Dale loves to hear from you…

V-auto on steroids otherwise known as “Provisions” right? Hi Dale, we have waited about 90 days to let what we thought would be the dust to settle around the new Provision product. We should have known better than to wait. We are two days into this new tool and all I can say is am disappointed that we waited so long. Our buyer Andrea just bought our first vehicle on through a proxy bid with this new remarkable tool at 91% price to market and 76% cost to market with $2000 in recon, our pack, transportation, and margin included. Now I will never get sleep knowing we can buy like this. This new tool is worth its weight in gold solely based on the ease of selection. We have one buyer that works diligently every day to fulfill our procurement needs, Provisions has just brought her efficiency and effectiveness to new level.
 
Although we are in the early stages of using Provisions, we think we understand the fundamentals of this tool. We could however use some help or guidance on a question. In addition, of course we have one suggestion.
 
The question is what factors into the suggested bid price? Based on our historical bidding standards for margin, recon, transportation and fixed pack, most of the recommended bids are below what we would have likely bid on the same vehicle. As a note, all of our settings remain on original default recommendations. Just for the record I am not complaining about getting vehicles for less, the issue is that we do not want to pass or under bid a vehicle due to lack of understanding.
 
Regarding the suggestion, it would be helpful to have an area for notes on each vehicle saved in favorites. If this exists today, we cannot find it.
 
Thanks again for all you do.

Mike,

I’m thrilled to learn that you’ve discovered Provision. I’ve been saying for some time now that this new system is a game-changer, and I’m now beginning to receive that type of validation, like yours, from the marketplace. In fact, just in the last ½ hour, I showed our performance managers an incredible new enhancement called Advanced Workbench. Without going into a lot of detail here, it literally allows an inventory manager to genetically engineer his inventory based on attributes that are most important, like demand, interest, profitability, volume or the like. The experience of seeing the cars in the market that possess those attributes that are most important to you must be like the scientist that first looked into an electron microscope. It will absolutely blow you away when you see it.

Regarding your question about Provision’s bid guidance. To be clear, bid guidance is just that, “guidance”. The bid guidance is an amount that you can justify paying in order to cover your cost of acquisition, reconditioning, profit objective and price the vehicle in the market at the exact dollar amount that will create the most immediate amount of consumer attention. That doesn’t mean however, that you can’t justify paying more for the right car assuming you’re willing to either sacrifice some of your profit objective or price competitiveness.

With the assistance of executives at Manheim, I’m currently working on strategies and tools that will provide vAuto provision users an advantage when proxy bidding. While I can’t control the prices in the market, I can provide meaningful information and useful tools that will help you place proxy bids that are more likely to win vehicles. There will be much more to come on this issue in the future, so stay tuned. In the meantime, be mindful of the bid guidance, but be prepared to pay more for the right vehicle.

Finally, regarding your suggestion about notes on the favorites page, I’m not sure if the system allows for this functionality at the present time. Please check with your performance manager and let me know.

Mike, once again I just want to say thank you for your note and for the intellectual contributions that you and your group have provided us during our partnership. Stay in touch.

Dale

Hi Dale,
   I was recently employed as a Used Car Mgr. at a dealership in Pittsburgh, Pa.. I was so impressed with VAUTO.  I've become an advocate. I've been out of work since leaving there in Nov.. I would like to know what I could do to become part of the VAUTO group.  I Know I would be a great asset to you and your company.
  If there are no openings at this time, I would like to know if you have to be a dealer to purchase your monthly program. Also, I have Ideas I think we should talk about that would enhance your product.  I would appreciate a chance to chat with you.

                                                                     Thank you,

Frankie,

Thank you very much for your interest and enthusiasm for vAuto. Yes, we are always interested in talking to talented people about prospective employment. Please send me a resume. Also, please feel free to send me an email directly (dpollak@vauto.com) so that I can review your ideas/thoughts to make vAuto better.

Again, thanks.

Dale

Dale,
I know it very important to get pictures of your vehicles online ASAP. I currently try to get my pictures uploaded to our websites right when the car comes in, but that sometimes lead to dirty cars being pictured. Do you think that could potentially turn people off of my car because it is dirty even though 99% of the time it is detailed when they come in to look at it.

Thanks for the question. The first thing that I’d like to state is that dealers should separate the notion of the physical front line from the virtual front line. Best practice is to have your vehicles on-line with a price, description and photo within one working day. This raises your question of how to get quality images before the vehicle has been fully prepared for the physical front line. The answer is that you do the best you can. Many dealers will take a recently acquired car and give it good wash, and then take a limited number of photos from the most favorable perspective and distance that best represents the vehicle. Once the vehicle is detailed, final photos are taken and those photos replace the earlier ones. While this photo strategy is not ideal, it is far superior than waiting several more days until the car is ready for the physical front line.

I also want to take this opportunity to address what I think is best practice for getting the vehicle to the physical front line. I think that two working days is the max providing there is no body work, and four if the vehicle needs to go through the body shop. If you can’t get cars ready for the physical front line on these time schedules, then you need to figure out what changes need to be made to do so. Every single day that a vehicle is not on your virtual and front line for sale, you lose money. Unfortunately for our industry, this loss doesn’t show up in a line item on your financial statement. If it did, dealers would be much more determined to get it done faster. Hope this helps.

Thanks,

Dale

Dale,
How important do you think online reviews are? Is it worth asking customers that appear satisfied to review the company on certain sites to increase the amount and quality of reviews? Will this help the SRP to VDP conversion? Enjoyed your book and thank you for your time.

Thanks so much for your question. Yes, I believe that actual consumer reviews about your dealership are important and will be even more so in the future. I also think that they will help SRP to VDP conversions, particularly if the third-party classified advertising sites features or links to such reviews.

Thanks for your question and stay in touch.

