USED VEHICLE SUPPLY | CHRIS CHASE But as Idriss and Paraskevopolous pointed out, the challenge in buying cars from private sellers is in finding a price that both buyer and seller are comfortable with. Marshall says another source of inventory many used dealers don't think of is their existing customer base. "So many used-car lots are the one and done," he says. "They get the inventory, they sell it to the customer. One time, one sale. But if you want to be really effective in the market it’s about managing your database, and also knowing how to shorten those trade cycles by coming up with a very effective mining strategy." By doing so, he says you can take advantage of sweet spots in the trading cycle and sell multiple vehicles to that same customer over a longer period of time, while taking in on trade the car they bought from you last time and re-selling it to someone looking for an older car or truck. "That’s where a lot of used-car companies miss the boat," says Marshall. "They’re not effectively working their database. They’re focusing really heavily on trying to source inventory through traditional means when the best place to find inventory is right under your own nose. It’s right in your own database." Marshall says that by working your database effectively and taking advantage of what he calls the cascade effect, there's an opportunity to turn a car twice, selling it to three different buyers over a period of time: first, to someone looking for a nearly-new vehicle that's one or two years old; then to a buyer who wants something three or four years old; and finally, to a driver who is on a tighter budget and can only afford a car that's five or six years old, for example. Canadian Black Book's Brian Murphy says a dealer is smart to look at any source of inventory that falls outside of the norm. "That’s just being good business people," he says. "If you can’t source the product through normal avenues, then see what else works." "If you manage the trade cycle more effectively and give people a reason to change earlier, you’ve just increased your production without pursuing new clientele," says Marshall. "So you use your own database to supply your demand, you get more turns, and you end up commanding the trade cycle."
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