According to Women-Drivers.com, the trustworthiness of a sales adviser has always been more influential on a female car shopper’s purchase decision than the price of a car. However, a different attribute has become more important than trustworthiness.
The site shared with Auto Remarketing that the most important factor in car-buying for women is now respect.
A recent report from the company, assembled directly from reviews by women car buyers, indicates that respect outranks trust, which is now the second-most important factor.
Below, Women-Drivers.com ranks the five attributes of a salesperson that are most influential on female shoppers' buying decisions:
1. Respectful
2. Trustworthy
3. Likeable
4. Knowledgeable
5. Understanding
The price of the vehicle came in just behind these reasons, in terms of influence.
“Of course this doesn’t mean that price is not important; it is a critical component,” the company’s analysis indicated.
“It means, that having a personal, empathic, real, approachable, open and friendly engagement is paramount first. After a sales adviser has passed the EQ litmus test of a female customer, then, and only then will there be a discussion regarding the price of that vehicle," the company concluded.
When they start the car-shopping process — much of which is spent online — 70 percent of Millennials are undecided as to what vehicle they want to purchase. However, by the time they get to your dealership, most already know which car they want to buy.
And therein lies the two-fold opportunity for dealers when it comes to this generation: influence the shopper online, but also serve as a consultant on the lot.
The dealership visit for these shoppers, says Isabelle Helms of AutoTrader.com, is now more about “the test-drive experience.” And it’s also more about consultancy.
Auto Remarketing caught up with Helms, who is vice president of research and market intelligence at AutoTrader, to talk about the 2014 Automotive Buyers Influence Study the company released this week.
The report covers a lot of ground; it dives deep into how consumers are shopping both online and in-store as well as the devices they’re using in the process.
For this particular installment of our look at AutoTrader’s study, we hone in specifically on the in-dealership experience for Millennials, something that Helms suggests has changed greatly.
This slice of the population now numbers 74 million, according to U.S. Census Bureau data included in AutoTrader’s study, and 95 percent of them are using the Internet as part of their car-shopping process.
When they start that car-shopping process, 70 percent of them are undecided on what they want, a ratio not unlike that of the general population’s, AutoTrader said.
But once they’re on the lot, Millennials are more decisive: 70 percent purchase the car they had in mind when they stepped on the lot, versus 66 percent of all car buyers, the study indicates.
“We know that over the last few years, consumers are visiting fewer dealerships during the shopping process. Today the average car-buyer visits 2.5 dealers. And as this research tells us, 70 percent of Millennials know what make/model they want and end up purchasing that make/model when they walk in to the dealership,” Helms said.
“So the dealership experience has to evolve with that. The consumer is educated; they know what they want. And when they visit they dealership, it’s all about the test-drive experience. It’s the test drive of the vehicle, but more importantly, it’s also the test drive of the technology,” she added. “So finding folks at the dealership that can showcase this technology and answer some of the more technical questions that they may have is something that dealerships need to be prepared to address with car-buyers. “
There are so many differences in the in-vehicle technology from model to model, the dealer needs to be able to answer the questions the shopper is bound to have for the specific car he or she has chosen, Helms said.
For instance, can the driver connect their devices with the in-car technology? What are the steps toward using the technology?
“What’s interesting is, consumers aren’t walking into dealerships anymore wanting to look and explore the various makes and models,” Helms said. “It’s, ‘No, I want this make/model and I want to learn more about the car. I want you to answer the questions for me that I couldn’t get answers to on my own by searching the Internet.’”
And much of this test-drive experience at the dealership has to do with the salespeople themselves, Helms said.
Millennials, she said, tend to want to work with a salesperson who is the same age and can better identify with and understand their specific vehicle technology needs. Many times, Helms said, younger female shoppers have preferred to speak with a female salesperson, because they found them more relatable.
“I think some of the more progressive dealers are starting to pay attention to this, and they’re diversifying their sales force a little bit at the dealership at little bit,” she said. “And because Millennials are asking for this, I think it’s important we listen and respond.”