Dale

Thank you for your answer. How would you encourage a team who isn't used to pushing reviews online? Contact solid customers or ask sales to ask new customers to review? Incentives to each? Service seems like the best option? Thanks again

I’m really not sure about best practice for getting positive reviews on-line. Perhaps some of our other blog visitors can share their best practices.

One thing I would say however, and that is that I would not offer incentives to customers of positive reviews. It’s OK to ask, but I would not offer outright incentives to do so. You might want to reward sales or service personnel for positive reviews; however I would advise that you stop there with incentives.

Thanks,

Dale

Dale,
I'm currently in the process of reading your book and I am finding all the information very useful and helpful. I have been in the business for 2.5 years and I was just promoted head manager of the used car department at a toyota store in PA that sells 75 cars a month with an inventory of 85-100. My GM wants us to sell 100 cars/month while not increasing inventory. Is this possible? Also, do you know or have any good microsoft excel programs that you have obtained throughout your career that help manage retail/wholesale inventory? Finally, how do you calculate ROI?? (dumb question????)

Chris,

Congratulations on your promotion. It is not only possible to sell 100 units with 85-100 on the ground, but it is common among dealers that subscribe to the Velocity Method of Management. In fact, today, I could show you a thousand of dealerships that consistently sell 150 retail per month with only 100 on the ground at any given time.

Such performances however require a deep understanding of Velocity methodology and stellar execution and discipline. From an ROI perspective, I think the best way to measure return on investment is to compare your total used vehicle gross profit (front, back and reconditioning) relative to your average monthly inventory investment.

Finally, regarding your question on spreadsheets, I’ve made my life’s work developing systems and tools to achieve high ROI Velocity results. vAuto is what I believe to be a best-of-breed system and tools for achieving Velocity success. If you haven’t seen the system, and would like to do so, please send me an email and I’ll have one of our product specialists contact you. Please stay in touch and let me know how you’re doing.

Thanks,
Dale

Hello Dale,

If this isn't too personal.  I'm interested in how you first acquired the vision for the company.  From your bio, it doesn't mention any technical training.  How were you able to create the innovative digital tools that your company offers?  Did you write the software or hired others to do it.  I'm a recent graduate and I'm interested in learning more about entrepreneurship. 

Thanks

Don,

Thanks for the question. Success is seldom a singular effort. Previously I was involved in a young start-up company in Austin, Texas called Digital Motor Works (DMi). Ultimately, we sold that company to ADP Corporation. During those years I learned the automotive retail technology landscape, but more importantly, had the unique privilege of working with a team of the best automotive data developers on the planet. With our success, we became close, like a band of musicians that know how to improvise and jam.

Later on when I started vAuto, I was able to put the band back together and once again reunite with the development team in Austin, TX, As well as many of our former high-impact management contributors. I also had incredible fortune of reuniting with Michael Chiovari, my former comptroller from my dealership. Michael is a tech wiz, but also has the unique ability to relate to people, specifically those in dealerships. Reunited without needing to go through the usual trials, tribulations and organizational dysfunctions, we once again made incredible music. So the beat goes.

Respectfully,

Dale

Hi Dale! Working with an under performing dealer. What are some cost effective (free) ways for a dealer to increase their SRP to VDP ratio?

TC,

Thanks for the question. It’s actually hard for me to think of any ways to increase the SRP to VDP ratio that aren’t free. Basically, it’s just about how you merchandise the vehicle on the SRP page. Specifically, the selection of the most stellar thumbnail photo, the number of photos that you say are available on the VDP page, the price, and the quality of the seller’s notes. There is obviously a lot of nuance in doing each of these 4 items, so I would definitely recommend that you draw on the expertise of the representative from that site. If you’re not able to get the support you need, give me a call and I’ll make sure that you get it. I hope this helps.

Thanks,

Dale

Hi Dale!

Just sent an email to Barbara in the marketing department at vAuto asking this same question before I found this method of contact directly to you. Who are the best US companies with national coverage for installing auto security systems? Hard to find this information from the UK and after looking at the vAuto website, which I found through your Twitter page, I felt that if you don't know, no one would.

Thanks - Andy

Andy,

Thanks for your note. The automotive security business in the US has steadily changed over the past decade. As electronic anti-theft mechanisms have been built into vehicles by the manufacturers, the after-market installed products have steadily dwindled. This trend has been hastened by GPS tracking devices that are now also standard or optional equipment in a growing number of vehicles. For example, General Motors On-Star is a service that can remotely lock, unlock, arm, disarm and track the physical location of any vehicle. Combined with a computer chipped key system, there is little room for after-market providers.

Even prior to this move to OEM electronic security, the automotive security after-market industry was highly fragmented. There was a dearth of manufactured mechanical devices installed by local agents. For a brief period of time there was a company called LoJack that looked like it would emerge as a national provider of security and tracking systems. Although this company is still around, I think that their value proposition has been largely eclipsed by the OEM systems described above. This new electronic OEM security landscape is why I think it’s been difficult for you to identify a community of prominent national providers.

Hope this helps.

Dale

Dale,

If a client is spending $1300 a month on a website like Autotrader.com what would be a good amount of VDP's if they have an average of 50 vehics?

Rebecca,

There is simply not enough information for anyone to properly answer this question. How many VDPs a dealer gets has much less to do with how much money they spend, than how they spend it, how they merchandise, what inventory they stock and how competitive is their market. Dealers often labor under the false impression that because they wrote and sent a large check to AutoTrader or Cars.com, they have done their part and now it’s time for the site to deliver. As I often say that when a dealer writes such a check, all they’re doing is paying to play in the used car, on-line, classified advertising arena. If you don’t know the rules of the game, or if you’re not good at playing by the rules, no amount of money can return certain results.

