The appraisal-to-trade ratio is the ratio of all vehicles appraised to how many were traded. They want the ability to identify the losers and look for any process adjustments that might prevent future losses. High-performing dealers do not consider a pack adjustment to offset these losses. A benchmark of 5 percent wholesale loss allowance is common. They separate these vehicles from the ones that were immediately wholesaled and set a KPI for the average wholesale loss on these specific units. Top performers recognize vehicles that were reconditioned and offered for retail but did not sell are likely to lose money. AGED WHOLESALE LOSS PER VEHICLE Up to 5% of vehicle costĪged wholesale losses are from vehicles that were wholesaled after an attempted retail. It is closely tied to appraisal-to-trade ratio. The goal is a small profit/loss per vehicle, an indication that appraisers are accurately assessing valuations and assumes no inventory adjustments or pack adjustments. IMMEDIATE WHOLESALE PROFIT/LOSS PER VEHICLE +/-$150 They typically have discounted recon rates for older vehicles and few to no packs. Top used-car departments separate the measurements of immediate wholesale, that is, a vehicle never offered for retail from aged wholesale.
Top performers recognize the strain and reduce the rates for older vehicles, typically five years or older.
Retail reconditioning hinders vehicle acquisition, especially on older vehicles that tend to be some of the most desirable but also have the highest reconditioning costs. REDUCED RECONDITIONING MARKUP FOR OLDER VEHICLES Packs made sense prior to the internet age, but those days are long gone. They slow down acquisition, including reducing new car appraisals. High performers understand the drag that packs place on their used operations. PACKS Good: Max 1% of vehicle value / Great: $0
It may require dedicated techs, staying open late and sublet. Top performers solve reconditioning delays. MECHANICAL AND COSMETIC RECONDITIONING TIME 3 days Fast inventory turns maximize high-gross opportunities associated with fresh inventory and drives profits in other dealership departments. Fast turn rates require a commitment by all dealership departments and a focus on efficiencies, including age intolerance. The highest performers turn inventory every 20 days. The inventory turn rate is the amount of in-stock inventory compared to monthly sales. The data is also a foundational element in inventory acquisition and appraisal processes. They use data to dictate when it is appropriate to “go for the gross” and when the window for profit is short, so they need to price aggressively from the start. Top performers embrace the balance between a vehicle’s desirability and its price. In today’s market, a key driving force is the resulting increase in profitability, which releases some pressure on the new-vehicle department for overall dealership profitability. Success in used-to-new ratio requires a combination of acquisition, reconditioning and retailing skills.
Used retail unit volume equaling or surpassing new retail volume is a foundational correlation of highly successful used-vehicle departments, assuming the dealership is meeting new vehicle volume goals. USED-TO-NEW RATIO Good 1:1 / Great 1.25:1
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Download the Top 12 Used Car KPIs and Benchmarks below or check out the full report here: 2018 Used Car Market Report & Outlook. See how you stack up against the highest performers in the industry. You’re inundated with data and reports, but which metrics matter most? Cox Automotive studied vast amounts of data from thousands of dealers, including the highest performers, to come up with a list of Key Performance Indicators (KPIs) and best-in-class benchmarks.
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