Tips For Improving Used Truck Sales
Knowing the market, using the Internet and establishing proper pricing can bolster profits.
By Denise L. Rondini, Executive Editor
The good news is that used truck values are high. The bad news is there has been a sales slowdown, likely the result of the shrinking pool of available inventory that fits a narrow criteria of desirable units, says KyleTreadway, president of Kenworth Sales Company.
Chris Visser, senior analyst and product manager, ATD/NADA Official Commercial Truck Guide, says, “The value of used sleeper tractors currently is at historic highs. The average six-year-old sleeper tractor with mileage in the mid-500,000-mile range is bringing in around $50,000 retail.
“Sleeper tractors with [fewer than] 600,000 miles have appreciated substantially over the past three years. The increased values are a result of the depressed sales volume of new tractors from 2007-2010,” he says. Newer model year trucks are following a more traditional path of declining values as they age, but the 2007 model year vehicles continue to maintain a high base value.
Fleets are keeping their vehicles longer than usual, which is resulting in trade-ins with mileage higher than typical. “As such the industry is adapting to the new reality of paying more for trucks with higher mileage,” Visser says.
What has resulted, according to Treadway “is a tale of two inventories. We must take trade-ins that fall into the less desirable 2008 and forward model year and must search further afield to purchase the more desirable 2007 model year trucks. We make little or no profit on the first group, and work harder to blend in the latter sales to keep our used truck departments out of the red.”
David Yglesias, dealer principal at Palmetto Ford Truck Sales, says as the economy is recovering, customers are looking for “clean, late model used trucks and there are few available. Especially hard hit is the medium-duty market.”
One way dealers can improve their chances of selling used trucks is by inspecting them and correcting deficiencies before putting the trucks on the line,” says Rick Wilson, medium-duty sales at Jenkins Diesel. “This will ensure the customer gets the best value for his money, and enables the dealer to sell on value rather than on price which increases gross [profit].”
Peter Trench, vice president of national accounts at Manheim, sees the Internet being an increasingly important tool for merchandising and selling used trucks. “Potential buyers are using the Internet to search for vehicles, research their purchase options and even to research the dealer’s reputation,” he says. “All this will occur before they make the first contact with the dealer. Having a solid, well thought out Internet strategy is critical for dealers.”
A dealer’s Internet strategy should have two pieces: inventory sourcing/wholesale and retail.
Trench encourages dealers to use the Internet to source inventory, research it and buy it. “This gives the dealer greater access to more potential inventory and information to make decisions,” he says.
In order to be successful retailing used trucks using the Internet, Trench says dealers need to have a solid website, good listing guidelines and a plan for search engine optimization. “Make sure the customer can find your inventory and that your store comes at or near the top of a Google search.”