Go Back   DealershipForum.com > Dealer Talk > Automotive Discussions

Notices

Automotive Discussions Car People talking about the Car Business – This is the place where it happens

Reply
 
Thread Tools Display Modes
Old 05-20-2014, 10:25 AM   #31
XDCX
Administrator
 
Join Date: Nov 2007
Posts: 14,869
Default

Quote:
Originally Posted by adastra View Post
New car franchises are hanging on to everything they take on trade. This is something that was unimaginable when I was working for new dealerships before 2010. Even with the junkers, they are selling with a bare minimum of reconditioning, and they only hit the auctions if remain unsold for 60-90 days.

By junkers, I mean cars that are more than 10 years old with 150k and up. Really anything that moves. The new Subaru store next to me looks to have about 3 to 1 used to new, with at least 50 $10,000 or under cheapos. Not quite the same ratio for the Hyundai, Ford, and Toyota stores, but still a much higher ratio than normal.
As we've discussed in other threads I think a large part of this current phenomenon is the "unintended consequence" of the government's Cash for Clunkers program in 2009. While the program may have helped sell some new cars there's no question that it also resulted in the destruction of a lot of used cars that still had value.

At some point the supply of inexpensive used cars will increase and their prices will fall. The question in my mind is - will the new car stores still cater to the lower end of the market when prices/demand fall or will they exit that market and start wholesaling their low ACV trades again?

My bet, FWIW, is most new car dealers who currently sell used cars in the lower tier of the market will continue to do so even if the prices/demand for these vehicles declines. I think a lot of the fears about the reliability of the older vehicles and the potential damage they could cause to a dealer's reputation have decreased.
XDCX is offline   Reply With Quote
Old 05-27-2014, 06:59 PM   #32
adastra
Member
 
Join Date: Mar 2014
Posts: 41
Default

Only an 8 hour drive for me to get to a market that isn't as nuts. Leaving at 4 AM tomorrow.

Just went over the record today. Combined a total of 33 retail units sold. ONLY because I could get the inventory. I'll ride the wave as long as I can, certainly not expecting a pattern, but hoping. A good month for us is 20. Someone working at the Volvo store told me I've sold more than them new and used combined this month, and they have at least 10x the inventory.
adastra is offline   Reply With Quote
Old 05-28-2014, 10:56 AM   #33
XDCX
Administrator
 
Join Date: Nov 2007
Posts: 14,869
Default

Quote:
Originally Posted by adastra View Post
Only an 8 hour drive for me to get to a market that isn't as nuts. Leaving at 4 AM tomorrow.

Just went over the record today. Combined a total of 33 retail units sold. ONLY because I could get the inventory. I'll ride the wave as long as I can, certainly not expecting a pattern, but hoping. A good month for us is 20. Someone working at the Volvo store told me I've sold more than them new and used combined this month, and they have at least 10x the inventory.
Congratulations on your record month.

Hopefully your willingness to work hard and buy cars from outside of your market will continue to pay off.

Concerning the comment about the Volvo store, that's very interesting. I can't imagine the store can be profitable if they're only selling about 30 new/used per month but have the overhead associated with a store that carries 300+ vehicles in inventory.

While I know I could easily look it up with Google, off the top of my head I can't even remember who owns Volvo now. I know Ford sold Volvo off just before the Great Recession and I think it was to a somewhat obscure company from China. (I remember Ford sold Jaguar and Land Rover to Tata from India, but I don't think Tata bought Volvo.)
XDCX is offline   Reply With Quote
Old 05-28-2014, 06:51 PM   #34
mryan55
Senior Member
 
Join Date: Mar 2013
Posts: 595
Default

Short post since it's from my phone... but Volvo fell into the hands of Geely in 2009.

It has been a tough go for Volvo as of late. With most lines staying steady or increasing sales Volvo is regularly down year over year.
mryan55 is offline   Reply With Quote
Old 05-29-2014, 09:06 AM   #35
DealerEx
Senior Member
 
Join Date: May 2009
Posts: 548
Default

Quote:
Originally Posted by mryan55 View Post
Short post since it's from my phone... but Volvo fell into the hands of Geely in 2009.