Dale

Hi Dale,
I've been using vAuto for 3 months now and absolutely love it! How close are you to coming out with a BlackBerry app? Thanks!

Nick,

Thanks so much for your business and note. I wish I had better news for you, we do not currently have plans for a Blackberry version of the application. As you’re probably painfully aware, Blackberry applications lag far behind ones for Apple and Android. This is because historically, the Blackberry operating system has not been very friendly to the internet. Its primary focus has been email communications, where it has really excelled. Creating and maintaining applications on multiple level platforms is very time intensive and given the present landscape of users is not presently on our road map. I hope this news doesn’t discourage your use of vAuto, if it does, I’d be happy to purchase an Android or Apple device for your use.

Thanks,
Dale

Hi Dale,
I have been working with you guys for over 2+years now. Mike and I are on a first name basis now due to this. Quite a dynamic and progressive guy. I have requested improvements and changes that have been implemented by your staff to help all dealers. Years before Vauto I wrote a plan that held the used car department as accountable to all other departments. The status qou despises this... Why , because they aren't held accountable...plain and simple. Most of them love to work their own hours and dictate what cars are worth while at the same time paying stupid money at the auctions. Call me crazy but you try to trade a car at rough book and the same Used car manager pays clean or extra clean at the sale for the same car. It is a travesty and so old school that dealers must wake up. So many buy Vauto as a quick fix when they must know they must look at ALL the analytics to truly use Vauto. My last REQUEST is that you digitize your books and have them available to all, whether IBooks, Kindle or Nook. A Small request since I have now made some not so happy with me but the truth nonetheless.
Peace and Godspeed, Bob Collins

Question for Dale:  Is there correlation between market days supply and number
of days it should take to sell at average market price?  If so, why. 
I not, why?

Mike,

Thanks for the question. First, let me explain how market day’s supply is calculated. It is a fraction, with a numerator being the number of current vehicles available for sale in the market, identical to the one in question. This number is divided by the denominator, which is the average daily retail sales rate over the past 45 days of that same vehicle in that market. In other words, if a particular vehicle had 10 available for sale in the market and they were selling at 1 a day retail over the past 45 days, you would divide the 10 by 1 and have a 10 market day’s supply.

Another way of looking at it is if no new ones came into the market like the one in question, but they only continue to sell retail at the current rate, in 10 days they would all be gone.

I don’t think that it would be reasonable to assume that a vehicle priced at average would take 10 days to sell. First, this is not the meaning of the calculation and second, there’s so many factors that affect a vehicle’s sales velocity other than price. It would be too simplistic to assume that a vehicle will sell in any given period of time, at a given price. Remember that these are used cars and they need to be merchandised properly. It is only when proper pricing is combined with proper merchandising and proper sales technique that a vehicle should be expected to transact.

Dale

Dale:  Will you be doing any training or putting on any courses at any conferences in the near future?  I've got some new managers that I want to have hear you speak in person.  I went to your class at the Digital Dealer Conference in Orlando and it was amazing.  I know you're busy running a business, but it sure is nice to hear from you in person every now and then!

Matt,

Thanks so much for your note. Unfortunately I will not be at Digital Dealer or the Driving Sales conferences next month. My middle son Alex is studying in Vienna for his first semester of Junior year and we’ll be going over there to visit with him. It really hurts to miss the conferences, as I look forward to seeing everyone. I’m also in the midst of writing my third book, so I’ve tried to keep my travel down just a bit. I will however, be a speaker at the NADA 2012 conference in Las Vegas. In the meantime however, I would be happy to host any of your managers for a session in Chicago. Let me know if this is something that you’d like to pursue and we’ll make the arrangements. Please stay in touch and let me know how you’re doing.

Respectfully,

Dale

You mentioned you'd be speaking at NADA 2012.  I'm just booking now and want to make sure I don't miss you, any idea what day/time?

Adam,

Thank you. My speaking times are as follows:
Friday, February 3, 12:15pm
Sunday, February 5, 8:30am (this session will be internationally translated) and 2:15pm
Monday, February 6, 8:30am.

Dale

Dale,

I heard you mention a certain ratio of VDP's to a sales.  Is it .0085%?

Dave,
Thanks for the question. Yes, that’s very close to the .008 factor that I use, however you must be very, very careful about the use of factor. First, it is really only a very rough guide that I and others use to equate VDPs to SRPs. It is not so exact that you can use it with competence against any dealer’s VDPs to estimate their used retail sales. If you were however to take the VDPs of 50+ dealerships, add them up, apply the factor, you would be fairly close to their combined used retail sales. The real important point here, is not so much the factor, but the fact that there is a mathematical relationship that generally exists between the number of VDPs and the number of used retail sales. In other words, the more VDPs, the more sales. Another benchmark that I commonly look to is the attainment of 10,000 VDPs. Generally speaking, you’d be hard pressed to find a dealership that sells more than 100 used retail without generating at least 10,000 VDPs. This doesn’t necessarily mean that if a dealership doesn’t generate 10,-000 VPDs it will sell 100 used retail because you still have to have a good sales process. Let me know if this helps.

Dale

Dale,
I remember visiting your booth at a NADA convention, maybe 5-6 year ago.  I was blown away by your presentation and waited afterwards to ask you about your product offering in Canada.  You quickly brushed me off once you realized I  was from Canada and explained that you didn't have the source of information in Canada to make your program run.  It was kind of funny at the time.  But I never forgot about the presentation and in fact when I got home from the convention, I told my wife about your program as my highlight of the trip.
Well it only took 6 years and your finally here!  As soon as I found out you (vAuto) was available in Canada, I signed up.  Waiting for setup to get started.  Looking forward to it....
Jerry Pfeil
Grey Motors Mazda

Jerry,

Thanks so much for your note and I’m so sorry if you felt that I gave you a “brush off”. I honestly try, and in fact do spend a lot of time with dealers and managers with whom I have no business relationship. I recognize that this world is round and surprisingly small, so again, please accept my belated apology. On a happier note, yes, we are now in Canada and wow, what a journey it was. Our Canadian version of vAuto is getting stronger every day as we create new compelling features based on your unique needs.

