanest motors around. You additionally dodge the issues and adjusting costs related with more seasoned vehicles. You likewise advantage from the genuine feelings of serenity from fixed regularly scheduled installments and there’s no selling bother toward the finish of your agreement – you basically hand back the keys.


What kind of insurance comes with car leasing?

Truly, we offer clients bespoke ‘Absolute Care’ bundles, which are a determination of vehicle and van rent bargains accessible with full inclusion, including protection, harm assurance, upkeep and furthermore mishap the executives.


What service can you expect for car leasing websites?

All candidates are welcome, regardless of whether you are a private people, sole merchant, restricted organizations or a PLC. As a component of the application cycle you’ll have to go through a basic credit check to survey your credit quality and danger status. This is a moderately snappy and simple cycle.

Money organizations settle on their choice on whether to give account to a client dependent on their at various times budgetary conditions.

It is clearly a lot simpler to rent a vehicle in the event that you have a sound credit status, notwithstanding, on the off chance that you do have a helpless FICO assessment, you may at present have the option to rent a vehicle utilizing a funder who has some expertise in aiding those with less fortunate FICO ratings.

Investigate our site at the models that are accessible for transient rent and choose which vehicle is best for you. From your underlying enquiry you will be set in contact with one of our master renting advisors who will gladly help with any inquiries you may have. They will direct you through the cycle of Short Team Leasing bit by bit, from getting you endorsed for account right to organizing conveyance of your new vehicle.

3 – two year rents truly couldn’t be easier and are an extraordinary method to drive a fresh out of the box new vehicle at a moderate expense and with the adaptability you need.

For momentary leases, account choices are made in-house, with endorsement ordinarily gave around the same time.

Personal Leasing

Consistently, an ever increasing number of individuals are deciding to rent instead of purchase their new vehicle. In the UK today, individual vehicle renting presently represents 1.9 million vehicles.

Individual vehicle renting is like leasing, in that you’re utilizing a specific vehicle, for a concurred time span (normally between 2 – 5 years), for a set charge.

You have total opportunity of decision over your vehicle’s make, model and determinations (shading, trim, and so on) and your agreement is custom fitted to you regarding yearly mileage, length of agreement and how you’d like installments organized. The complete expense of your vehicle rent is determined on a few variables:

  1. The estimation of the vehicle (un-driven)
  2. The vehicle’s assessed an incentive toward the finish of the rent (the remaining worth)
  3. The yearly mileage stipend
  4. The length of the rent
  5. The administrator expense

Toward the finish of the individual vehicle renting period, the vehicle is essentially returned, looked at and installments stop, leaving you allowed to rent another vehicle, should you wish.

VW Golf


For what reason is Personal Car Leasing so Cost Effective?

An ever increasing number of people are taking a gander at the choice of individual vehicle renting rather than out and out buy as a substantially more financially savvy method of running a vehicle.

Presently like never before, because of substantial vehicle devaluation misfortunes and startling fix costs related with purchasing, individual vehicle renting can spare a lot of cash over the rent time frame, with numerous nowadays considering it to be the least expensive approach to drive a pristine vehicle. With vehicle renting, you’re basically paying the deterioration on the vehicle, which means your month to month outgoings are altogether lower contrasted with most different types of money.

Who is Eligible For a Personal Car Lease?

Fortunately nearly everybody is qualified for an individual vehicle rent, you basically need to meet the accompanying models:

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  6. Not been announced bankrupt, nor have CJJs or IVAs against your name
  7. Be fruitful with your credit application
  8. Credit Status

As a feature of the application cycle, you’ll have to go through an individual credit check to survey credit quality and danger status. This is a generally simple cycle. It is a lot simpler to rent a vehicle with a more beneficial credit status, nonetheless, in the event that you have a helpless FICO assessment you may at present have the option to rent utilizing a funder represent considerable authority in those with less fortunate FICO ratings.



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