Relatively New Used Car dealer in need of your help!~ I know, I know another one of these posts.

First off, just wanted to formally introduce myself and give a little bit of a background as to how I became a dealer.  My name is Murad and I am 28 years old residing in NYC.  I've operated my family's business of automotive repair for the past 13 years (yep, since I was a teenager I got into the line).  The family business of automotive repair has been with us since 1982 so I wanted to keep the legacy (so to say) going.  About 1 year ago I wanted to add another business to the automotive repair and decided to open a Used car lot on the same premise.  What encouraged me to do so were the numerous customers that just got fed up of spending money on their old vehicle(s) and decided it was time for something more reliable and then would leave and buy a second hand vehicle.  What would tick me off initially about other dealers was the "miscellanous fees" and fee's that I felt should not be there.  Just like my repair business, I wanted to get people away from the typical stereotype that all mechanics/dealers are crooks.  By all means, I'm not a saint but I just wanted to go the extra mile for the customer, yes even the difficult ones.  It took a while but it finally clicked that I should invest in my current car lot.  

As it sits today I can most definitely say I accomplished and learned a lot in my first year.  I think the most important factor was building a relationship with financing companies and today I have 4 prime banks and 1 subprime bank.  Personally, I think I did well for someone that normally keeps up to 10 vehicles on the lot but this year I've turned my focus to bigger things along with increased my responsibility (my business partner just left me).  I find myself wanting to understand the initial factors of 1). finding the right vehicle 2). Advertising efficiently.  I currently (like most) deal with Manheim and do not carry a big budget.  I really do not know how/where to advertise because of my limit of budget. I normally advertise on social media and craigslist with over 90% of my customers being those that are fed up of their previous vehicles on the repair side. 

I really need the experienced dealers to chime in and give me a few words of advice as to what drove your success? Advertisement? How do you know what is right to purchase from Manheim? I am focused on doubling the business this year but just feel that New car dealers make this tough with minimum down and low-interest rates and since I am now doing this alone I will have other expenses such as transportation of vehicle's (which my ex-business partner and I initially did ourselves). I am a One-man team, meaning, I am the sales-man, finance and delivery person.  I do it all myself including customer-service for my repair facility.  If you can kindly spare a few minutes to share advise, I would appreciate it! Thanks!

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Cutting the staff in half and doubling the business is a tall order. I advertise on Craigslist, have a website, a facebook page, carsoup.com and cargurus.com. Craigslist will likely be your best and cheapest source for leads. As for what to buy, that's tough and depends on your price point, it seems each lot has their own type of vehicles that work best.

Murad

You are in a very unique situation, and I mean that in the best way!  You have opened a new extension to your service business and actually have 30 years worth of existing customers!  You have regular customers that already trust you.  What a blessing for you.

First thing you need to do is get a GOOD computer system.  By "good", I mean a computer system that can keep track of all of your customers for you.  Who they are, how to get reach them, what they drive, and what they have done to it in the service department.  I don't know what system you use for the service side of your business.  I would recommend DealerClick.  I can get you the cell phone number for the President of DealerClick.  This is a low cost system that can also handle your service business.  It interfaces with Manheim and your banks as well.

Now you need to start combing through your database.  Look for customers that have spend a significant amount of money repairing their vehicles.  Look for customers that have owned their vehicles for 4 years or more.  Get on the phone and talk to these people.  Tell them that you can trade them out of their "2006 Impala" and into a "2012" Impala for $245 per month, TT&L Included.

Whatever you do Murad, do NOT try to compete with all of the bigger dealers in your area.  Beat them to the punch.  You are small, and that CAN be an advantage...as long as you don't try to play by the same rules as the big stores.  You are small, quick, can get to customers BEFORE they ever enter the market.  

Another thing that you can do is find out how many of your service customers would like to SELL a vehicle.  They trust you.  You know the history on the car.  Consign these things.