I want to remind you and others that the vAuto system is much more than software, first and foremost it’s a strategy or methodology of management. As you probably know, I’ve written two books on this subject, and I would definitely recommend reading, if you haven’t done so already, Velocity 2.0: Paint, Pixels and Profitability. The book is available on Amazon, or I’d be happy to send you a copy if you provide me with your mailing address. If you are able to adopt the strategy of Velocity and use the software properly, the results for your dealership are significant. You will come to learn much from our Canadian based performance managers. These individuals will engage with you and your staff on a regular basis to ensure that you’re getting the improvement that you deserve. Please keep me in the loop as you proceed on the Velocity journey and let me know if I can be of personal assistance. Again, thank you for your patience and understanding.

Respectfully,

Dale

Dale,
That was quick response!  No apology necessary.  You had a line-up of people that wanted to have a word with you after your presentation and I wasn't at all offended by your polite "brush off".  I am very excited to finally experience your software.  I would also like to take you up on your offer of sending me a copy of your book.  Please feel free to send it to my attention, to the dealership below. 
THANKS!
Jerry Pfeil
Grey Motors Mazda 
RR#5 P. O. Box 790
Owen Sound ON
N4k 5W9

Jerry,

Thanks again, the book is on its way. Stay in touch.

Dale

Dale,
I'm experiencing issues with vAuto due to connectivity issues with Reynolds. Is there a plan in motion and what is the time frame for a resolution? You know I love your program and have been a customer for a long time, but I need an operational tool.
Regards,
Tom Cole
Acura Columbus

Tom,

Thank you. As we just discussed on the phone, we are pursuing several different solution alternatives. We’re all in this together, please have confidence. Together we’ll work through it. I’ll be in touch with you tomorrow with more information.

Respectfully,

Dale

are your books available in audio? jkitzmil@aol.com

Hey John,

If I’m correct, I think your dad is Jerry. If so, please give him my regards.

Yes the book is available on Audio CD at Amazon.com. Please let me know if you need additional assistance.

Dale

Dale,
Have you considered using this technology in the Real Estate field ? If so I would enjoy talking to you.

Thanks,

Jim,

Thanks so much for your question. At the moment, we have our hands full serving the retail automotive market place. If you have a suggestion or idea, send me some information and I’ll keep it in my file for future consideration.

Respectfully,

Dale

Dale,
Could you please have Tom Murphy do another webinar this month on defending price? Last month it was great. I would like to have all of our sales people, hear this information.

Thanks,
Greg

Hi Dale,

I would be interested in your comments on the below questions:
Do you have any experience or case studies of applying the Velocity model within the UK or European franchised network where inventory of used cars average 70 and start from as little as 30 units.

Do you believe there is a critical mass below which Velocity model may stall? if so what do you see as the limiting factor and potential solutions. Most of your case studies are with dealers with industrialised reconditioning (eg in house detailing depts) beyond the scale of smaller operators.

Would be intersted in your thoughts, expereinces or examples of Velocity in sub 100 unit sites.

Jason,

First, please accept my apology for a much delayed response. Things have been really crazy (all good) with the AutoTrader/Manheim integration. If you’ve been following the US automotive news, you’ll also note that we purchased another company called VinSolutions. Suffice it to say, there’s no shortage of exciting work to be done.

I do not have any direct experience with the UK market. This is something that I hope to acquire in the near future as we consider further international expansion.

I can tell you with certainty however, that the size of a dealership does not affect the Velocity model in any way other than positively. There’s hardly a day that goes by that I don’t state that “small is the new big”. In other words, I have learned that smaller dealerships have an advantage with the Velocity model for several reasons. First, the internet is ubiquitous and has changed the shopping behavior for car buyers in every market. Smaller markets often have not been exposed to the same degree of competitive pricing as larger ones and therefore, small market dealers that adopt the Velocity approach often get much more than their share of business until their counterparts figure it out as well. Second, smaller dealers often have lower costs, which allow them to price even more competitively than their larger counterparts.

Third, smaller dealers can often make the transition from traditional to Velocity Management faster and with less pain. This is because typically, the owner/operator is closer to the action and therefore there’s more executive fiat to drive the transition. This is also typically true because smaller inventories contain less absolute dollars of negative equity, the stuff that needs to be dealt with in the early painful phase of the transition.

One of the best examples of how well Velocity Management works for a small store in a small market is Woody Butts Chevrolet. This dealership is in a town of 3,500 and a county of 11,000 people. Under traditional used car management philosophy, Woody Butts Chevrolet sold fewer than 50 used units per month. Today, this same dealership using Velocity Management sells consistently 100 to 150 retail per month. To be sure, Woody Butts would tell you that the transition wasn’t easy, but they’ll never go back to the old way of doing business. Today, I have experience with hundreds of similarly small dealerships that are or in the process of transforming themselves into regional used car sales outlets.

Another example is Haldimand Motors in Ontario, Canada. The owner, John Edelman discovered the Velocity Method of Management long before there was ever a company called vAuto. John sells approximately 150 to 300 used vehicles per month without a franchise in a very small town.

I hope that this explanation serves as assurance that the Velocity Method of Management works anywhere so long as the internet exists along with a desire on the part of management to adopt new practices and processes tailored to the new efficient used car market.

Dale

Jason,

Thank you so much for the thoughtful questions. I’m traveling today and your questions merit thoughtful responses. To this end, please allow me just a few days and I will respond in full. Again, thank you.
Dale

Dale,

With your extensive knowledge of the automotive industry and auto sales, what advice would you offer to sales people that work at companies such as autotrader.com or cars.com to help establish business with dealers who are currently not using online platforms? With the majority of your message pertaining to dealerships that are currently online, what questions would you pose to gain business and how would you handle objections from those who have not taken that step?

