Increase Your Turn Rate and Margins

Both Buyers and Sellers Can Combat Margin Compression by Keeping Their Inventory Fresh

The Transition to Used-Vehicle Sales

In the past year, there’s been a shifting focus from new vehicle sales to used vehicle sales, primarily due to consumer demands.  At an average price of nearly $37,000, new vehicles simply don’t fit within consumer budgets as much as they used to. The growing appeal for pre-owned vehicles is so great, dealers have been shifting their inventory more in favor of used-vehicle sales which carry greater profit margins.

With the used-vehicle market firing on all cylinders, dealers are fiercely competing to secure prime inventory that they can price right for their consumer demographic. In order to successfully capitalize on maintaining higher margins with less than 45 days on average turn rate, dealers need to explore efficiencies on how to acquire quality inventory for retail. One particularly important area that has a major impact on profit potential is the reconditioning process. At an average of 10-12 days, the reconditioning process can be long and costly, slowing down the time it takes to get your vehicle to the front line and reducing your front end profit.

AMP Remarketing’s Innovative Solution

AMP Remarketing’s “Event Sale” is changing the dynamics of dealer inventory acquisition by giving dealers the opportunity to connect reconditioning cost management with days inventory management via a digital platform that offers only Frontline and CPO Ready units. CPO programs are great for the used-car space. New data from J.D. Power shows higher average profits and faster turn rates for CPO vehicles consistently over the past two years.

Dealers have been selling more CPO units because customers are willing to pay about $3,000 more for a CPO vehicle than for the same vehicle without certification according to a study by Cox Industries. Consumers see the value in the certification process, getting extra warranty and financing that the captives put out there. CPO programs also give dealerships the chance to build loyalty with consumers. By treating a CPO vehicle owner as a new vehicle owner, dealers develop consumer trust, further ensuring they come back to the selling dealer for service as opposed to going to a service station down the street.

AMP’s decision to develop a program that would specifically focus on Frontline and CPO ready digital acquisitions for dealers came as margin compression on used-vehicle sales began to become an issue for dealers. Consumers are now doing the majority of their vehicle research online, spending fewer days in the market, and visiting fewer dealerships. What this all means is that vehicle sales are increasingly being won and lost online. Dealers need to determine who is in the market, what they are in the market for, and most importantly, how to get it. AMP Remarketing’s’ turn to earn “Event Sale” provides an outlet for aging frontline and CPO ready inventory for buyers starving for quality inventory.

Dealers that have shifted their focus to the used car arena credit their success by way of velocity selling with CPO Spot Ready units. By deploying market predictive technologies like vAuto, dealers can identify which popular vehicles they could price below the market average in their consumer demographic in order to optimize inventory selections by forecasting local buyer trends and can rank vehicles by days it believes they will sell.

With the factories lowering production on new vehicles this year and no favorable lease or financing programs in sight, the predictions of a stronger 2020 used market are eminent. With a growing voracious appetite for pre-owned inventory in a crowded competitive market, dealers don’t have the manpower to have boots on the ground daily at physical auctions near and far and not always coming away with a decent inventory. For this reason, dealers are going all-in on sourcing inventory acquisitions as buyer demand is beginning to outpace supply.

AMP’s digital “Event Sale” will offer only Frontline and CPO Ready inventory allowing dealers a direct channel to procure quality “spot ready” inventory that they can get right to their front lines for retail, enabling higher margins by avoiding the cost of expensive reconditioning, floor plan expense and margin compression.

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