Week after week, All Things Used Cars' host David Long invites voices from across the industry to share their experience and expertise with dealers. This week we are taking on the topic of perfecting your appraisal process with guest George Magda!
You can listen to a full replay on Clubhouse.
George started by sharing what he sees around the industry as the pain:
30% perform first appraisals, with fewer than 30% completing a 2nd before buying a car. This practice leaves the vehicle's actual value ambiguous and, therefore, an unnecessary risk.
Sometimes VIN/TAG-based appraisals are not accurate.
Without a thorough appraisal, it is impossible to know what recondition costs. The second appraisal is useless without a good first one.
A second look is required. A system for having a second opinion on everything should be developed and maintained.
Data shows vehicles overlooked by one dealership are eventually appraised, acquired, and sold by another. If you want to appraise the car, you have to contact the customer.
Are the leads bad or underworked?
George offered some solutions to establish a solid Lead - appraisal - acquisition rhythm:
Use KPI to determine the number of appraises performed and work to increase it.
Use profit on in-house-appraised cars vs. others as a metric for implementation success.
Measure the projected recon costs vs. the actual and adjust accordingly.
A good appraisal plan is more than just looking at vehicles and running numbers. It requires following leads and getting cars in the dealership. Getting in touch with customers quicker and with more accurate numbers will ensure they don't get a better deal somewhere else, costing you inventory and reputation with the customer.
Create a plan easy enough for your whole team to follow. Get leads in the building, complete first appraisals, and report those findings to the manager for the second appraisal.
Everybody should know the process and be able to follow it on a busy day.
Do not skip the second appraisal.
The 2nd set of eyes will increase margins by entire percent points.
Perfecting your appraisal process will increase profits, help fine-tune inventory, and avoid wholesales that should have been retail. It starts with increasing the number of vehicles we get in the store and appraising. With time the data will lead to the next area of easy improvement.