With dealers having to get creative to find enough used vehicles these days, it’s becoming clear that many are turning to the service lane as a prime resource for these hard-to-find units.

While there are often strategic intricacies involved, the concept, simply put, is this: a customer comes through the service lane with a vehicle that meets a dealer’s used-car inventory needs, and the dealer puts together an offer to acquire the vehicle.

And Hendrick BMW is one that has successfully bolstered its used inventory by employing this method.

That said, Steve Strickland — pre-owned director at Hendrick BMW —acknowledges that, typically, shoppers don’t immediately jump at the offer.

Sometimes this approach requires a bit of teaching or negotiating on the part of the dealer, and sometimes there are vehicles that might not make sense to acquire.

For example, Strickland said the dealership has to make sure the vehicle isn’t one that was just sold to the customer, as it wouldn’t be wise to give that shopper trade value for the car. In addition to bypassing recently sold vehicles, the dealership also passes on vehicles with poor reports from Carfax.

But, all in all, approaching the service lane customer has proven to be fruitful for the Charlotte, N.C., dealer.

The dealership was one of two profiled in a recent case study provided to Auto Remarketing by FirstLook about this technique and how the inventory management company’s offering can help dealers in this regard.

In its report, FirstLook discussed the successes found by both Hendrick BMW and Penske Honda (which is out of Indianapolis) in using the service lane as a used-car resource.

“For the greatest success, both dealerships feel there is a short window of opportunity when customers will respond to an offer they hadn’t considered when they arrived for service,” the company wrote in the report. “You need to quickly identify customers who own the vehicles that will be most lucrative for your pre-owned lot. And you need the confidence to make an accurate offer that will leave plenty of margin when you place that vehicle in your stock.

“For this, both Hendrick BMW and Penske Honda have turned to FirstLook 3.0 to assure profitability in their service lane purchases,” it continued.

Of course, there are other inventory management platforms on the market, including those provided by such companies as vAuto, Reynolds and Reynolds, Dominion Dealer Solutions and more.

vAuto, for instance, is what Brian Benstock of Paragon Auto Group employs in using the service lane to grab used vehicles. Benstock also shared some insight on this service-lane practice with Auto Remarketing.

Hendrick Store Finds Service-Lane Success

It has been well documented that off-lease supply throughout the industry softened as a fallout from the leasing pull-back years earlier.

And with the normally strong off-lease supply from BMW slowing a bit, Strickland said “we’ve had to look outside,” and has found that the service lane was another viable option to find used cars.

“We’ve tried a couple different approaches with this, and some months are better than others, but it generates customers that will come back later and either buy from you or just right out sell it to you. It’s made some activity happen,” he told Auto Remarketing in a recent interview.

However, Strickland emphasized: “Very seldom do customers immediately, on-the-spot sell you their car on that day in service.”

Often, he said, the conversation may get the wheels turning in the shopper’s mind about making such a move, and then the customer goes home to talk with his or her significant other before making a decision.

It can also take some time, negotiation or education.

“Sometimes you have to educate the consumer on the values of their car and things of that nature,” he said.

Interestingly enough, though, Strickland said 75 percent of customers who don’t immediately accept the offer will at least call the store back, as long as the dealer follows up by phone or leaves a message after the visit.

Of course, it takes a special kind of salesperson to secure these transactions.

“Just like you have to have that capability (to negotiate) when you sell cars, you have to have the same skill in buying the cars,” Strickland noted. “We found that out from the very beginning. We had a couple people that tried it and just weren’t very successful with it. And those were the type of people that are probably not good retail-type salespeople.”

Getting the Word Out

In the case study report, Strickland mentioned that many people simply do not realize that a dealership will buy cars from consumers.

While he contends it would not be a smart use of marketing dollars to spend money on simply advertising that your store buys cars, Strickland said it can be effective to incorporate that message into the normal sales advertising that you already do.

He said his store gets the word out about buying cars from consumers through its website and via service-lane customers or shoppers that come in to make a purchase. Strickland also stressed that his store is part of the AutoTrader.com’s Trade-In Marketplace, which provides the shopper with a guaranteed offer on trade-in while simultaneously giving dealer another used-vehicle inventory source.

More Successes with Approach

Benstock — the vice president and general manager of Paragon Honda and Paragon Acura, which won Auto Remarketing’s inaugural CPO Dealer of the Year Award in 2010 — has been turning to the service lane to find vehicles for several years now.

“It’s huge,” he said of the importance of this technique, pointing out the dealer is bidding for used cars without competition, with less pressure, and it lets him pick and choose what he wants.

Furthermore, Benstock added, the dealer creates multiple transactions at once. In his approach, the store gets a used vehicle for its inventory and then also sells that customer another car, as well. In fact, he said a new- or used-vehicle sale is “always attached” to the deal.

Then, of course, that customer can come back for things like service visits.

And while Hendrick BMW does not require another transaction be involved, the store has spurred additional sales through this approach.

“We had a customer in the other day that was one of our BMW customers, and we started the process of buying their car. And while they were here, they walked over to our Mini Cooper store, and then we ended up converting it over for a trade-in on a Mini Cooper, so they could help on the sales tax savings,” Strickland said.

“We’re seeing more and more of that,” he said. “There are a couple different avenues for it, but our main thing was to source inventory. But now we’re seeing that it’s creating sales.”