Ever thought about what truly drives profit in the auto dealership business? Most people immediately think of selling cars right? WRONG.
Profit margins are dependent on your cost of acquisition and while there is not much you can do to increase the price/value of a vehicle you’re selling; there is a lot you can do to control the cost of acquisition.
It doesn't matter what you sell a car for if you overpaid for it, or if it sat on your lot for too long. What matters is what you paid to acquire that piece of inventory.
And right now our dealers are attending auctions less and less because they understand that the overpriced, generic vehicles at the auction are eating into their profits and their future revenue.
Acquiring vehicles directly from consumers on sites like Craigslist and Facebook marketplace can generate up to 4 additional sources of revenue.
Here’s what you need to know to capitalize on locally listed deals and stop depending so much on external sources like auctions or walk-ins.
The Winning Mindset for Buying Cars Off the Street
Yes, the private party is a goldmine, yes you can buy dozens of cars a month, and yes you can add millions of gross. But it's not a cakewalk. It requires a lot of work.
Buying cars should be in its own dedicated department. The best way to think about it is your sales department in reverse. You need to allocate resources just like you would other revenue-generating streams in your business.
We wouldn't say it's hard or challenging, we’re not splitting atoms here. The bottom line is that it just takes work. Work in the form of research, data analysis, outreach, internal team collaboration & communication.
Read this carefully:
It's a numbers game, just like anything else in our industry and most businesses in life. The more outreach and follow-up you do, the more people you’ll get a hold of, the more vet sheets you’ll get, the more offers you make, the more cars that I'll acquire.
To be successful you need to be playing offense and not defense. This isn't the old days anymore, buyers and sellers are smarter than they’ve ever been before. If you want to compete you need to be aggressive.
Some tools help automate and streamline alot of the manual steps to buying FSBO vehicles. But you have to meet us halfway. Anyone who tells you their software or system can automate the entire buying process is lying to you. We know EXACTLY what it takes to be successful and we can promise that we will always be transparent and realistic with you.
Crafting Your Strategy: Practical Insights
Again…The real money is in buying the cars not selling them. Let's break down how to do that:
- Know Your Market: Keep your finger on the pulse. Understand what sells and what doesn't. Stay updated with the latest trends and adjust your strategy accordingly.
- Dedicated Team/Buyer: The highest performing dealers have at least one full-time buyer to focus purely on acquisitions. Train them, empower them, and watch them bring in those deals.
- Leverage Technology: Utilize dealer software to its fullest potential. Let it handle the data crunching and heavy lifting, so you can focus on the bigger picture.
- Communication is Key: Whether it's internal team collaboration or negotiating with sellers, effective communication makes all the difference. Private party car buying can also streamline this.
- Customer Relationships Come First: Be proactive in your outreach, but remember, a little charm goes a long way. It's about building relationships, not just closing deals.
- Follow-Up, Follow-Up, Follow-Up: Never underestimate the power of a well-timed follow-up. It can turn a maybe into a definite yes.
- Realistic Expectations: Set achievable goals. Understand that while technology helps, the human element is irreplaceable.
To read more about exactly what you need to get started check out one of our recent blogs: Private Party Acquisition: What You Need to Get Started
Why implement a Vehicle Acquisition Management Tool?
VETTX utilizes cutting-edge technology, including AI-driven data enrichment, automation, and machine learning to streamline the vehicle acquisition process. It aggregates listings from multiple online marketplaces, identifies potential leads, enriches data, and allows you to connect with sellers efficiently. Our platform guides you through each step, making it easy to source vehicles directly from private sellers.