One concern AutoTrader has also heard from Millennials is that of the sales pitch itself. Helms said the company found in last year’s survey that Millennials actually do enjoy browsing the lots for vehicles and engaging with a salesperson.
“The problem is, they’re not at all interested in the high sales-pressure environment, and often times they leave the dealership more dissatisfied than the average car buyer, which results in less loyalty for the particular dealership,” Helms said.
“I hate to say this, but they’re expectation is that they’re going to have an experience that is similar to what they encounter at an Apple store,” she added. “Unfortunately, when they walk in, they aren’t necessarily greeted with a consultant who is there to help ensure that they end up in the right car without a high sales pressure tactic.
“Again, I think some of the more progressive dealers in the industry today have caught on to that, and they’re making big changes at dealerships, changing their sales approach; some of them are moving away from commission structures and putting these sales reps on just flat salaries, which reduces significantly the sales pressure that the consumers face," Helms concluded.
Pick an automaker, domestic or import, and they’ve probably recalled thousands of vehicles so far in 2014. In light of this year setting a new record for recalled vehicles, Potratz Partners Advertising shared two separate recommendations aimed at helping dealerships use recalls to improve both the service and sales departments.
“Despite the negative aspect of a vehicle recall, it does present dealerships with a great opportunity to be able to drive not only service traffic, but sales traffic as well,” said Samantha Cunningham, vice president of account services at Potratz during a recent installment in the company’s “Hard Facts” video series.
To improve the service drive, Cunningham suggested that dealers enhance the content and capabilities of their websites.
“We need someone to submit a lead form, not just schedule an appointment,” Cunningham said. “Why not build a page specifically for vehicle recalls?”
Turning next to the sales area, Cunningham explained the strategy by first considering scenarios not associated with the auto industry.
“Think about it this way. Have you ever experienced frustration because something is broken and you feel like you consistently have to repair it? Maybe your phone or your dishwasher,” Cunningham said. “Think about the frustrations a customer might be experiencing if they’re getting something regularly about a recall that’s pertaining to the vehicle they’re currently driving.
“It’s a great opportunity leverage the situation and maybe make a conquest from another manufacturer,” she added.
To watch the entire video titled, “Make Your Recalls Work for You,” click the window at the top of this page.
If you’re looking to get a dealer riled up, just ask him about his marketing plan. Here’s a quick sample of what I hear every day: “The more I put into marketing, the less I get back.”
“Don’t tell me to invest more in marketing. Not until I see some kind of return.”
“No one’s responding to anything. I’m just sending messages into the ether.”
I get how they feel, really. No dealer can stomach the idea of wasting time or throwing money down the drain.
The thing is, you don’t have to increase your spend, your resources or your team size to get the results you need to settle your stomach. You just have to market more effectively — and by that I mean more personally and more strategically.
And you should start right now, because if there’s one thing I’ve learned in 10-plus years in the business; it’s that the best marketers make the best dealers.
Here’s how I think about it — marketing to your customer base is a large-scale version of what you already do best: Connecting with people. Making people feel important. Feel heard. Like their needs are understood. And like you want them to end up with the vehicle or the service that suits their unique needs. That’s how you’d feel about a customer standing in front of you right now.
Marketing is just a matter of making hundreds and thousands of those connections at the same time, between your many dealership departments and your very diverse customer base. Hundreds and thousands of connections that can add up to one big difference in your return. I’d say that’s reason enough to make some changes in your strategy and your tactics.
Sound like a huge undertaking? It’s actually easier than you’d think, and I’ve seen firsthand how effective marketing can be for dealerships that do it right. Greg Jensen, GM of Kocourek Chevy, came to me looking for a way to get more pointed messages to more of his customers, and he quickly took to the idea of segmenting the database within his CRM. He couldn’t believe the return he saw.
“I was actually able to increase my conversions significantly — and got significantly better results,” he told me recently. “Marketing to individual audience segments works. I’ll never send another mass communication again.”
And that was just the start for Greg. The extent of your success depends on how quickly you embrace what I consider to be the five most important truths in automotive marketing, and I’m going to talk you through them step by step:
Every Connection Counts.