It has been a tough go for Volvo as of late. With most lines staying steady or increasing sales Volvo is regularly down year over year.
Used car values on them have dropped drastically also...dealers are scared of them because of the cost of repairs if needed...particularly a/c and electrical issues....the control panel modules seem to have lots of issues
DealerEx is offline   Reply With Quote
Old 06-02-2014, 10:44 AM   #36
XDCX
Administrator
 
Join Date: Nov 2007
Posts: 14,869
Default

Quote:
Originally Posted by DealerEx View Post
Used car values on them have dropped drastically also...dealers are scared of them because of the cost of repairs if needed...particularly a/c and electrical issues....the control panel modules seem to have lots of issues
Thanks for the information - that's interesting.

I can see why a dealership might be somewhat reluctant to take a Volvo in on trade or buy one at auction. In addition to the repair/reliability issues you mentioned I also think the customers who shop for used Volvos are a bit quirky and they'd probably be more inclined to buy a used Volvo from a franchised Volvo dealer.
XDCX is offline   Reply With Quote
Old 06-07-2014, 11:37 PM   #37
adastra
Member
 
Join Date: Mar 2014
Posts: 41
Default

Total retail cars for the location for May was 36. Never dreamed that possible with a 30-40 car inventory. Other than the mountain of paperwork, I have little to complain about.
adastra is offline   Reply With Quote
Old 06-08-2014, 07:00 PM   #38
mryan55
Senior Member
 
Join Date: Mar 2013
Posts: 595
Default

We also turned 100% of our inventory in May... average daily inventory of 70, total sales of 71. I never shy away from Volvos... thanks to wholesale values dropping drastically since their 2008 troubles and 2009 Chinese takeover they make for a cheap but still prestigious car.
mryan55 is offline   Reply With Quote
Old 06-09-2014, 09:47 AM   #39
XDCX
Administrator
 
Join Date: Nov 2007
Posts: 14,869
Default

Quote:
Originally Posted by adastra View Post
Total retail cars for the location for May was 36. Never dreamed that possible with a 30-40 car inventory. Other than the mountain of paperwork, I have little to complain about.
Congratulations on a great month.

That's an impressive sales figure given your inventory - I doubt there are too many used car dealers who are able to do a 100% turn.
XDCX is offline   Reply With Quote
Old 06-09-2014, 09:53 AM   #40
XDCX
Administrator
 
Join Date: Nov 2007
Posts: 14,869
Default

Quote:
Originally Posted by mryan55 View Post
We also turned 100% of our inventory in May... average daily inventory of 70, total sales of 71.
Congratulations on a 100% turn - that's awesome.

Quote:
Originally Posted by mryan55 View Post
I never shy away from Volvos... thanks to wholesale values dropping drastically since their 2008 troubles and 2009 Chinese takeover they make for a cheap but still prestigious car.
Interesting comment.

I never really liked Volvos because at least in the Seattle area it seemed like the typical Volvo buyers were a bit quirky and high maintenance. The sales process was slower than what it would be for most other used car customers.

That said, if the price of Volvos has fallen to the point where someone who was shopping for a used Camry could be switched to a used Volvo maybe it could be a "win-win" for both the customer and the store. (Assuming that the Volvo doesn't turn out to have reliability/repair issues.)
XDCX is offline   Reply With Quote
Old 06-09-2014, 06:07 PM   #41
mryan55
Senior Member
 
Join Date: Mar 2013
Posts: 595
Default

Yes, the Volvo sales process is quite slow. Before my CDJR days I did some time at a Volvo dealership, and the pace is much slower. Customer is definitely quirky, and you have to been down with lots of tweed jackets and pipes. Just joking, but it definitely holds true in some cases.

I shouldn't have made that comment about Volvos yesterday. Just had to make the choice to wholesale a 2008 S80 3.2i FWD with only 100,000 miles due to a myriad of common Volvo electrics issues. $1800 estimate plus some blend door actuator problems that had to go to the local Volvo store for further diag.
mryan55 is offline   Reply With Quote
Old 06-10-2014, 02:03 PM   #42
XDCX
Administrator
 
Join Date: Nov 2007
Posts: 14,869
Default

Quote:
Originally Posted by mryan55 View Post
Yes, the Volvo sales process is quite slow. Before my CDJR days I did some time at a Volvo dealership, and the pace is much slower. Customer is definitely quirky, and you have to been down with lots of tweed jackets and pipes. Just joking, but it definitely holds true in some cases.
Concerning your days at a Volvo store, if I can ask, how were the grosses on new cars?

