Used car lots

At this point I can’t really afford not to take the work I have only been open since august of 2021 building my customer base  the car lots I have came from the last company I worked for. Some a really good relationship with customer warranty plans when they sell a car. One in particular is becoming an issue with rising cost of goods unsure how to handle it besides firing the customer. He wants gripe on every invoice but continue to use us.

Isaac

Looks like you have taken on a big nut. I suspect you don't have that whole building, but what ever portion you have looks impressive.

I love the looks of your location! You have what appear to be nice neighborhoods around you, with a lot of newer/well kept housing. You appear to be in what I call a 20/20 market. Less than 20% of the homes in your direct market area have household incomes above 75k per year. Less than 20% of those households have bachelor level, or greater education levels. These numbers typically indicate a stronger propensity for "do it yourselfers". These "straight up demographics" of those neighborhoods does not match up to what i am seeing in Google street view. I was surprised to find such nice, well kept housing close to your location. Says a lot about quality of the individuals living in those markets. I believe you likely have more then enough "do it for me" customers in your area, you just need to work towards attracting those type customers. 

Our shop is in a similar market, less than 20/20. We also went thru our period of working for used car lots, thinking some work is better than none. One of the only reasons we got any of the used car business, is we were cheaper than the surrounding shops to begin with, largely unprofitable, and most lot managers would still beat us up. We only ever had one lot that was decent to work with, and when that manager changed, we got out of that business. We also don't work well with any of the extended warranty companies for the same reason. They want to also beat you up, control margins, and essentially drive you out of business. We frequently have to tell customers they are going to be responsible for 20-30% of the bill, because their extended warranty does not cover the charges. I suspect that if you had the time to accurately measure you profitability from the used car work/extended warranty work, overall you would find no cash left from those services whatsoever, although they do produce some cash flow, but I would still be looking to exit that type of business as soon as possible. 

I am also going to guess that your labor rate is below $100 an hour. One thing that I did not understand, for much of my early life as an owner, was that cheap prices are a very expensive form of marketing. I like your google reviews and testimonials on your website. You may find it is cheaper overall to do actual marketing to any higher income, higher educational level households/neighborhoods in your area (DIFM, do it for me customers), then it is to have lower overall prices to attract customers. My method is not as easy and requires courage, lots of courage to pull it off. You have to be able to charge, what you need to charge to first survive and then prosper, and you have to be able to hold that line with friends and relatives. It is not likely that you are in a position to offer a discount from your current prices to anyone. Technicians and staffing required to operate an automotive service facility today are just to valuable to discount to anyone, until you are long established and reasonably profitable. Better to charge what you need to, and have funds to support your family, your staff and your community, Imo.

You can't do it all at once, but you can work towards it. 

Promote the service you offer, that I read about in your reviews and testimonials

You may need to seek assistance with doing actual marketing, if you are not strong in that area.

I am more than happy to be wrong about any of my assumptions stated above. 

Best Wishes for a bright future

Randy Lucyk

I do used car lot repairs at my shop, I generally offer 10% off and they are used to fill between jobs. If it’s a rush job they are charged at regular rate.

I opened a used car lot some years after establishing my two repair shops and nearly destroyed them in the process. It gave me a deep appreciation of the motivation of the used car market and taught me to stay away from them as customers. There is a reason each of those cars is floating around the used market and the dealer's motivation is completely at odds with the typical customer who wants their car to be safe and reliable and can be persuaded to spend that extra dollar that benefits them in the long run. The dealer just wants to move that can of worms of the lot as profitably as possible. But the "you touched it - you own it" principle applies to both. It's a lot easier to live with that principle of you were allowed to do your best work to start with.  Do you want your brand associated with a business that is trying to market marginal vehicles at the highest profit? Concentrate all of your effort on building a good loyal clientele and earning the public's trust. 

5 hours ago, rpllib said:

Isaac

Looks like you have taken on a big nut. I suspect you don't have that whole building, but what ever portion you have looks impressive.

I love the looks of your location! You have what appear to be nice neighborhoods around you, with a lot of newer/well kept housing. You appear to be in what I call a 20/20 market. Less than 20% of the homes in your direct market area have household incomes above 75k per year. Less than 20% of those households have bachelor level, or greater education levels. These numbers typically indicate a stronger propensity for "do it yourselfers". These "straight up demographics" of those neighborhoods does not match up to what i am seeing in Google street view. I was surprised to find such nice, well kept housing close to your location. Says a lot about quality of the individuals living in those markets. I believe you likely have more then enough "do it for me" customers in your area, you just need to work towards attracting those type customers. 

Our shop is in a similar market, less than 20/20. We also went thru our period of working for used car lots, thinking some work is better than none. One of the only reasons we got any of the used car business, is we were cheaper than the surrounding shops to begin with, largely unprofitable, and most lot managers would still beat us up. We only ever had one lot that was decent to work with, and when that manager changed, we got out of that business. We also don't work well with any of the extended warranty companies for the same reason. They want to also beat you up, control margins, and essentially drive you out of business. We frequently have to tell customers they are going to be responsible for 20-30% of the bill, because their extended warranty does not cover the charges. I suspect that if you had the time to accurately measure you profitability from the used car work/extended warranty work, overall you would find no cash left from those services whatsoever, although they do produce some cash flow, but I would still be looking to exit that type of business as soon as possible. 

I am also going to guess that your labor rate is below $100 an hour. One thing that I did not understand, for much of my early life as an owner, was that cheap prices are a very expensive form of marketing. I like your google reviews and testimonials on your website. You may find it is cheaper overall to do actual marketing to any higher income, higher educational level households/neighborhoods in your area (DIFM, do it for me customers), then it is to have lower overall prices to attract customers. My method is not as easy and requires courage, lots of courage to pull it off. You have to be able to charge, what you need to charge to first survive and then prosper, and you have to be able to hold that line with friends and relatives. It is not likely that you are in a position to offer a discount from your current prices to anyone. Technicians and staffing required to operate an automotive service facility today are just to valuable to discount to anyone, until you are long established and reasonably profitable. Better to charge what you need to, and have funds to support your family, your staff and your community, Imo.

You can't do it all at once, but you can work towards it. 

Promote the service you offer, that I read about in your reviews and testimonials

You may need to seek assistance with doing actual marketing, if you are not strong in that area.

I am more than happy to be wrong about any of my assumptions stated above. 

Best Wishes for a bright future

Randy Lucyk

 

 

 

Our building is about 10,000 sqft a 3k of it isn’t accessible yet due to city code an adding a bay door we are working on that right after making this post we did up our prices we are at 90hr which is average for the area and for dealers 65 at the moment I’m pushing the dealers higher at a slow pace and you are right I do need help marketing better I relied solely on word of mouth an cheap prices. Our car count is about 150 a month and it’s about 50% dealer for now. Thank for you words of wisdom btw.