I’m starting with the basics. A conversation, call, click, or any kind of contact with any level of interest from a prospect needs to be captured because it could be your next sale. It may sound obvious, but a lot of dealers lose track of (or don’t track at all) important opportunities because they seem premature, or because the particular department a prospect communicated with wasn’t the department that could meet that prospect’s immediate needs.
But all prospects need to be marketed to, wherever they are in the buying cycle, so make sure all prospects are in your CRM and that your CRM is visible to every department that interfaces with them.
No Two Customers Are The Same
The only thing your prospects and customers have in common is that they all belong in your database. Once they’re there, focus on what makes them different, and segment them according to those differences. Where are they in the buying cycle?
Are they actively looking for a new vehicle? Just passively searching? How’s their equity?
Did they buy their current vehicle from you, or another dealer? Have they bought other products or accessories from you (your warranties, gap insurance and other add-ons)? Do they do service with you? And if so, what does their service schedule tell you about how soon they could go for a new car?
Nothing is more critical to your marketing strategy than segmentation, so start separating your fresh prospects from your loyal customers, your service regulars from your no-shows, and be ready to approach every segment differently.
It’s Time to Ditch The Blanket
When you’re looking at a segmented database, you’ll start to see why blanket marketing messages get ignored. Send one message to a thousand people and hundreds will ignore it. You simply can’t capture everyone’s attention the same way.
Send one message to each segment, and you’ll get your responses. Segmenting makes it easy for you to send reminders to loyal service customers, saving coupon distribution for those you’re trying to convert. It also makes it easy to specifically target op-code declines with offers that inspire a change of heart. And, when you’re falling behind on a specific sales goal, it’s easy to zero right in on the customers most likely to buy what you need to sell, and match them with incentives they qualify for.
You’ve Got to Take a Hint
Some customers just don’t like the phone. Some only like the phone. Some may like email in April and by May decide they only have time for a text. Either way, you have to “listen” to their cues, and change your outreach accordingly. This is another essential function of a good CRM — one that tracks device-specific responses and prompts you to change your tactics accordingly. If you know the surefire way to get through to them, why wouldn’t you use it exclusively?
Be Real About Your Reporting
Without the proper perspective on all your results, you won’t really know how well you’re performing as a marketer. The metrics you track should be as segmented as your customer base, and they should be prioritized according to their impact on your overall success. Response and conversion are most important, so make sure you’re knocking it out of the park there. But then go a little deeper. Are you monitoring engagement across the entire database, or across your newest prospects, the least likely to engage?
Are you looking at your overall close ratio, or at the close ratio within your loyal customers segment, where you’ll see the strongest showing? Are you factoring in regional differences between your rooftops, or the differences in marketing spend for higher-end vs. lower-end vehicles? Bottom line, know your benchmarks, which are as unique as your customers, and monitor them closely.
Believe me, I know what dealers are going through when they feel burned out on their marketing efforts. But I promise you, the results you’re after are in reach, and you can get there with a few simple shifts in your strategy.
Sean Stapleton is the vice president of sales for VinSolutions.
As members of Generation Y age, join the work force, have families — and, of course, purchase vehicles — many are turning to the used-car lot.
In fact, these younger buyers are purchasing used cars much more often than older generations, such as Generation X and the Baby Boomers.
That’s according to data from J.D. Power’s Power Information Network (PIN), which shows this year so far, Gen Y buyers make up 35 percent of used-vehicle sales.
That’s compared to Gen X’s portion of the used-car market, which equates to 26 percent. Baby Boomers only account for 32 percent of used-car sales during the first half of the year.
The bottom line: As Gen Y ages, they are buying more used cars.
Take these statistics for example:
In 2009, Gen Y accounted for 23 percent of used-vehicle sales, and this number jumped to 26 percent by 2010.
In 2011, Gen Y bought 31 percent of used vehicles sold in the U.S., and 31 percent in 2012.