Rick,

Thanks for the thoughtful questions. First, let there be no doubt that the Cars.com and AutoTrader products work, and work very well. What could possibly not work when sites like these bring together millions of buyers and sellers? Having said this however, that doesn't mean that these sites will work equally well for every dealer. What I have come to understand very well is that sites like Cars.com and AutoTrader will work wonders if
and when the dealer understands their responsibility and executes those responsibilities effectively.

Now specifically to your question about what I would say to a dealer that is not using either one of these sites. I would tell the dealer that I wouldn't even think about taking their money until and unless they recognize that the Internet holds the key to most car buyers and until the dealership demonstrates a commitment to learning the requirements to be successful. I suppose that this is somewhat of a takeaway approach, but nevertheless it is the right thing to do.

Dealers are all too willing to believe that if they hand over their money to
AutoTrader or Cars.com that they deserve to have results. As you and I both
know this is just not true. And consequently it would be a mistake for you
to let any dealer venture into this realm with such an expectation. So the
real question is whether you have a dealer with the mindset to learn. If
you don't, I would not spend a lot of time there. Perhaps, you might want
to give them a copy of my book Velocity 2.0: Paint, Pixels and
Profitability or alternatively I would be happy to have a conversation with
the dealer on your behalf for the purpose of trying to stimulate a genuine
interest to learn.

If a dealer demonstrates a genuine willingness to learn what it takes to be
successful, then, before accepting their money I would spend as much time as
necessary to ensure that they have proper knowledge and processes in place
including but not limited to:

- Realistic pricing strategy
- Quality photographs
- Quality descriptions
- Efficient process to push vehicles and photos out
- Basic understanding of SRP/VDP and conversion metrics and benchmarks

If you as the rep were willing to work with the dealer to ensure proficiency
in these areas before you except their money chances are they would have
success on the site, and most importantly respect you as a trusted advisor.
Achieving the status of a trusted advisor should be the goal of anyone
selling a product or service to a dealership. To do this, you must always
put their interests first, and if you do they will reward you with loyalty
and respect.

I hope this helps.

Dale

Dale,

I have received a number of calls in the past few weeks about variable pricing on internal and detail labor. Would it be possible to collect data from 8 to 10 dealers to look at where they are having success? The data that I would need is each dealers internal labor rate, detail rate if that work is done internally, what they pay for details if they are done externally, used car volume and technician cost per hour. With our rapidly increasing volume we are ready to open our "used car factory" in a few weeks. Our objective is to increase our service and detail gross, reduce the time it takes to get vehicles online, increase our sales volume, decrease our reconditioning cost and increase our velocity all at the same time...We will be using a non-traditional business model with an off site location and a dedicated staff to complete the work. With my service background I have always protected the traditional dealership full retail pricing on internal work theory. However, I think I may have found a way to decrease our reconditioning cost per vehicle and increase our service gross at the same time by using variable labor pricing and reduced labor costs.

Thanks,

Keith

Keith-I see you are building a "used car factory" and have very aggressive goals about speeding up your recon so I recommend you contact Dennis McGinn at rapidrecon.com 650-996-9551 and ask him to walk you thru how Adam Simms has improved both sunnyvale and his new Ford store! All the best, Bill.

Keith,

I really appreciate your thoughtful approach in an attempt to create greater efficiency in the reconditioning process. I would like to invite responses to Keith's questions. I'll keep your information confidential and once compiled, with the permission of all participants I'll circulate a composite spreadsheet for review. Please send your responses directly to my email (dpollak@vauto.com) with the subject title Reconditioning Efficiencies.

Thanks in advance

Dale

Dale,

Let me take the opportunity to thank you for creating and refining the VAuto product. We implemented the system several months ago into our auction business with the anticipation that we could scale more efficiently. I can now report that the system has exceeded our expectations and is used constantly throughout our organization. There are many features that are tremendously useful but the one I appreciate the most is "Transparency". In the business for over 30 years in many different capacities is great, but how do the stakeholders know you've got it down? With your product they have a complete understanding of everything we do on the supply side. Thank you!

Scott,

Thanks so much for the positive feedback. I would really like to learn more about what IronPlanet does and how vAuto helps serve the business. Look forward to more.

Dale

It is an interesting evolution from both IronPlanet's perspective and my own. I started trading highline vehicles electronically in 1988 via the phone line. I now own that company and needed a trusted auction platform to sell the members vehicles to the public. Having 7 years of success using the IronPlanet construction equipment auction with another business I own prompted me to contact the CEO. After a few months of discussions and negotiations we agreed that the automotive market had a place for their product. I am not aware of any other retail auctions online that provide guarantees on the vehicle, the title, and of course the money! IronPlanet Motors is the most exciting project I have had the pleasure of working on in my career, so far. And I have been involved in some crazy stuff!

Scott,

Fascinating. You look like a true entrepreneur. Every day I'm more convinced that this business is headed to an e-commerce environment.

Stop and think about it for a minute. Today, there's barely enough profit in the sale of new and used vehicles to support a quality sales staff. Gen Y buyers would prefer not to deal with the human at all if possible, and now technology enables every aspect of the transaction to be automated. This includes research, finding the specific vehicle, taking the trade and financing.

Dale

Dale,

I couldn't agree more. There is less price separation at the wholesale auction today than ever. I personally believe it all boils down to trust. Now matter the opportunity or "Deal" available if you can't trust the transaction and every related component there simply is no deal. Within each of the elements that we agree on there is a specific need for the parties to have a positive experience. As many governments are discovering globally, you just cannot hide the ugly stuff and get away with it today! And that is a great thing in my opinion.

