Page 44 - GIADA-Mar 2018-web

SALES STRATEGY

Reconditioning a used car for retail sale?

Consider vehicle, repair type, expected value

By Michael Bor, Co-Founder and CEO, CarLotz

When consigning a vehicle for retail sale,
sellers face an important question: What, if
any, investment should I make in improv-
ing the vehicle’s condition to maximize its
sale value?

The answer depends, first and foremost, on
the specific condition of the vehicle but is
certainly influenced by the unique prefer-
ences of the likely retail buyer for that vehicle.

MECHANICAL ISSUES
Major mechanical issues need to be ad-
dressed first, as these not only impact value;
they likely determine whether the vehicle
sells at any price.

If the retail-consigned vehicle idles rough,
shakes or shimmies while driving, makes era-ready” vehicles that don’t require VEHICLE TYPE
odd noises, emits smoke, or has alarming cosmetic repairs after the sale. For lower Is your retail-consigned vehicle a luxury
dashboard warning lights, you are certain- priced vehicles, or vehicles destined for import brand, or a value domestic brand?
ly handicapping that vehicle’s ability to sell tradespeople such as work trucks or car- Is your vehicle designed for tradespeople
quickly for a good price. go vans, consignors should consider the or executives or families or young buyers?
extent and visibility of the cosmetic issue
Consignors frequently think they can before investing in the repair. Is the trim level of your retail-consigned
avoid making repairs and allow the buy- vehicle designed for the value buyer or a
er to “price in” mechanical issues, but, at If the consigned vehicle has major dents, buyer looking to make a statement? An-
best, buyers may assume the vehicle carries broken lights or windows, seat tears, loose swers to these questions determine wheth-
significantly more risk due to these condi- panels that indicate a fender bender, or er an investment in top-notch recondition-
tions and will likely reduce their offer price even deep scratches, you will generally re- ing will yield the return that you’re looking
meaningfully — often more than the actual ceive a return on your investment if you for.
cost of the repairs required to get it running repair these issues prior to retail sale. A
properly. At worst, buyers will walk away breakdown of mechancial versus cosmetic For example, a white Chevy Equinox LS is
completely. Neither outcome is good for the can be found here. probably fine with some scratches on the
consignor, so for obvious mechanical issues, bumper, seat wear and a star on the wind-
consignors should invest in repairs for retail MINOR COSMETIC ISSUES shield. A black-on-black Chevy Equinox
or consider choosing a traditional wholesale If the vehicle is mechanically sound and LTZ with leather, sunroof and backup
channel for sale. has only minor cosmetic damage such as cameras likely needs to be reconditioned
door dings, paint scratches, minor wind- to a higher standard to meet the require-
MAJOR COSMETIC ISSUES shield issues and bumper scuffs, the recon- ments of that vehicle’s buyer. Similarly, a
Vehicles that are mechanically sound but ditioning decision is more difficult. crew cab four-wheel-drive special-edition
have major cosmetic damage fall into the pickup truck demands a higher recondi-
same category as mechanical issues: The Is this really a make or break decision for tioning level than a regular cab, white, two-
consigner’s decision to repair the damage buyers? Will I get a return on my invest- wheel-drive work truck.
will not only increase value, but it also likely ment? While these are not easy questions, Continued on page 51
will determine whether the vehicle sells at all. one helpful tactic is to consider the buying
Most retail buyers of higher-end vehicles, audience: Who is the likely buyer of this
priced at $20,000 or above, prefer “cam- vehicle?

42 | GIADA Independent Auto Dealer MARCH 2018