Lastly, this number jumped to 32 percent in 2013, before increasing even more during the first half of this year. These same statistics for Gen X has hovered consistently in the 24- to 26-percent range.
According to the new study from J.D. Power, Generation Y consumers also now make up a larger percentage of U.S. new-vehicle retail sales than their older Generation X counterparts.
According to PIN data that illustrates that assertion, Gen Y has accounted for 26 percent of new-vehicle retail sales so far this year, compared to Gen X’s 24 percent share.
The largest group of buyers remain the Baby Boomers, who accounted for 38 percent of new vehicles sold during the first half of the year.
In comparison, in 2013, Gen Y accounted for 23 percent of new vehicles sold, while Gen X bought 24 percent of new vehicles during the first half of the year.
“As Gen Y consumers enter new life stages, earn higher incomes and grow their families, their ability and desire to acquire new vehicles is increasing,” said Thomas King, vice president of PIN. “As new-vehicle demand among Gen Y consumers increases, it will be important for automakers to respond to the needs of these consumers, not only in terms of the vehicle design, but also the marketing, sales and service experience.”
And the gap between Gen Y and Gen X car sales will most likely continue to grow.
According to J.D. Power, Gen Y sales volume is expected to grow 17 percent this year when compared to 2013.
On the other hand, Gen X sales volumes are only expected to jump up by 6 percent during 2014.
J.D. Power's PIN data shows which cars Gen Y shoppers are favoring.
According to the data, these younger customers are gravitating toward smaller vehicles, with compact/small vehicle segments accounting for nearly half of all Gen Y purchases.
In fact, the compact car segment is the most popular segment for Gen Y, with 20 percent of all vehicles sold to this group coming from this segment.
Gen X tends to lean toward larger vehicles, as this age group slightly favors midsize vehicles.
For Gen X, compact SUV is the most popular segment, making up 15 percent of sales to this generation.
To win today’s car shopper, it takes more than your sales team to be on its “A” game. The reputation of the entire dealership plays an important role in each car sale. More and more, the service department influences whether a shopper purchases a car from you or another dealer.
Increasingly, consumers learn about your dealership’s reputation online, which is why it’s important to leverage your online presence to build and maintain long-term customer relationships. For dealers wrestling with this strategy, the big question is: How are today’s shoppers navigating the path to purchase?
It’s become clear that much of what we used to know about how consumers shopped for cars no longer applies. But that doesn’t mean the Internet has eliminated long-term customer relationships. If anything, consumers crave it more than ever. That’s why dealers must get in front of consumers early in the game to provide the information they demand.
Forget the Funnel
For years, dealers have clung to the notion of the car shopping journey as a funnel and aligned their marketing strategies to its various stages. According to this theory, consumers start with a wide consideration set, gradually eliminating vehicles from consideration until they narrow their choices down to the single correct fit at the end. In reality, consumers take a much less linear path from consideration to purchase.
That’s because shoppers rely heavily on a variety of research sources throughout the journey. In this early stage, shoppers utilize several inputs to shape their initial consideration set, including personal networks, previous experience, and online and offline resources to populate, hone and refresh their consideration set.
Rather than a funnel that narrows down the large consideration set to a final car, car shopping is a dynamic process in which shoppers sift through the available options, adding and eliminating cars as they go. Even after consumers have gathered enough information to narrow their consideration set and visit a dealership, the process continues. Armed with mobile devices, more consumers are conducting research during the dealership visit as a way to evaluate new information and make sure they are getting a fair deal.
Among other things, shoppers check dealership reviews, where they examine reports on both the sales staff and the service department. Consumers want to balance the short-term logistics of the sale with their long-term expectations for service and repair.
Service Drives Sales
The service department is a much more important influence on the buying decision than you might expect. According to a Harris poll commissioned by Cars.com, nearly two-thirds of in-market car shoppers indicate that a service department’s reputation is a factor when choosing where to purchase a vehicle. That means not only are dealers losing out on service revenue, they could be missing out on potential sales as well if their online reputation is not a priority.