Scott

HOW MANY LEASE ANRENTALS ARE LEFT TO COME INTO MARKET THIS SUMMER

Thanks for the question. I'm not sure, but I'm scheduled to have a discussion with Tom Webb, Manheim's chief economist later next week, and I'll ask the question and reply.

Thanks again,

Dale

Dale,
Thank you for the opportunity to ski with you here at Big Sky. I had a wonderful afternoon with you and Pepe. I was intrigued when you commented about your company and decided to research a bit. Your zest for skiing and pure enjoyment of the day is obviously in tune with your sucess in life. It was a privelage to spend a very special day.

Michael Thomas
Big Sky, Montana

Michael,

The afternoon with you and Pepe was nothing short of amazing. I found something out about my own personal limit, and that's an experience that money can't buy. I also have to honestly tell you that I'm pretty sore today, and taking it a lot easier. Please send me all your contact information, I'd like to stay in touch. Big Sky and Eagle Mount rock. My email address is dpollak@vauto.com.

Dale

Is Velocity 2.0 available as an E-Book for Kindle etc. or will it be soon?

Adam,

Velocity 2.0's audio version is only available on CD. You can order it through Amazon.com.

Thanks,

Dale

Dale, I have always heard that you have said an average dealer could expect to convert his VDPs into sales by using this formula and chekcing it in the f&I office. the formula I have heard is (VDPs *.004) which in a real world senario woudl be 2000-*.004 = 8 slaes can be expected on those VDPs the dealers have. Can you confim or deny?

John,

I have to deny. The .004 should actually be .008. Having said this however, it is only directionally predictive. In other words, if you apply it to any given dealer it may or may not work. However, when applied across a large group of dealers, it becomes very accurate. For this reason I do not offer the formula to dealers for the purpose of guidance, but use it only to demonstrate that there is in fact a correlation between the number of VDPs generated and the number of cars sold. Please be mindful of this fact.

Thank you,
Dale

Sent you an e-mail. Thought I'd post it here too.

Dale,
What percentage of your dealers list their raw inventory online?
And, is this something that you recommend?
Sincerely,
Dana W. Pratt III
E-Business Director
Bill Marsh Automotive Group
1621 S. Garfield Rd.
Traverse City, MI 49686

Dana,



When you say “raw” inventory, I know what it means in your world, but I’m not sure what it means for others. Most dealerships have processes to get every car on-line within some period of time after its acquisition. The obvious exception being cars that are deemed to be wholesale from the start. Please clarify and perhaps I could provide more insight.

Dale

Hi Dale ,So happy to see you doing well. Joe Gellenbeck

Does Velocity 2.0 come in Spanish or audio CD?

Rick,

Velocity 2.0 is only available in English. However, you can order the audio CD from Amazon.com. It appears to be currently out of stock, but here is the link: http://budurl.com/9tw6 Thank you,

Dale

Dale, My name is Rodney Douglas. The car dealership I work at is moving toward adopting a velocity based program to manage our used inventory. I have been chosen to spear head the operation. After reading your second book I realized that your knowledge of our constantly changing industry will be vital to my success in this new postion! I am trying to fill my head with as much info as I can on the process you seem to have perfected. Obviously, a lot of things need to change when adopting this new philosaphy, and I was wondering what you thought would be a good starting point? Thank you for all your hard work on the subject, I firmly believe your ideas are cutting edge and look forward to learning as much as I can from you in the future.

Thanks for your time.

Rodney,

Thanks for your note. Reading Velocity 2.0 is the first of many steps that needs to be taken in order to experience the Velocity journey. It's equally as critical to have everyone else in the dealership read, understand and agree as well. You'll need some software, and most importantly someone that can guide you through the various phases of the journey. This is something that we do at vAuto, however there are also other tools and many qualified consultants. I would recommend that you talk to two or three different software solution providers and/or industry consultants. Please let me know if I can be of additional assistance.

Thanks for your note.

Dale

Dale, I keep getting this in the sales meetings, "what are reasons to buy today", I have been brain storming, and simply cant come up with any good word tracks. Been selling cars for 4 years, know the steps, and should have the answer, but dont. Please help with some reasons to buy today...

Great question. Let's open this up to others in the velocity community.

Dale

Dale,
How effective is a good internet marketing campaign for a car dealership? Do Pay Per Click ads and Seo help a Dealership enough for the trouble? What is your experience and knowledge on the subject?

John,

Thanks for your question. I don't consider myself an expert in the area of SEO or Pay Per Click, although I'm trying to learn as much as I can on these subjects.

My general belief has been and continues to be that on-line classified advertising is the most effective internet merchandising medium for used cars. I'm much less sure about this fact for new cars. I suspect that SEO and Pay Per Click may work better for new cars.

I think the reason for this difference has to do with the say that people shop for used versus used cars. When it comes to used cars, I think it's first about finding the right car and then the best deal. Alternatively, when it comes to new cars, I think it's first about the deal and then about finding the place to buy it. On-line classified advertising is more friendly to the former than the latter approach.

I'd be curious as to the thoughts from others on this subject.
Dale

In response to John's question, I would agree that the classified outlets are the first best way to merchandise your used inventory online.

However, though I'm no expert either, SEO and PPC have their place and can definitely be "worth the trouble" The mantra needs to be "it's about the inventory", so with either PPC or SEO the focus needs to be on the inventory itself and the SEO efforts tied to how people search. For example, if you are in Asheville, NC and someone types in "used Honda Asheville" you want a page presented high in the search results that lists your used Honda inventory -- not your dealership's homepage or any other page on your site. If the search is even more specific, like "Used Chevrolet Malibu Asheville" you want them directed right to the detailed inventory page for the Malibu you have in stock.

