Proper Appraisals Are Essential
Profitability in the used truck department starts with a correct assessment of the vehicle.
By Denise L. Rondini, Executive Editor
When done properly a used truck appraisal benefits all parties, according to Trevor Pasmann, corporate used truck manager at Kenworth Sales Co. “Accurate appraisals provide dealers with a higher level of certainty for building a price for the appraised truck,” he says.
“The sales representative benefits because accurate appraisals improve closing ratios and protect deals from unpleasant surprises. Accurate appraisals offer customers an opportunity to get the best possible value for their equipment,” he adds.
Peter Trench, vice president of national accounts at Manheim, cautions that if you appraisal a trade-in too low, the customer will look elsewhere. “But if you appraise too high, you might bury yourself in the trade making it tough to retail or wholesale it. If you’re appraising the vehicle to acquire it for your inventory and for retailing, you need an accurate price that factors in your market, any reconditioning work needed to make it retail ready and what kind of gross profit you are looking for.”
If you have a leasing operation, a proper appraisal is important to make sure the truck meets the lease terms or trade terms, says George Barnett, president of DEKRA-TRS.
The person best equipped to handle the appraisal process is someone who is knowledgeable and experienced, like a used truck sales manager. “The used truck sales manager will know what is selling in your market, what the wholesale prices are, and will have a good base of knowledge to determine how much reconditioning will be needed to make the vehicle retail ready,” Trench says.
He also suggests the used truck sales manager work closely with the new truck sales manager if the truck is a trade-in and part of new vehicle sale. “Sometimes you need to appraise the truck a little higher to close the new sale,” he explains.
Make sure your used truck appraisers are knowledgeable in the area of truck manufacturer models, components and specifications, Pasmann suggests. “In addition, the appraiser must have a basic understanding of the mechanical working of the vehicles.”
On the job training is the best way for used truck appraisers to learn their jobs. “You learn by doing and observing more experienced folks as they handle the appraisal process,” Trench says.
“When we get a new inspector, we send him out with one of our experienced guys,” Barnett says. “We let the new guy do the appraisal on the truck and our experienced guy also will do it. Then we compare the two reports and go over the things the new guy missed. We do this five to six times before our new guy is ready to go out on his own.”
A good used truck appraisal is detailed, comprehensive and informative, Pasmann says. At the very least, he says, the used truck appraiser should document the following: basic truck information (year, make, model, VIN, mileage, etc.), type and condition of interior, exterior walk-around body damage and paint condition, tires, wheels, brakes, suspension, engine, lights, frame, exhaust, fifth wheel, aftertreatment exhaust systems.