While national chains are using digital marketing effectively and making it easy for customers to find pricing information online, dealerships have underutilized these platforms. But price transparency isn’t the only factor customers consider for vehicle service information.
The majority of car shoppers won’t visit a dealership without conducting research, and they don’t always trust the information they get from dealers. That’s why consumers rely heavily on third-party websites for an unbiased perspective on the dealership and its service department, typically through first-hand experiences from other customers.
Online consumer reviews, which recount a customer’s first-hand experience in the dealership, rank as one of the top three most important factors that shoppers consider when choosing a service provider (technician certification level and warranties are the other two). In the Harris poll, 57 percent of in-market car shoppers indicate they would seek out service department reviews before purchasing a vehicle, while only 10 percent of in-market buyers said they would not consider service reviews before buying from your dealership. Clearly, this is an important factor in cultivating long-term relationships with your customers.
It’s also important to note that dealers have the initial advantage over national chains for providing service. At a dealership, consumers feel they’re getting service from a technician that’s an expert on their particular make and model. That’s especially important for out-of-warranty vehicles. That trust factor isn’t as high when a car owner visits a national chain or local independent shop.
In fact, according to a report conducted by GfK Research, consumers are willing to spend 10 to 15 percent more for service at a dealership, especially for specialized repairs where dealership expertise is at a premium. That’s why when it comes to developing long-term customer relationships, it’s crucial for dealers to promote their reputation online for providing quality service.
A Multichannel Approach
Promoting your expert technicians and parts and labor warranties can help separate your dealership from national competitors, particularly for specialized repairs of off-warranty vehicles. And because shoppers use multiple devices in their buying decision journey, it’s imperative for marketers to take a multichannel approach, connecting their messages to reach shoppers on computers, tablets and smartphones.
It’s important to work closely with service managers to promote the overall brand and the value they offer in every area of the business. One of the best ways to get in front of new customers is to showcase your value online and give them what they want: information about the dealership and the services offered, and reviews of first-hand experiences from other consumers.
By understanding how consumers take the journey from initial consideration to purchase, you’ll be in a better position to leverage all aspects of your dealership’s reputation — including the service department — in various online marketing channels. And that will put you in a better position to win new business and retain off-warranty customers.
Jack Simmons is Dealer Training Manager at Cars.com. He will be a speaker once again this year at Used Car Week, which is being held Nov. 10-14 at the Red Rock Casino, Resort and Spa in Las Vegas. He is scheduled for a workshop at 2 p.m. on Nov. 10 as part of the CPO Forum. For more information, visit www.usedcarweek.biz.
MasterFiles executive vice president and skip-tracing expert Alex Price has scheduled his next round of free webinars to help repo agencies and recovery executives at finance companies.
Price plans to cover what he explained as three types of tracing: micro-tracing, macro-tracing and skip-tracing. Price combines what he describes as old-school skip-tracing methods with new age cyber-tracking technology to equip attendees with tools that he gained through invaluable experience.
Price explained that he balances the hard facts about skips with just the right amount of humor and a touch of Southern charm.
“You need to know where you’re going and why before you move forward in your process,” said Price, who has more than 25 years of industry experience. “It can spell the difference between profit and loss.
“This webinar is designed to show your staff what search to use for the type of tracing required for the account, before you ever go out in the field or issue the assignment,” he continued. “No matter your budget or fee structure, I have a plan of action to help you become more efficient and profitable.”
There are five opportunities for agency staff and finance companies executives to participate in this free, 30-minute skip-tracing webinar. The schedule is as follows:
—Aug. 11 from 1:30 to 2 p.m. CDT
—Aug. 12 from 1:30 to 2 p.m. CDT
—Aug. 13 from 1:30 to 2 p.m. CDT
—Aug. 14 from 1:30 to 2 p.m. CDT
—Aug. 15 from 1:30 to 2 p.m. CDT
Many auctions have been ramping up their reconditioning facilities lately to better meet customer’s needs, and Manheim is no exception.
In fact, Mike McKinney, regional vice president operations for Manheim, told Auto Remarketing the company has invested more than $8 million in capital investments in reconditioning facilities for the company’s operating locations since 2012.