How consumers actually search speaks to the popularity of the classified sites. Consumers have been taught that they can visit the classified sites and, without regard to the dealer or the brands the dealership sells, search for their desired year, make and model and have the available vehicles presented to them. Only then do they begin to filter through who they would consider buying from (hence the importance of properly merchandising your inventory within those sites --- but that's another topic)

So, you can be effective with SEO and PPC. The results depend on knowing how people search and making sure you have the proper optimization of your detailed inventory pages --- and that's where the experts come in. I do have a recommendation for a website provider with stellar SEO and PPC capabilities that I have worked with recently if you would like to reach me.

Dale,
I was in your GM CUV Workshop in Los Angeles a few weeks ago. Near the end of you presentation you mentioned a dealer who averages $1450 a car and turns his inventory 15 times. Could you please let me know the name of the dealership. One of the dealerships at the meeting asked me this questions and I would like to respond. Thanks, Frank w Sandy Corp.

Frank,

Thanks for your question. I believe the group that I was referring to is the Bill Marsh Group in Northern Michigan. They have a Buick/GMC, Chrysler/Dodge, Hyundai, and independent used car operations. Today, I’m pleased to tell you that they are not alone with this type of performance. I can provide many other references in addition to Bill Marsh, including Keith Kocourek in Wausau, Wisconsin, the Germain Group in Columbus, Ohio, Sam Swope in Louisville, Kentucky, and the list goes on and on. Let me know if this helps.

Thanks,

Dale

Ok I am wearing Murphy out as we speak.

Are wqe closer on the android app?

Jason,

Thanks, it is here now! Please contact your vAuto Performance Manager. We haven’t officially announced it because we are just in a soft launch mode. We are making sure there are no bugs before we start blowing our horn. Thanks for your patience.

Dale

I am wearing Murphy out

Good!!

Dale Pollak
Founder
vAuto Inc.
2221 Camden Court, Suite 210
Oak Brook, IL 60523
630-343-9016
dpollak@vauto.com
www.vauto.com
http://dalepollak.com
www.twitter.com/vauto
facebook

Hello Dale,
I am interested in getting some information on . We are interested in purchasing vehicles that have been repossessed or returned leases before they are sent to the auction . We are interested in very large quantities of vehicles. Please point me in the direction of a person I can contact in regard to such a request.

Edward,

Thanks for your note. I'm not sure that I know anything that you don't. Are you looking to export?

Dale

Dale,

I recently received an email post from Tommy Gibbs where he proposes changing the way we look at the UC recon process from an internal profit model to a line item expense model which is what Carmax uses. This seems to be at odds with your philosophy of increasing bottom line profit using recon as part of the 'transactional profit'. Could you help me understand the difference? Thanks Steve Gerhartz

The retail recon argument was based on the idea that dealers could mark a car up without regard tor market forces. The Internet has changed all that. Consequently, the idea that dealers should charge their own internal departments higher prices than they would charge a large fleet customer seems hopelessly counter productive.

I make my argument in WARD's in April.

http://wardsdealer.com/ar/auto_downside_recon_retail/index.html

Please understand that this is NOT a suggestion to do pre-owned recon at net. Ultimately a dealer has to make his own choices.

Steve,

Thanks for your note. Aren't we really just talking about putting profit in one pocket versus another? My point is really that charging used cars retail for reconditioning is a form of a pack, and a pack is really nothing more than a tax, and taxes inhibit commerce. So, I'm less concerned about which pocket you put it in, and more concerned that you only burden the vehicle with an amount of recondition that represents market rates. Regardless of whether you make it a line item or a market rate internal service charge, you'll remain competitive for the purpose of acquisition and pricing. Does this make sense to you?

Dale

Dale I was just recently made aware of your company while on a trip with MAZDA NORTH AMERICA to Ireland. I currently have a Mazda dealership with a 12% market share. However in saying that I realize that the future of my dealership is in my used vehicle operation. What all my dealer friends told me about you is exactly what I have been saying for the last two years. I just could not put it all together.I ordered both books today,but would love to see a seminar. I also realize that your system is not in Canada yet. Will it be coming to CANADA soon. Thank you very much.

Mike,

Wow, 12% market share, congratulations. That's really a great job. Yes, we will be coming to Canada soon however, at the moment I can not disclose the details. Please send me an email with your contact information and we'll notify you soon regarding details and timing. In the meantime, please continue your education on the Velocity Method of Management as it will serve you well when we join you in the near future.

Thanks again,

Dale (dpollak@vauto.com)

Dale,
I'm considering pay plans for salespeople and looking at the surplus of College Grads out there right now. My question is: Have you seen any sales pay plans that are Salary Plus Commission and bonus that would attract some of that talent?

Dale,
Thank you for your quick reply. We are in the process of changing our selling strategy to the direction you mentioned and currently using Real Deal, vAuto, True Car and Trade in Marketplace.
We are experiencing some resistance from our tenured salespeople toward using this strategy, but I am positive they will realize the potential in a short amount of time.

Tom,

Thanks. The resistance from the tenured crew is not surprising. Stick with your program, it's the right way to go. Let me know what we can do to assist you.

Thanks again,

Dale

Tom,

Thank you for your question. First, I would encourage anyone else to please weigh in with your suggestions.

Regarding the type of pay programs that might appeal to college grads, let's first examine why most college grads today don't consider a profession in automobile sales. I contend that the most fundamental reason for this fact is that most educated young people don't want to engage in a profession that requires traditional negotiation. These kids today come from a culture that values collaboration and mutual benefit versus negotiation that inevitably creates a perception of either winning or losing on the part of the participants. Given this reality, I would offer a few suggestions. First, consider advertising for a product specialist or marketing representative. Specify that the job does not entail traditional negotiations. Rather than expecting the applicant to negotiate, they are expected to become thoroughly versed on product specifications and highly skilled in written and verbal communications. Further, keep in mind kids coming out of school today don't want to work 60-80 hours as we once did, therefore a 40-50 hour work week with a flexible schedules and good benefits will likely hit the mark.

