Used Car Sales Made Easier—and More Profitable

data mining

A more precise way to meet customers’ needs

Sometimes what you’re looking for is right in front of you. When it comes to profitable, effective sources for building your preowned inventory, it’s time to take a closer look at your DMS. With advanced tools and processes, your dealer management system can easily become the best place to find pre-owned cars that sell quickly and turn a big profit.

And that’s exciting. Used cars have historically been a money-maker for dealerships, but sourcing them involves a good amount of resources: time, energy, money – not to mention a good amount of guesswork that can render those resources a wasted effort. Live and online auctions leave dealerships bidding against each other, lowering their margins. And cars sourced this way involve auction fees, transport costs, money spent on repairing and reconditioning, and fixed costs like interest from floor-plan financing. The longer cars sit on the lot, the more expensive they become.

With the demand for CPO and preowned growing, it’s more important than ever to build a solid inventory of cars that your customers can rely on as being high-quality and a good fit for their needs.

This will build customer loyalty as well as your dealership’s reputation.

Advanced data-mining tools allow you to easily turn your DMS into a source for CPO and preowned that are in high demand, turn fast, and increase your profit margin.

An excellent example of the simplicity of this solution happens every day in your service lane.

Getting customers on the lot is more than half the battle, right? You can be alerted ahead of time to who’s coming in for service today, and who just entered the service drive. Be ready with the service-to-sales opportunity they are most likely to be receptive to (trade keys, upgrade, etc.). Given this knowledge, you have a better chance of sourcing their car, if you want it.

used car sales


This is where mining your DMS and using that information the right way—combined with big data like consumer shopping behavior— comes into play. With AlertMiner, receptivity is determined by real-time data such as where they are in the car-buying process and their unique car “position,” which could include how far into their retail or lease contract they are, how close their warranty is to expiring, and more.

Let’s take a closer look at retail contract customers as an example.

Currently, the contract average in America is 69.5 months, with 10 percent extending to 84 months. Long-term contracts are good because more customers can afford cars this way, but bad if you have to wait seven years for another sale. Our data shows that customers with 60-month contracts are ready to convert at about 30 months. We’ve also found that as customers come closer to paying off their contracts, they’re less likely to convert. Have you analyzed your current retail and lease customers to define their term segments? What about your average trade cycle per segment?

“AutoAlert is by far our best tool for ROI. The profits are much higher with AutoAlert. We can engage a customer who is not in the market, keep their payments the same, get them into a new car with no money down, and our profits increase on the deal as well, so it’s fantastic for the dealership and the customer.”
BRAD MUGG, managing partner at Norm Reeves Honda Superstore

As another example, mileage alerts give you insight into your customers’ driving habits. Say John has 24 months to go on his lease but is already over his mileage allotment and is receiving penalties. Letting him know this is a great service to him, and helps keep your dealership front-of-mind when he’s back in the market. But maybe you already know that he’s back in the market because you’ve been receiving data on his shopping behavior. That’s an opportunity. Now you can engage in the right conversation with him at the right time.

There are times when you want to build a specific inventory of cars, whether it’s a particular make and/or model or a particular type, like CPO. AlertMiner is a tool that helps you find and source these cars quickly. Some dealerships even make a game of converting these opportunities, awarding sales and service team members who bring in the most cars. And because AutoAlert opportunities have proved to convert at a higher rate than opportunities sourced other ways, your team will gain confidence with increasing success.

And then there are times when you know exactly the car you need.

Let’s say you have a customer whose daughter, Sara, is looking for a top vehicle for her first car. A 2014 Ford Mustang fits the bill perfectly, exactly what she wants.

A great service you can provide is to look at upcoming service opportunities for just the right car. Mary is bringing her red 2014 Mustang in for service next week. Maybe Mary will forego service when you give her a printed-out upgrade offer with a similar payment, based on her current shopping behavior. Sara’s parents will love that you have a story on the car. And if Mary isn’t ready to upgrade, your DMS is full of other opportunities!

When it comes to preowned cars, knowing exactly what your customers want – and being able to provide it when they want it – will make your dealership stand out in today’s quickly evolving market. It will also make your sales of preowneds more profitable.

Let Us Know What You Think