Rock Anderson, RVP, West Region Operations, says reconditioning has always been an integral part of the company’s offerings.
“Traditionally, reconditioning has been an important part of our business. That has not changed. Volume continues to increase as our consignors see great value in certification of vehicles prior to sale. Manheim is positioned to assist our customers’ reconditioning needs,” Anderson said.
Another factor that has pushed the importance of recon facilities at auction is the fact that many dealers are not investing in body shops of their own, instead choosing to utilize the auction recon facilities.
“We have grown the major dealer segment of our business to assist our customers in all of their wholesale needs,” said McKinney. “Many of today’s new-car dealer retail locations do not have their own body shops, so we are positioned well to provide this service to them.”
That said, sellers remain the largest percentage of facility users, says Anderson.
Interestingly, to push interest on the buyer side, the company has connected the recon facility with the next step after sale for a vehicle — transport.
“Buyers are gaining ground as we improve our ability to package reconditioning services with our transportation packages,” McKinney added.
McKinney also outlined some of the ways the company promotes and advertises its reconditioning facility’s capabilities and services.
“Frontline services are promoted in our auction lanes and throughout our locations. We have a staff of more than 250 field sales representatives meeting with customers to promote the value of reconditioning,” he said.
Anderson explained to Auto Remarketing that the recon facility at the auto auction is a way to increase value for customers.
“I would not categorize it as an integral part of the ‘modern auto auction,’ but rather an integral part of a customer’s value solution. At Manheim we are focused on connecting and delivering what the customer needs to guarantee their individual business success,” Anderson said. “Reconditioning is just one of many solutions Manheim provides to help our customers succeed.”
When asked if the reconditioning facility has become more important at auction as wholesale prices have risen, McKinney said, “It has been a steady part of the value chain for our customers.”
Greater Milwaukee AA Redesigns Recon Facility
Fleet and lease sales continue to rise on the consumer-facing side of the market, and with off-lease volumes in the wholesale lanes expected to grow substantially this year, reconditioning facilities at auctions are stepping into high gear in an effort to make sure these vehicles are retail-ready for dealers and buyers.
Greater Milwaukee Auto Auction is tackling this challenge with a brand new recon facility.
“We believe that our reconditioning facility is very important, at the auction level, for the dealers. The dealers want to buy a fully reconditioned product to sell to the retail customer whenever possible,” said Kristie Griffin, GMAA president.
In April, Auto Remarketing reported that the auction opened the doors to its brand new on-site reconditioning facility, which features three long wash lanes, a five-car service department, a full body shop, auto upholstery services and corporate offices for its fleet consignors.
In fact, Griffin said the auction’s primary reconditioning customers are fleet consignors.
The recon business serves to connect the industry, as new-car stores utilize the auction’s recon facility, as well, Griffin said, because the work meets the fleet standards.
The new reconditioning facility is located right next to the auction’s fleet check-in lanes, so the cars can go directly in the body shop, service center or into the three-lane detail shop, depending on their needs or flags.
“This process aids our consignors in throughput, and keeps our shops busy at all times,” Griffin said.
Another way the auction ramped up services for its customers is by “streamlining our processes,” said Griffin.
“We have separate fleet check-in lanes, where incoming cars are checked in, CR'd (condition report), signed off by the consignor, and color flagged, before they are moved,” she said.
The auction decided to improve upon its reconditioning offerings when neighboring land was for sale, and the move has expanded the facility to 35.5 acres.
“We looked at the property and loved that is was joining and on the same side of the street. Our national fleet accounts have a very high standard for reconditioning services, and we knew that we needed a stronger facility to compete in the marketplace,” Griffin said.
The auction has also added matching signs to both the main auction and our new reconditioning facility, “and that has gained a lot of local attention, where both locations are on a main artery in Milwaukee,” Griffin said.
Eco-Friendly Investments
Going back to $8 million in capital investment for recon that Manheim has made in recent years, McKinney gave some insight into some of improvements, one in particular that appears to have some positive ecological ramifications.