With respect to the actual commission structure, I would strongly recommend a selling environment where documentation replaces negotiation. In order to draw customers today, vehicles need to be priced right, and that precludes the opportunity to do much negotiation. You have to use tools like www.RealDeal.com to skillfully demonstrate to shoppers while although your vehicle is not the lowest price in the market, it represents the best value in the market. To facilitate this type of selling, I would recommend a livable base wage with a small to moderate commission structure. There are two necessary components to the commission structure. The first is that a full commission will be paid only when the vehicle's transaction price equals its asking price. To the extent that the vehicle's transaction price has to be discounted, then so, too is the commission. The second aspect is that the commission amount per sale goes up based on volume.

The certainty of a livable wage with decent benefits, acceptable hours and desirable work environment combined with this incentive program will allow you to draw a large quantity of new-breed candidates that will be highly motivated to market vehicles with a positive image.

Hope this helps.

Dale

Dale,
Generally speaking this is the time of year when there is a pullback in wholesale pricing of vehicles. More specifically program cars. The volume of program cars is increasing lately at auctions and seems to be the short term trend. What are your thoughts of volume/bulk purchasing? We are tossing around the idea (by our standards) of making a significant purchase of around 100-125 program cars. This would of course be an attempt to hedge against a future higher market. Speculative for sure, but history usually dictates that prices will climb after a short term decrease. Currently we have 3 stores that sell around 160 used combined per month. Does this go against the velocity philosophy? Just looking for a bit of input from you or John or other dealers who have either tried and failed or tried and succeeded with this idea.
Thanks
Scott Dibble
Dahl Automotive

Scott,

Thank you for the thoughtful question. First, I would want to know that those vehicles that comprise the bulk purchase are ones that have relatively low market day’s supplies. Believe me, if they do not, you don’t need them under any circumstances.

If they are reasonably low market day’s supply cars (i.e., 60-75 MDS), then what you’re proposing is a speculative purchase. To be clear, the only sensible justification for buying cars is to regulate turn. When/if your retail turn goes beyond 17 or 18 times per year, then you need cars. This rule of thumb will always keep you from getting in trouble.

I suspect however that this proposed purchase isn’t being made to fit that model, but rather to capture a momentary opportunity. I guess I can endorse that subject to the above stated MDS limitation, providing you recognize that you are now acting as a speculator rather than a retailer. Speculators sometimes win for taking risk, but they also often get burned. Most dealerships today are not in a financial position to be on the wrong side of a bet. If however, you recognize your proposed purchase as one driven by speculation, and you’re prepared to accept the downside risk, then go for it.

Too often, however, dealers get confused between their role as a responsible retailer and the desire to be a speculator. To the extent that any dealer is going to speculate by making bulk purchases, they better be prepared to recognize a mistake and address it quickly. What I mean is that you should make a commitment before you buy about how long you’re willing to carry excess inventory and how much you’re prepared to lose should you go beyond that point. If you identified and planned for the downside risk, and you’re really prepared to accept it, then it’s probably OK to take a bold move once in a while. I would however do as much research up front by talking to the auction people and remarketing people in the industry that your wholesale supply and demand assumptions are correct. Any professional speculator thoroughly does their homework.

Dale

Dale,

Why do you not factor in price or payment ranges when assessing your stocking strategy.

Rocky,

Thanks so much for your question. You are right, price point and ultimately payments are significant stocking considerations. Discussing appropriate vehicle price points is something that vAuto Performance Managers routinely do when conducting meetings with our clients.

It is difficult, however to speak of any given price point as a target for the broad industry. Obviously the appropriate price point and consequential payments will vary according to the market and dealership brand profile. I think the only universal statement of truth regarding price points is that lower is better. Such vehicles tend to turn faster and present less depreciation.

Please let me know if I’ve addressed your concern.

Dale

DALE, WE ARE CURRENTLY HAVING A DISCUSSION REGARDING AVERAGE COST PER UNIT IN REGARDS TO STOCKING. WHAT DO YOU THINK IS THE BEST WAY TO DETERMINE THIS NUMBER. WE ARE USING THE STOCKING TOOL TO GIVE US SOME DIRECTION REGARDING PRICE POINTS. SHOULD THAT ALONE GUIDE OUR STOCKING OR SHOULD WE ATTEMPT TO GEAR OUR BUYING INTO A CERTAIN PRICE PER UNIT.

Phil,

Thank you so much for your question. Sorry for my late response, I’ve had a pretty hectic week. I’m not sure if you know it yet, but vAuto has just released a new feature called Knowledge Network. The purpose of the Knowledge Network is to allow a vAuto client to benchmark themselves against other dealers with respect to questions about what should certain numbers optimally look like. Average unit cost is one such metric. Moreover, you have an ability to compare yourself against only dealerships of your brand, size and other similar criteria. Importantly, you can also compare yourself against what we call top performing dealers, or even members of your 20 group.

Now, to address your question specifically, the answer has some dependency on your market and the brand identity of your dealership. For most dealerships, their brand identity is often shaped by their new car franchise. For a Nissan dealer, my feeling is that $12,000 - $13,000 unit cost is probably optimal. Depending on your neighborhood and other such factors however, there may be some exception to the rule. Again, the Knowledge Network will be an excellent resource to help guide you as you think about setting your performance metrics. Please free to get a hold of your performance manager, Steve Willis at swillis@vauto.com to become more acquainted with how our new tool works.

Dale

Dale,

Thanks for answering my question, and I agree that price and payment are important considerations. I was wondering why your tool and others do not seem to generate reports that identify these price and payment points and trends.

Rocky