To the extent there are not too many Volvo stores I'm guessing that the grosses should be higher. I'm also guessing that Volvo didn't have any stair-step incentives that forced their stores to chase volume regardless of gross.

Quote:
Originally Posted by mryan55 View Post
I shouldn't have made that comment about Volvos yesterday. Just had to make the choice to wholesale a 2008 S80 3.2i FWD with only 100,000 miles due to a myriad of common Volvo electrics issues. $1800 estimate plus some blend door actuator problems that had to go to the local Volvo store for further diag.
Sounds like you made the right decision.

It would have been hard to justify spending $1,800+ on repairs/recon and then still have the risk you'd have to wholesale the car at auction where prices are weak if you couldn't find a retail buyer.
XDCX is offline   Reply With Quote
Old 06-10-2014, 09:06 PM   #43
mryan55
Senior Member
 
Join Date: Mar 2013
Posts: 595
Default

Volvo grosses were OK, but not great. My entire time with Volvo was during the era of Ford ownership, so they were eligible for A/Z/X plan. Ford would reimburse you back to invoice on the A/Z/X deals.

Holdback and delivery allowance combined to a whopping total of 2% of base MSRP. I woudl have to imagine that the figure is greater now, but I don't have many Volvo contacts these days.

New car profits were also hurt pretty regularly by service loaner requirements. We were required to have 2 loaners based on our sales volume, and these are almost always basic V50 or S40 wagons, which are not the most desirable vehicles.

Over the years, I averaged $1,400 front-end per copy... not impressive, but Volvo has been a struggle for a decade plus, and especially when you think that while most OEMs post major gains, Volvo posts 25% sales losses each month, month in and month out.
mryan55 is offline   Reply With Quote
Old 06-11-2014, 10:21 AM   #44
XDCX
Administrator
 
Join Date: Nov 2007
Posts: 14,869
Default

Quote:
Originally Posted by mryan55 View Post
Volvo grosses were OK, but not great. My entire time with Volvo was during the era of Ford ownership, so they were eligible for A/Z/X plan. Ford would reimburse you back to invoice on the A/Z/X deals.

Holdback and delivery allowance combined to a whopping total of 2% of base MSRP. I woudl have to imagine that the figure is greater now, but I don't have many Volvo contacts these days.

New car profits were also hurt pretty regularly by service loaner requirements. We were required to have 2 loaners based on our sales volume, and these are almost always basic V50 or S40 wagons, which are not the most desirable vehicles.

Over the years, I averaged $1,400 front-end per copy... not impressive, but Volvo has been a struggle for a decade plus, and especially when you think that while most OEMs post major gains, Volvo posts 25% sales losses each month, month in and month out.
Thanks for the information.

If your experience is typical of most Volvo stores I can imagine life must be stressful for most Volvo Dealer Principals. Low sales volumes combined with weak grosses and declining market share would definitely be depressing.
XDCX is offline   Reply With Quote
Old 06-11-2014, 04:12 PM   #45
mryan55
Senior Member
 
Join Date: Mar 2013
Posts: 595
Default

Volvo is a struggle. The good thing is that only a handful of Volvo stores around the country are single point stores. Most have plenty of other franchises around to pay the bills. And service loyalty/retention is very high among Volvo customers.
mryan55 is offline   Reply With Quote
Reply

Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off

Forum Jump

Similar Threads
Thread Thread Starter Forum Replies Last Post
What percentage of New Car Dealerships have Body Shops onsite? XDCX Automotive Discussions 7 08-08-2013 09:44 AM
Dealerships that host Car Shows XDCX Automotive Discussions 16 04-17-2013 01:58 PM
What's the future look like for the Rural New Car Dealer? XDCX Automotive Discussions 22 05-03-2012 03:07 PM
Independent Franchises? jules4jeeps General Discussions 7 06-19-2009 01:13 PM
City extends $1 Million in Bridge Loans to Car Dealerships XDCX Automotive Discussions 1 12-08-2008 09:45 AM


All times are GMT -7. The time now is 10:09 PM.


Powered by vBulletin® Version 3.8.5
Copyright ©2000 - 2024, Jelsoft Enterprises Ltd.
Copyright DealershipForum.com - 2008 - 2016