A considerable portion of that capital investment was used for making recon more energy efficient, as these facilities traditionally come with a large amount of water waste as well as other more toxic substances.
“Our focus has been to improve wheel repair, install lifts, convert our shops to environmentally friendly paint processes using water-based paints, and provide up-to- date diagnostic equipment to accommodate newer vehicles,” said McKinney.
Likewise, Greater Milwaukee Auto Auction also has kept sustainability in mind, as it made investments in energy efficient technology while building its new recon facility.
“Our main auction lanes have been relighted with energy efficient lighting. Our reconditioning facility needed strong daylight caliber light that drops low from the ceiling so our technicians can see any imperfections and correct them,” Griffin said, “We made a strong investment in an energy efficient ‘return air system’ in the reconditioning facility that maintains a safe and healthy work environment.”
Elsewhere in the recon world, Eric Ramsdell — who is national account manager for auctions and remarketing at Safelite AutoGlass — explained a program at his company that fosters eco-friendliness.
Safelite, which Ramsdell said is the preferred glass provider for several auctions and remarketers, has a windshield recycling program. He said Safelite is the only one of its peers to have a wide-scale program of this kind.
Granted, there are hurdles involved in recycling windshields, but Ramsdell also emphasized how doing so helps the environment.
“Windshields are not commonly recycled because they are made from laminated glass, which is created using two sheets of glass with a clear resin interlay called Polyvinyl Butyral (PVB) between. It is the resin interlay that keeps the glass together when damaged, but it is also difficult to separate the glass and inner plastic layers and re-purpose the PVB,” Ramsdell said.
“Additionally, the logistics of returning windshields to a recycling plant are challenging. Unfortunately, this means the majority of damaged windshields go to a landfill after being replaced. With the average windshield weighing 35 pounds, that creates an enormous environmental impact,” he continued.
That may explain why Safelite chose to go the recycling route and why nearly three-fourths of its locations currently return damaged windshields.
Explaining the program’s origins, Ramsdell said Safelite partnered with Shark Glass Recycling Glass and rolled out a windshield recycling program in 2012.
“With Shark’s patented technology, the laminated glass from Safelite’s customers is processed through the crusher, which separates the glass from PVB,” he said.
“Approximately 90 percent becomes ‘glass cullet’ — which can then be recycled into a number of new products including fiberglass insulation — while approximately 7 percent becomes PVB scrap, which is reprocessed into pellets and recycled into a number of new products, such as carpet backing, paint and primer, and other plastic products,” Ramsdell continued. “In fact, Safelite uses rugs made with the recycled carpet backing with the company logo in many of its locations.
“The logistics of collecting the damaged windshields and shipping to the recycling plant were designed to be carbon neutral, using existing freight lanes within the supply chain returning to Safelite’s East Coast distribution center,” he added. “For this reason, Safelite currently has 70 percent of its locations returning damaged windshields and hopes to reach 100 percent in the near future.”
Ascertaining specific figures as to what is the prudent amount to spend on reconditioning can be a bit of a challenge, according to industry experts who crunch wholesale numbers for a living.
While neither ADESA’s Tom Kontos nor Manheim’s Tom Webb shared a specific dollar amount with Auto Remarketing, each economist did explain how grade numbers — what dealers see on run lists showing a vehicle’s condition — are giving analytics teams at least a point of reference to quantify what a wise amount of reconditioning might be.
“There’s obviously more online buying than there used to be,” Webb said. “Some dealers go into their search, and they’re only buying vehicles that have a certain grade. So to the extent that you can take even a modest improvement of the grade of a vehicle sale from a 2.9 to 3.0, there are a lot of dealers who search for vehicles that are only 3.0 and better. If you don’t do that, you’re not on their radar screen.”
Kontos shared a similar sentiment, emphasizing how condition reports are becoming more uniform throughout the wholesale industry and how dealers are gravitating to those grade numbers.