Thank you both for taking the time out and making suggestions. With Craigslist, I get numerous calls where people want to know whether or not I am a dealer and then they just hang up. With my current repair shop customers we get a lot of bites but seems like we can hardly reel them in. People are just scared of a finance commitment. Although I am not a big dealer with numerous cars, all my cars are late models starting from 09 and up. I now have Appone which gave me access to 5 banks and another local finance company that has sided with us since day 1.

Another thing, bigger franchised dealers offer 0% with qualified credit how do I get these customers?? We have a lot of competition and my biggest thing is honesty with customers. I enjoy doing business in a clean manner but seems like evem that isn't good enough. Either that or Im just rushing?

On the 0% thing, you have to educate your customer.  Making a purchasing decision based upon a 0% rate is really not good reasoning.

You are $10,000 cheaper than the Franchise dealer on your 9 month old vehicle that is still under warranty.  Why would a customer pay $200/month MORE just because the can get 0% money.  Your AppOne bank can get that same customer 3.99%.  It is just a numbers thing, and your customer doesn't understand it.  However, YOU do.  You can show them on paper, plain black and white.  The numbers don't lie.

When the Craigslist customer asks if you are a dealer, tell them that you are a Repair Facility that sells a few vehicles here and there to your loyal customers that don't want to go through the hassle of a Dealership.  That isn't a lie Murad.  At this point, that is really what you are.  That is a good thing, not a bad thing.

Personally, I believe that your calling card is NOT to compete with all of the other stores that are trolling for the "in market" customers that are shopping all over town.  Your calling card is all of those loyal service customers that have supported you and your family for all of these years.  These people would love to be able to avoid the Dealership Experience.

Clint,

I truly appreciate your response as that makes more sense to me now. 

Good luck. It's a tough business, but once you find your niche, it's a gold mine. As far as individuals being turned off because you are a licensed dealer, you should be able to turn that to your advantage. Explain that in order to be a licensed dealer, you are actually licensed and bonded, and are bound by rules and regulations. If a dealer lies or takes advantage of a customer, then the customer has some recourse. If the customer is buying from an individual or an "unlicensed" dealer, then the customer has no real recourse against them. It is to the customers advantage to buy from a licensed dealer. Sure, they may pay a little more, but you also own a mechanic shop, so it's been through your "190 point" inspection before being put on the lot for sale. I personally see plenty of advantages to your situation. You can't get them all, but you certainly can get all that you want.

I'm a relatively new dealer myself, I just started my 3rd year. My advise to you is to find a Niche market. You said your customers are tired of their older vehicles that need maintenance/repairs often. Since you have a repair business, you have an upper hand. It's great that you're expanding your current business, so kudos on that. I also have to give you a hand for establishing a relationship with some banks in your first year. We're on year 3 and largely due to the area we're in, I still don't have a single banking relationship.

Do a little market research. What I mean is, look at other dealers in your area and see what they're offering. Do they deal with BHPH lots and older vehicles, do you see a lot of newer 2-5 year old vehicle lots? Or is it mostly brand new lots? Find something that no one or not too many other people are doing and go for it. I don't know your customer base so I can't give specific advise. But for my area, BHPH lot with cheaper cars works great. I do a lot of cash sales as well. I tried doing the traditional financing, carrying more dependable vehicles that are newer, but it was a cash hungry business and the cars were slow moving for me. The margins were so slim that when something happened (a motor goes out, a tranny fails etc) it would put me way behind. I still do some deals where I send them off to a finance company but I do most of my financing in house and sell cash the rest. You find what works for you.