“It’s caused me to rethink my views of reconditioning from how do you come up with the one or two things you need to do on a car that you think will bring a positive return on investment, versus how do I take a two grade to a three grade,” Kontos said. “That way, you’ve got a better chance of getting eyeballs on that car in the online space and even the lanes.”
Webb explained how the analysis of reconditioning trends has been a perplexing topic for some time.
“As you can imagine, the studying of the return on reconditioning has always been a big issue to the extent that now we have much more improved and consistent condition reports both at the vehicle’s check-in point and post reconditioning,” Webb said.
“It makes it a lot easier as an analyst to determine what the payback on that reconditioning is and to make very strategic decisions on what reconditioning to do or not to do,” he continued.
In light of that evolution, Kontos described how reconditioning at the wholesale level is being impacted by steadily rising supply — especially of off-lease vehicles. What might have been acceptable level of reconditioning 12 to 24 months ago might not cut it nowadays.
“It puts a premium on the efforts of remarketers to do a better job in the area of reconditioning than they’ve needed to do in recent years because the market was so strong,” Kontos said.
“The market is becoming a little less forgiving to those that do recon than when supplies were tight and prices were strong where you could sell without pretty much doing a lot of recon and not worry so much about the condition of the vehicle,” he continued.
“I think people did back away from doing a higher level of recon during the period of 2010 through 2013,” Kontos went on to say. “It was not a huge drop-off, but people tried to be consistent with their reconditioning policies on the institutional consignment side, the banks, the finance companies and the OEMs.”
Editor's Note: This story is part of our “Reconditioned for Success” special section coverage in the July 15 issue of Auto Remarketing. The all-new digital edition of that magazine can be found here.
While the precise return on investment for reconditioning is certainly up for debate — and economists contacted by Auto Remarketing were averse to putting an exact number on it — the payoff from a dealership’s recon investment raises some interesting issues.
How much should dealers be willing to put into making a car retail-ready when acquisition costs are already high? And to what degree does reconditioning raise a car’s profit potential? How do you balance the costs and benefits?
Among those who have examined these questions is Mark Bollman the president of Creative Colors International, who talked with Auto Remarketing earlier this year.
CCI is a business-to-business entity specializing in on-site repair and restoration solutions for fabric damage, and among its clientele is the auto industry.
The company does have some consumer-facing business, “but we’ve always structured ourselves to cater to the B2B client, allowing them to — specifically in the new- and used-car industry — to increase the value of the vehicles they buy at auction that have damage by investing in reconditioning dollars,” he told Auto Remarketing in an interview this winter.
“Because for every dollar that they spend in reconditioning, it yields them $1.50 back in profit,” Bollman continued. “So, it’s a very good profit-producing sector in the dealership.”
But there is the need to strike a balance, especially when costs may be high.
That’s something that Brian Benstock of Paragon Auto Group urges dealers to be mindful of, particularly when acquiring vehicles. Given the cost of reconditioning a vehicle, the dealer needs to buy right.
“We’re going to have to be more astute when we’re buying cars,” Benstock said of dealers. “We’re going to have to really take into consideration the potential retail transaction price for that vehicle when we’re putting the number on the car.
“We cannot make the same mistakes that we used to make by overpaying for a car and worrying about that later on down the road,” he continued. “You have to buy it right from Day 1. You have to make sure you’ve taken all of the known factors into consideration from Day 1. And, frankly, you’ve got to be more judicious in purchasing the vehicles.”
And when considering the recon process, Benstock said it’s important to first look at the appraisal process — and when you’re acquiring a car from a consumer, involve that customer in the appraisal. Take that customer through a step-by-step walkthrough, he said, and help them understand the money you’re putting in the car.
“We’re going to point out (to the customer) the things that we need to do to make that car the value that it needs to be before it can be retailed and the wholesale costs associated with that,” Benstock said. “And a lot of our customers … when you walk them through honestly, they’re with you. They understand.
“But you can’t do with the customer not there,” he added. “The customer has to be present.”
And Benstock said there is “substantially less pushback” from the consumer when recon costs are explained thoroughly, noting they “tend to be very understanding” of the costs that dealers must put into a car to have it retail-ready.