Don't worry much about 0% down and low monthly payments - thats for new car dealerships to lure people in. I know exactly how you feel, a place here, the biggest lot around advertises $199 down, $199/mo - but it's for 7 years or longer!!!! Trust me, no one wants to own the same car for 7 years. I also find that I'm dealing with a different type of customer. While big car lots market that advertising to lower income, less creditworthy people - those customers are not the one's who qualify for that program. It's the people with excellent credit and income who qualify, and they don't want those kind of cars! It's all marketing hype. Give it time. Your word of mouth will spread and build a great business soon. I'd say about 70% of my business is from word of mouth. I do right by my customers (much like you describe that you do) and my customers appreciate me for it. They know they're not buying a brand new car. But they know we provide excellent service when something goes wrong. I personally set them up with ASC warranty plans on each vehicle - but since you have a repair facility you may want to consider writing your own warranty plans. I'd have an attorney advise you on that though. At the very least if you did offer a plan like ASC, your customer will have a place to bring the car to and you get paid at the same time! It's win win either way for you since you have a repair facility.

Unless you have mega dollars to invest don't sweat the 0% interest and excellent warranties on almost new cars. There's no money in business like that. They're not operating that way to start with, it's just marketing. I guarantee you almost no one that comes on their lot qualifies. Your customer base will understand. They will come to you and pay more because you're honest about it.

I hope my advise helps I do not mean to present myself as an expert, I'm only sharing my experience and personal opinions from my experience. Good luck! and Thank you

Hi Murad, 

I have worked with hundreds of dealers over the past 10 years. I have seen many succeed and many fail. Those who have succeeded operated a simple honest business. My tips to any dealer to get people in your door: 

Competitive pricing, you dont have to give it away but price competitively

Photos - photography your inventory you don't need 50 pictures 25 or so is plenty to showcase a car. Make sure your lead photo has the vehicle facing your call to action this encourages people to do what you want them too.

Website keep it simple, easy to use forms, easy to find contact info and mostly a great SRP and VDP will go a long ways. 

Comments - Write up your cars not your dealership, people want to know about the vehicle list the important stuff. Mileage, options, trim, exterior and interior color any service work you have performed.

reviews, reputation management is HUGE, most people wont even consider your dealership unless you have at least 4 star rating. If you  are not get on the reputation train and get those ratings up.

3rd parties - Autotrader, cars.com edmunds, cargurus, carsforsale, craigslist  etc.. There is no reason to spend massive amounts of money to be at the top of the list. Spend the minimum competitively price your cars, take good pictures, do a good write up and if you have the car they are looking for they will call you. Craigslist, I say be honest and up front in your ads let them know you are a dealer and that they are better off to buy from you because of XYZ.. 

Transparency, unfortunately the car business has a bad reputation and people are always expecting a bad experience.. be transparent about your business, your pricing and vehicles. Honesty goes an extremely long way in the car business. 

Social Media, stay on top of it . Use facebook to get reviews and get people to check in at your dealership.. people that see these things on facebook from peers are more likely to shop with you because of that more than anything else.

Dont ever let your phone calls go to voicemail unless its actually after business hours. I have listened to literally thousands of un answered calls with a very frustrated potential customer on the line, remember if you dont answer your phone the next guy will answer his.

Accuracy, keep your website up to date with what you have in stock 1 or 2 discrepancies will make the average customer shy away

Location, most people will drive up to an hour to get the car and deal they want be sure you are marketing with craigslist into that radius. 

In regards to doubling the business this year, I would caution you to grow at a pace that you can keep up with. I am not a car dealer, but I am in the business of helping dealers get licensed and on their feet. One of the biggest missteps dealers make is growing the business too rapidly. Before long, the dealer that started with 5 cars on the lot (or 10 in your case) now has 40 cars on the lot and struggles to keep up. The business expansion costs they incur eat up all their profits and the business suffers.

There are a lot of good people on this forum who have offered their wisdom to you. I wish you all the luck.

I think I can help without cutting the staff. Just give me a call if you have 10 minutes to spark 816-985-0246

Murad,

#1 You can't do it alone. #2 It sounds like you could use the guidance of an experienced consultant to help you with your transitions towards bigger and better things. I have helped dealerships all over the country grow their business by 20 - 200%. I can hep you. I have been in your shoes.

If you are serious about growing your business go to my website and check out just a few of the things I can help you with. 

Best Wishes,

Dennis Wagner

President & CEO

TheDennisWagner.com

www.thedenniswagner.com

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